Tag Archives: Insurance

by | September 14, 2010 · 6:05 am

Hotel Industry Health Risk Management: Hotel Owners Should Negotiate “Loss Of Attraction” Or “Contingent Business Interruption” Insurance Coverage For Losses Arising From Bed Bug Infestation

“…many hotels have negotiated for “loss of attraction” coverage, which covers the actual loss a hotel might sustain if it had to cancel reservations or was unable to accept bookings due to an infestation.”

State inspectors have the authority to shut down an establishment that poses an "imminent health hazard" involving fire, flood, sewage backup, rodent infestation, bed bug infestation or "any other condition that could endanger the health and safety of guests, employees and the general public."

“I would say both business interruption and to some extent contingent business interruption are two of the most difficult values for a business to assess,” says Craig Lapsley, vice president at Travelers Global Technology.

In evaluating those risks, companies have to consider their earnings, operating expenses and payroll–which is often overlooked but should be included, he says. In addition, companies need to consider how long they could be out of business and how long it could take to get back up and running.

“It’s difficult for insurance professionals, who do it all the time, and it’s extremely confusing for insureds,” Lapsley says.

Whenever there are large losses or catastrophic events, a very large percentage of insureds invariably turn out to be underinsured when it comes to business income, he says.

What makes contingent business interruption particularly tricky to assess is that it involves operations that are outside the company’s direct control. A company’s own operations may be in fine working order, but it may nevertheless suffer a significant loss of business income because of a disruption in the neighborhood, or with one of its suppliers, or with one of its buyers.

 For more:  http://www.riskandinsurance.com/story.jsp?storyId=13708831

 

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by | August 16, 2010 · 8:28 am

Hospitality Industry Insurance Risk Management: Las Vegas Hotel Has Insurance Policy That Fails To Name Hotel As “Additional Insