Traditionally Professional Liability Insurance has been understood to be inside the realm of Architects, Engineers, Doctors, Attorneys and Accountants. More recently attention has been drawn to the subject of Contractor’s Professional Liability. The attention of Owners, Contractors, Attorneys, Insurance Companies and Courts can have catastrophic effects when a contractor’s insurance program is discovered to be inadequate when a contractor is accused of a negligent act, error or omission.

Contractor’s Professional Liability Insurance vs. General Liability Insurance

Most contractors carry General Liability insurance and feel comfortable that their firm is well protected. Unless they directly employ Architects or Engineers, few contractors perceive there is a need for contractor’s professional liability insurance, since they do not believe they supply "professional services". It should be noted that these policies are not standardized like general liability insurance policies.

That comfort zone is changing, due to a better understanding of the fundamental differences between a general liability policy and a professional liability policy. Basically, a general liability insurance policy will cover losses caused by alleged contractor negligence in "ordinary construction means and methods," as long as it results in bodily injury or property damage arising from an occurrence.

A Contractor’s Professional Liability insurance policy or Contractors Errors and Omissions insurance policy covers damages resulting from a negligent act, error or omission. A clear distinction exists between damages and bodily injury or property damage. Damages can be a purely economic or monetary judgment, award or settlement. An owner’s business interruption loss can be significant enough to put a negligent contractor out of business. A contractor’s error or omission can cause a total structure to be torn down and rebuilt, resulting in significant lost profits and revenues, which may be awarded against the negligent contractor.

Trends in Professional Exposures of Contractors

As the lines of responsibility between design firms and contractors merge, contractors are assuming nontraditional risks that their contractor’s insurance program does not contemplate. With construction projects becoming more complex and new construction contracts being introduced, design responsibilities are becoming more fragmented. New methods of project delivery have created new challenges and exposures which are often misunderstood and not properly analyzed.

Recent trends to create a collaborative construction team, exposes contractors to professional liability. Programs such as Leadership in Energy and Environmental Design (LEEDS) and Building Information Modeling (BIM) are exposing contractors to professional liability risks by blurring what were clear lines of responsibility and liability. There is a tendency of contractors to enter the process earlier, as owners and design professionals seek to capture their construction expertise in manners not previously seen.

A difficult aspect of the construction process to clearly identify is the incidental "design" activities that many contractors engage in from time to time. Traditionally these have been thought to be within the "means and methods of construction" and laid outside the realm of design professional services. Courts have taken a different view today. Temporary work like shoring, falsework and dewatering has design implications that many contractors fail to recognize. Specialty contractors such as Fire Suppression have for years been involved with design and employ what are generally referred to as "Engineering Technicians" which seem to fall somewhere between a skilled or trained worker and a degreed Engineer. Mechanical and Electrical subcontractors often engineer or design heating, ventilating, and air conditioning (HVAC) and other systems. A newer method being employed various state Departments of Transportation are assigning design responsibilities to highway/heavy contractors thereby transferring risks previously assumed by the state.

One of the most troubling trends is in the area of "inspection". Inspections have been a part of many specialty trades for a long time. No one thought twice of inspecting something before putting together a proposal and often opinions are rendered. It was commonly understood they couldn’t possibly ascertain problems that were not visible on the surface, but yet existed somewhere underneath.

Courts however have ruled otherwise. One court stated "A professional service is one calling for specialized skill and knowledge in an occupation or vocation. The skill required is predominately intellectual or mental rather that physical." Other cases claim that the widely accepted definition of "professional" has to do with the exercise of advanced or specialized knowledge or technical expertise.

Contractor’s Professional Liability and Contractor’s Errors and Omissions policies will in all likelihood become a staple for many contractors’ insurance programs. With more design responsibilities transferred to contractors and increasing demands by General Contractors for Contractors Professional Liability policies in subcontract agreements, any expectation that this will just fade away, is probably just wishful thinking. Fortunately the insurance industry is taking notice as more products are becoming available and insurance contracts are better tailored to meet the match the newer risks of the construction industry.

Gary Pearson, CPCU is an expert in contractor’s professional liability insurance and difficult to place product liability insurance coverage. He is employed by the RJ Ahmann Company, a regional insurance agency located in Eden Prairie, Minnesota.

The purpose of this article is to better educate insurance buyers on the importance of having products liability insurance coverage as part of their overall General Liability insurance program.

In order to better evaluate your company’s overall product liability risk exposure I think it’s important to understand a few key items.

• Products liability insurance (sometime referred to as Manufacturers Insurance) is just one aspect of a company’s overall insurance program that sometimes gets overlooked.
• Products liability is often overlooked due to the fact that many companies don’t understand/believe they have exposure to products liability claims "since they are not the original manufacturer", or, better yet, they don’t know that their current program is excluding products liability, which is all too common in this ever increasing complex insurance environment. (CG 21 04 – Exclusion _ Products – Completed Operations).
• General Liability Insurance (excluding products liability) is intended to protect your company for any 3rd party liability brought against you arising out of your premise/operations (on-site). The real question is what happens if your company is brought into suit for any 3rd party property damage or bodily injury off-site?

What is Products Liability Insurance?

Products liability insurance protects the business from claims related to the manufacture or sale of products, food, medicines or other goods to public.It covers the manufacturer’s/ sellers liability for bodily injury or property losses caused by their negligence. Their negligence can take the form of dangerous defects in the product or even sometimes failure to warn the public if its inherent risk factors. It is important to note that damage to the product itself is not included in the coverage. Sometimes, when it’s part of a commercial general liability policy, the coverage is also referred to as Products-Completed Operations insurance.

There are generally three types of products liability insurance claims a company may face:

• Manufacturing/Production Flaws – Bodily injury or property damage ensues from a product that was flawed during manufacture;
• Overall Design Defect- The product’s original design is unsafe, and people are injured or property is damaged as a result;
• Defective Warnings/Instructions – An injured party alleges that the product instructions and warnings supplied to consumers were inadequate for them to understand the risks involved in using it.

The damages awarded in any one of these claims can be serious enough to ruin a business’s reputation and even put them out of business. It is important to note that the coverage only responds to bodily injury or property damage, and does not extend to financial damages where no bodily injury or property damage occurs.

Many wholesalers/resellers fail to secure this coverage. Their logic is that since they didn’t "manufacture" anything, they don’t need the coverage. Often times retailers and wholesalers (along with the manufacturers) are brought into a lawsuit for alleged negligence by the consumer. Most states follow the "stream of commerce" model of liability, meaning that if your company participated in placing the product into the "stream of commerce", it can be held liable.

As a business professional, you understand there are many things that can happen in the course of your daily operations for which you could be held liable, and that you don’t even have to be at fault to be sued.

If your company provides any products to the consuming public, you need product liability coverage. Don’t assume it’s already included in your standard General Liability Program. Please check with your insurance professional to get a clear understanding of what exactly is covered (and what is not) for the insurance premiums you are paying.

Scott Lyman, ARM is an experienced property/casualty insurance expert, who works with clients to design coverage to meet their needs. Mr. Lyman is currently a Client Executive for RJ Ahmann Company, a regional insurance broker headquartered in Minneapolis.

The 2012 Property/Casualty Insurance Market

Whether or not it seems that way to you, it has been a buyers’ commercial insurance market for the last several years. Despite underwriting losses and weakening investment returns, capital flowed into the insurance market place, increasing insuring capacity and maintaining artificially low insurance rates. Over the past six months, we’ve seen a flattening to modest hardening of the insurance market place.

While it will be some months yet before 2011 results are fully understood, it is clear that 2011 was a unique year. Catastrophe losses in the US are likely to total more than $35 billion, once all of the results are in. More importantly, these are not just damages caused by a single disaster. In 2011, we had earthquakes, hurricanes and tornadoes causing massive damage in the US. 2011 set a record for the greatest number of events generating billion dollar plus losses in the history of the insurance industry.
Historically insurance underwriters counted on investment returns to shore up weak underwriting results. For most well-managed insurance carriers, their investments were largely in government and corporate bonds, rather than in stocks. Investors fleeing the volatility in the stock market, increased demand for bonds, effectively lowering their yield. Since 2008, the returns available from insurance carrier investments have become nominal at best.
What can you expect in the 2012 Commercial Insurance market?
If you have high severity exposures and/or adverse loss experience associated with your workers compensation insurance coverage, your premiums are going to increase. You should expect to be hit be increases in your workers compensation experience modification and corresponding decreases in schedule credit discounts, if your state allows them. The combination could increase your premium significantly. If you have had very adverse loss experience, you may find yourself in your state’s workers compensation pool, historically the market of last resort.

If you have had property insurance losses during the past few years, your premiums are likely going to increase and alternative options will decrease. This is particularly true for historically difficult exposures, such as industrial facilities and garden apartment complexes. We have always pointed to the property exposure associated with hospitals as being equivalent to insuring pig iron under water. High quality fire restive construction, fully sprinklered, sophisticated alarm systems, people on site 24/7 … what could go wrong? The tornado last year in Joplin, Missouri damaged the local hospital beyond repair, and is generating a substantial business income loss as well. If you have difficult exposures, your ability to get insurance just became more challenging. Was 2011 an aberration or does it reflect changes in global climate? Will it repeat itself, or will losses return to normal? Only time will tell.

Executive risk insurance exposures are not immune from the hardening market place either.

In our base of business, we are seeing average increases from five to 10 percent in this line of coverage.

• Directors’ and officers’ liability insurance claims have increased in a soft economy, marked by the failure of many businesses, large and small. We’ve seen claims filed by distressed shareholders, regulators and unsecured creditor committees.
• Employment practices liability insurance claims have increased substantially, particularly as unemployment benefits run out, and people become desperate for any income stream they can find just to stay afloat. EEOC filings reached a new record high, totally close to 100,000 new filings in 2011.
• Professional liability insurance and specialty coverages have followed the D&O liability coverage, and become more expensive and more difficult to place. In a hardening market place, we tend to see London become more of a player, and we expect that will happen in 2012.
• Anecdotally, I have seen a greater number of employee dishonesty insurance claims in the past three years than in my entire career. Economic pressure plus a change in how many employees view their employers have led to people taking advantage, "because they can." I find that many businesses underestimate their exposure to employee dishonesty losses, yet the insurance against those losses remains relatively inexpensive.

What about general liability insurance and commercial automobile insurance?
Thus far, the stress in the workers’ compensation, commercial property and executive liability insurance markets has not manifested itself in the general liability and automobile lines of coverage, at least in our base of business. We expect to see firming in both lines of coverage in 2012, but it is too early to predict by how much.

Final Thoughts
Now, more than ever, you need an experienced insurance professional, backed by a strong organization, to help you navigate the insurance market place. Now is not the time to blanket the market place in search of quotes. Work in a disciplined, organized fashion with an insurance profession that you trust to safely guide your company’s insurance program. Visit us at www.rja.com to consult with an insurance professional who will construct an insurance program that will work for you.

Russ Birch, CPCU, ARM has 35 years of experience in the commercial insurance industry in roles ranging from underwriting to sales and marketing management. In addition to his Chartered Property Casualty Underwriter and Associate in Risk Management designations, he holds an MBA in Finance from the University of Minnesota. He currently leads a team of professionals at RJ Ahmann Company in suburban Minneapolis.

Managing your school bus transportation risk exposure is a daily challenge.

In fact, today more than ever, government policy continues to drive regulations in this regard. Effective January 1, 2012, the Governor’s Highway Safety Association (GHSA) put into place new cell phone and text messaging requirements for the transportation industry, outlining by state the new requirements and penalties associated with cell phone use while operating motor vehicles. The GHSA is a collaborative body that works with the State Highway Safety Office (SHSO), generally located within each state’s Department of Transportation (DOT) office, in helping to develop Strategic Highway Safety Plans (SHSP).

The new cell phone/texting legislation comes at a good time. The US Department of Transportation recently published results that reported nearly 6,000 people were killed and 500,000 injured in crashes associated with distracted driving, primarily due to mobile devices and cell phones. These new laws are looking to curb recent data and bring some needed safety back to our streets, highways and communities.

Minnesota Statute 169.443-Subd 9(b), Safety of School Children; Bus Driver’s Duties states the following requirements for school bus operators;

• Cell phone use is banned for ALL School Bus Drivers
• Text Messaging is banned for All Drivers, including School Bus Drivers

Follow the highlighted links to review Minnesota highway safety laws, including the new cell phone/text legislation and other important Minnesota statutes relating to School Bus Drivers.

There are some fairly stiff penalties for school bus operators who do not adhere to state policy. On January 25, 2012, the GHSA appointed Lowell Porter to serve as the newly created National Law Enforcement Liaison Program Manager to coordinate a national law enforcement program that would serve to enhance highway traffic safety through increased law enforcement involvement throughout the country. The GHSA will work with each states SHSO office in providing law enforcement expertise, education and encouragement in supporting traffic law enforcement initiatives. The desired outcome is to create a more cohesive law enforcement strategy among the states and the GHSA. That said, while it varies by state, citations relating to violations of the new Cell Phone/Text legislation can range as high as $2,500 per violation. GHSA and SHSO are looking to partner closely in this important initiative and bring some needed change to the transportation community.

Effective Safety and Risk Management Measures

Advice for School Bus operators with respect to cell phone use while operating a school bus includes:

• Turn ringers off and put phone in an area of vehicle that is out of reach;
• Do not send or receive calls or text messages while inside the school bus;
• Do not read GPS devices, newspapers or books as all are serious distractions;
• Avoid eating and reaching for drinks while driving;
• Set mirrors, radio stations, air settings BEFORE setting the vehicle in motion.

Additional risk management measures that school bus companies and their operators should consider in their collaborative risk management efforts include:

• Create a Safe Driving policy as a part of your organization’s written Safety Program;
• Set forth specific driver behaviors as a part of your Safety Driving policy;
• Ask vehicle operators to sign a written agreement stating their commitments to company policy;
• Set forth punitive measures, as a result of driver violations in this regard;
• Conduct regular driver training sessions to keep your vehicle operators current with company policy, as well as federal and state laws regarding school bus operation;
• Create an incentive program designed to reward vehicle operators who embody company policy through their safe driving efforts.

Safe School Bus Operation requires a commitment to government policy and procedure, as well as a commitment to company policy and preferred driver behavior. Commit to setting forth and communicating your company’s commitment to the new cell phone and text messaging campaign and become a collaborative partner to curbing our nation’s distracted driving statistics and make our country and local communities a safer place to drive and live.

Mike Pehrson is a Transportation Risk Specialist with RJ Ahmann Company, a regional insurance agency located in Eden Prairie, Minnesota.

Lawyers professional liability insurance, also known as lawyers malpractice or lawyers errors and omissions insurance, can vary a great deal from one insurance carrier to another and even among policyholders of the same carrier. That’s because there are a myriad of carriers, as well as policy forms and endorsements – some of which vary from one policyholder to another with the same carrier. Here are some basic things to look for when comparing these policies to one another.

1. Defense costs:
Consider whether they are outside or inside the policy limits? If they are inside then your limit will be eroded by these costs when it comes time to pay the claimant. Statistics show that one third of total claims payments are for defense costs. Choosing enough limit is imperative to ensure payment to the aggrieved party after paying defense counsel.

2. Selection of defense counsel:

Lawyers professional liability insurance policies vary on the insured’s ability to select defense counsel.

Some policy forms give this right solely to the carrier while others involve the insured in the selection process. This can be important as claims of this nature can affect reputation and standing. Particularly in disputed cases, lawyers and their firms want a say in who defends them.

3. Settlement:
Does the policy give the insurer the right to settle a claim without the insured’s consent? Some policies do while others require the insurer to get the written consent of insured prior to doing so. For similar reasons as stated in the selection of defense counsel, this policy provision wording is significant for many insured’s.

4. Definitions:
All insurance policies define certain terms used throughout the policy and lawyers professional liability insurance is no different. This is an area where policies can differ dramatically. One important definition is the meaning of "insured." Some policies do not include contract attorneys in their definition of insured while others do. Another important definition is the meaning of "claim." Since the insured has duties or responsibilities to give notice – among other things – to the insurer in the event of a "claim" it is important to understand what constitutes a claim as defined in the policy. Failure to notify the insurer of a "claim" as defined in the policy could jeopardize coverage.

5. Exclusions:
Like other professional liability policies, lawyers professional liability insurance contains certain exclusions that can limit or completely exclude coverage. While there are some exclusions you’d expect; like intentional acts and war; there are also exclusions you should pay attention to. For example, if an insured holds more than a 10% interest in a business enterprise or sits on a Board of a charitable organization and renders professional services to it, then that is generally excluded unless specifically endorsed.

Lawyers professional liability insurance policies are not all created equal.

The coverage they provide, the way they define important terms and their exclusions can vary widely from policy to policy. A careful and considered approach should be utilized when examining lawyers professional liability insurance in order to address areas of concern and potential coverage gaps that are best resolved prior to a claim occurring. Discuss your situation with an insurance agent that is knowledgeable in the area of lawyers professional liability insurance.

Michael Jacobs is an experienced insurance industry professional with the RJ Ahmann Insurance Agency, a regional insurance agency in Eden Prairie, Minnesota. His practice is focused on providing professional liability insurance services to law firms and consultants.

For many companies, intellectual property is a very important asset. Intellectual property insurance can be an important tool in protecting this asset. Companies can be particularly vulnerable to attacks of their intellectual property, as larger competitors seek to eliminate competition. Intellectual property includes your patents, copyrights, and trademarks. The loss or damage to this property can be caused by infringement, misappropriation, and defamation or emotional distress. Most general liability insurance policies do not provide any coverage for intellectual property. Therefore most companies, whether intentionally or not, are self-insuring this exposure.

Patent insurance is a highly specialized type of intellectual property insurance coverage that can protect your company from loss in the event of patent litigation. The market place offers two types of policies:

• The first type protects the holder of patents by paying a portion of their legal expenses when they litigate against patent infringers; i.e. firms using their patents without authorization. This is often referred to as “offensive coverage.”
• The second type of coverage pays a portion of the legal defense expenses and /or court awarded damages when a patent holder accuses your company of patent infringement. This is often referred to as “defensive intellectual property insurance.”
  Most intellectual capital insurance policies have a coinsurance requirement that requires the policy holder to share in the legal expenses and/or settlement.

Obtaining Intellectual Property Insurance

Before you can purchase intellectual capital insurance, you must go through an underwriting process that consists of several steps.

• The completion of a fairly extensive application, which will serve as the basis of the underwriting process.
• The insurance company will perform an extensive search of public data bases or require a legal opinion on the status of your current patents.
• The insurance company will charge a nominal fee to search for similar or related the products to identify potential litigation sources that have any relevance to the applicant’s products.
• Once the patent has been reviewed, you will receive a list of the patents searched.
• As an alternative to the search fee; most underwriters will accept a “Freedom to Operate” opinion from an outside counsel for the required due diligence requirement.
• Finally, the underwriter will develop a proposal that includes intellectual property insurance terms and conditions for your evaluation.

The initiation of an intellectual property insurance claim depends on the type of coverage involved.

• For “offensive coverage,” you must first identify the fact that someone has infringed upon your intellectual property rights. Your first step is to put the insurance company on notice of potential infringement. The insurance company will investigate and may send the company that had infringed on your patent a letter alerting them to the problem and asking for a solution. If that action fails, you and the insurance company will agree to a litigation strategy. The insurance company will control the lawsuit, including negotiation of settlements. The reason the insurance company will control the lawsuit is they have the most at risk. In addition, they have the greatest experience with this type of litigation. If the law suit is successful, you and the insurance company will share the Economic Benefits relative to the amount each party had contributed to the lawsuit. The insurance company’s share of the economic Benefit is limited to the amount actually reimbursed to the policyholder.
• For “defensive coverage,” your first indication that there is a problem will probably be a letter or a summons and complaint from an attorney that represents the other party. The letter will probably demand immediate cessation of the use of the other party’s technology, and may demand damages. You should immediately put your intellectual property insurance carrier on notice, and they will guide you through the rest of the claim process, which will include negotiation and possible litigation.

It is important to understand some intellectual property insurance policies have a 90 day exclusionary period. Any threats of litigation due to an infringement brought during the initial 90 days of the policy are excluded from coverage. In addition the underwriting process can take several weeks to compete. The first step is to complete the application. Based on your exposures we can email you the insurance company application that will offer the best protection.

Insuring intellectual property is a complex issue, and most insurance agents do not have the expertise to handle this type of insurance effectively. Your best approach will be to engage an insurance agent that has expertise in the area of intellectual property insurance.

Jim Silesky is a Vice President with the RJ Ahmann Company in suburban Minneapolis. His insurance practice is focused on providing comprehensive insurance alternatives for companies with intellectual capital, private equity and international exposures. Jim’s background includes 35 years of underwriting and broking experience for commercial entities.

Pollution Insurance, also known as Environmental Impairment Liability, is tailored to the type of business that you operate. Coverage is determined based upon whether your exposure is due to contracting operations or if you have a fixed facility. This article will contrast the differences between Contractors Pollution Liability and Site Pollution Liability.

Contractors Pollution Liability Insurance

Contractors’ pollution liability policies are designed to provide coverage for bodily injury or property damage to third parties arising from the following environmental liabilities:

• Construction or remediation operations whether performed by you or subcontractor(s)
• Claims alleging improper supervision of subcontractors

Environmental liability insurance carriers have the ability to tailor their coverage form to meet your operations. Some of the contractors that commonly carry contractors pollution liability insurance include:

It is important to note that not all Contractors Pollution Policies are created equal. Many carriers do not automatically include coverages for all of your exposures. Some coverages and endorsements to add to your policy include:

• Coverage for mold, asbestos, or silica;
• Coverage for pollution caused during transit;
• Coverage for non owned disposal sites.

Environmental Impairment Liability coverage should be a serious consideration to company’s who produce hazardous waste or occupy a site that previously produced waste or hazardous materials. The pollution insurance product that you would want to consider for a fixed site is called Environmental Impairment Liability or Environmental Liability Insurance.

Types of fixed facility businesses that consider Pollution Insurance are:

• Agricultural Operations
• Construction Yards
• Health Care Facilities
• Industrial Facilities
• Colleges and Universities
• Commercial Buildings (Banks, Offices, Retail)
• Golf and Country Clubs
• Recycling Facilities
• Real Estate Transactions

Environmental liability coverage can be tailored to your site. Coverage is available to pay for first party damages to your site to pay for remediation of your polluted property and other clean-up expenses. Third party pollution coverage is also available, if there is a possibility that pollution from your site could migrate and affect third parties. Insurance carriers can also tailor pollution coverage for pre-existing unknown conditions, as well as coverage for future events created by your operations.

Coverage for pre-existing environmental conditions will require additional information on your part. A phase I site study will need to be completed to determine if there are any known contaminants. If contamination is found then a phase II site study will be required, and the insurance carriers will likely exclude coverage for any known conditions. Site studies do not always turn up all contaminants; therefore we highly recommend you the purchase a policy that protects you from pre-existing conditions.

Why Purchase Pollution Insurance?

The risk of pollution may seem somewhat minimal, but if you are a contractor or owner of property you should consider Environmental Impairment Liability coverage. General Liability and Property coverage exclude coverage for pollution conditions. Are you prepared to pay damages to third parties and remediate the damage that pollution causes? You should also consider your reputation and how the public would view a company that creates an environmental hazard. We recommend Environmental Impairment Liability insurance to protect your business from these risks.

Carl Godziek is an experienced insurance professional, working with the RJ Ahmann Company in suburban Minneapolis. His practice is focused on providing affordable insurance alternatives for Pollution Liability Insurance.

Now that we have completed the 2011 Healthcare Insurance renewal cycle, there are unique observations that can be made regarding the over all healthcare insurance costs, coverage options and employee participation. At R J Ahmann Company we collect survey results from across the upper Midwest region which we can use for benchmarking purposes in comparison to our clients data.

The effect of the Patient Protection and Affordable Care Act (PPACA) generated an increase in health insurance rates for the majority of employer groups ranging from 1-4 percent. The national 2011 mid-market average overall cost increase was 8 percent based on these survey results. With the great uncertainty of the future impact of potential healthcare insurance reform, many employers are looking for the silver bullet to help contain the costs of employee health insurance. Unfortunately, there is not a single solution that will in itself provide decreased medical insurance plan premiums.

How can you control your healthcare insurance costs?

Our success in working with clients to manage their health insurance increases includes addressing the major components that can result in changes in employee behavior.

Many employers have implemented dual or multiple health insurance plan designs in an attempt to introduce consumerism among their employee base. In addition to giving employee choice among the various healthcare insurance plans, it allows cost control by basing the employer’s contribution on the base plan. Employees can then choose to pay the difference in monthly premium to enroll in a richer plan design.

The incidence of Consumer Driven Health Plans (CDHP) has been increasing over the past 5 years with 22 percent of employers offering this type of plan. An additional 17 percent of employers are considering adding this type of high deductible health insurance plan for their upcoming renewal.

Adding a high deductible plan and setting the employee contribution at a competitive level, will engage employees in the process of purchasing their healthcare insurance. The result is better buying decisions at the employee level, higher utilization of generic prescriptions and proactive shopping for cost and quality of routine medical services.

2. Offer competitive health insurance plans with reasonable employee contribution levels.

As annual medical plan costs continue to rise, employers are balancing plan design changes with increased cost sharing on the monthly employee contribution to premium. Our survey showed that 33 percent of employers increased the employee share of the monthly premium and 24 percent increased the deductible under the plan(s) they offered.

Though these are the two most common strategies, there are certainly many other combinations of health insurance plan design changes that can have an impact on overall cost. A detailed analysis of claims activity and plan design can often reveal cost saving strategies without a major cost shift to the employee.

Another emerging healthcare insurance strategy in recent years is Defined Contribution Plans. An employer decides what amount per employee they will make available to purchase health insurance. The employee then makes their plan elections from several health plan options. These plans allow the employer to set their cost level and allow employees to make choices on which plan design will fit their individual or families needs.

Wellness programs can mean different things to different people. These programs come in many forms and the statistical data that is available shows that wellness programs help to control health care insurance costs through awareness and claim avoidance. The programs can include simple topical communications with employees, walking contest health fairs or biometric based wellness plans. It is best to consider a three to five year window when considering implementation of wellness programs.

While wellness programs were once for the large multi-national corporations, they have been adapted for smaller firms and there is prevalence in the mid-market and small employer segments. We have assisted groups in the 30-50 employee range in establishing a full biometric-based, wellness plan. A biometric-based wellness program includes an annual blood draw on site by qualified professionals and benchmarking the actual results with target metrics that are established for the plan. The incentives are normally based on passing the specified metric or earning them back during the year, when employees participate in specified activities or improve their health.

Wellness programs help prevent future health insurance claims by incenting improvement in the overall health of the employees in the group health insurance plan. They are measurable and if structured appropriately can improve an employer’s return on investment over time.

Healthcare insurance reform and the PPACA legislation are being debated and litigated in many venues. The ultimate impact will not be known for some time. However, most employers are eager to find solutions today to help bend the long term cost curve of employer based healthcare insurance programs. A multipronged approach has proven most effective in our practice in controlling the rising cost for our client’s and survey participants. While we all wait for the final determination on healthcare insurance reform, it is a perfect time to integrate some of these strategies into your health insurance program.

Andrew Krane has over 25 years of experience consulting with employers on their employee benefits programs and providing employee benefits insurance coverage to meet their needs. Mr. Krane currently serves as the Employee Benefits Practice Leader for RJ Ahmann Company, a regional insurance broker headquartered in Minneapolis.

Eden Prairie, MN (Jun 8, 2011):  RJ Ahmann Company today announced a new partnership with Assurex Global.  RJ Ahmann Company, a privately held insurance and risk management firm located in Eden Prairie, MN, is now part of the world’s largest privately held risk management and commercial insurance brokerage group with over $28 billion in annual premium. This relationship allows RJ Ahmann Company to work on six continents with other independent insurance brokers who have proven themselves as the best in their respective markets.  Our clients get the best of both worlds – the clout of a large organization with the personal attention for which RJ Ahmann Company is known. 

As with every Assurex Global Partner, RJ Ahmann Company was chosen after being identified as the strongest brokerage in its respective region.  A rigorous due diligence process confirmed that RJ Ahmann Company met or exceeded an extensive list of high standards that Assurex Global values.

Richard Ahmann, CEO, RJ Ahmann Company, said, “This relationship with Assurex Global gives RJ Ahmann Company and our clients access to specialists in every area of insurance and risk management as well as unique insurance products you can’t get anywhere else.”

About RJ Ahmann Company
RJ Ahmann Company is a full service insurance and financial services provider with a global reach.  Founded in 1956 and based in Eden Prairie, Minn., RJ Ahmann Company offers tailored insurance solutions for individuals, families and businesses including property/casualty insurance, employee benefits, bonds, and financial services.  RJ Ahmann Company is a privately held independent insurance agency.  For more information, visit www.rja.com

About Assurex Global
Founded in 1954, Assurex Global brokers service clients from more than 500 offices on six continents. With over $28 billion in annual premium volume, Assurex Global is the world’s largest privately held network of independent agencies/brokers offering risk management, commercial insurance and employee benefits. For a complete listing of Assurex Global offices, or for more information, visit www.assurexglobal.com.

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As the alternative energy debate continues, the argument between which is “better”, wind energy or solar energy, is beginning to sound like the old beer commercials; “tastes great versus less filling.”  The reality is that from the perspective of commercial insurance, the issues involved with solar energy insurance are very similar to those involved with wind energy insurance.

One of the key differences between wind energy and solar energy generation is location.  Our experience is that most wind energy installations are located in rural America, while a great deal of America’s solar generating capacity is located in or near cities.  One of the most interesting developments in alternative energy insurance has arisen from the practice of placing solar panels at the location where the electricity generated will be consumed.  Commercial solar energy insurance consists of the various insurance policies that are used to protect these installations.

Developing a commercial solar energy insurance program for an array of solar panels that are located next to or even on top of the facility where the energy will be used at is much less complex than developing a program for one of the mega installations now being constructed in the Southwest United States.  This article is focused on the insurance issues associated with those commercial solar panel arrays that are used to power commercial size operations rather than an installation on a home or farm, which I have addressed in other articles.

Property Coverage in a Solar Energy Insurance Program

We are seeing a growing interest by large insurance carriers that are now underwriting property insurance on small solar installations.  Typically, they are providing coverage for a broad range of perils, but are most concerned about wind storms, hail damage, lightning caused power surges and ice build up.  The limit of liability purchased for the solar energy property insurance should be adequate to replace the installation.  We typically recommend that the property insurance coverage in a solar energy insurance program be extended to include potential business interruptions and the extra expense associated with them.  This is particularly important if the entity using the electricity owns the panels themselves, as they will need to purchase electricity on the open market until the panels are brought back on line.

Coverage is available for unexpected catastrophic equipment breakdown, but it will add cost to your solar insurance program.  A good warranty will cover many of the same issues as equipment breakdown insurance, while the warranty is in force.  Equipment breakdown coverage becomes increasingly important as the installation ages and falls out of warranty, and a smart buyer will purchase equipment breakdown coverage at that point in time.

Liability Coverage in a Solar Energy Insurance Program

If you intend to utilize the energy produced by your commercial solar installation on your property and isolate it from the electric grid, then the decision of whether or not to purchase liability insurance coverage is your own.  You should carefully evaluate the accessibility of your installation site to the general public.  I almost always recommend purchasing a general liability insurance policy with limits of at least $1,000,000 per occurrence/$2,000,000 annual aggregate for any commercial installation.

If you intend to connect your installation to the power grid, the structure of your liability insurance will be dictated by your relationship with your local utility company.  Usually the commercial solar producer is required to purchase general liability insurance with limits of liability in the amount of anywhere from $300,000 per occurrence to $2,000,000 per occurrence.  This insurance typically is required to name the utility company as an additional insured and must meet other specific requirements outlined in the Power Producer Agreement (PPA).

It is easy to develop loss scenarios that will exceed these basic limits of liability in a commercial solar insurance program.  You can extend your limits of liability by purchasing an umbrella or excess liability insurance policy.

Other Components of Solar Energy Insurance Programs

Commercial solar energy insurance programs have a great deal in common with any other business.  They need to carry workers compensation insurance on their work force, they need to insure their vehicle exposures, and they have the same management liability exposures as any other business.  They should consider excess liability or umbrella coverage on their operations.  The specialization in insuring commercial solar energy installations really is related to their property insurance and their liability exposures.

I recommend that you seek the advice of an insurance agent that has experience placing coverage for solar installations.  That agent should be able to walk you through the issues that you should consider in evaluating your solar energy insurance situation.

Contact RJ Ahmann: To build an insurance policy that will be effective and affordable, you need a company that customizes your policy for you. Visit us at Small Business Insurance Liability to consult with an insurance professional who will construct an insurance program that will work for you.

Russ Birch, CPCU, ARM has 33 years of experience in the commercial insurance industry in roles ranging from underwriting to sales and marketing management.  In addition to his Chartered Property Casualty Underwriter and Associate in Risk Management designations, he holds an MBA in Finance from the University of Minnesota.  He currently leads a team of professionals at RJ Ahmann Company in suburban Minneapolis.

You may call Russ, at (800) 600-6185, or fill out our simple Contact Us form to the right and we will return your call during business hours.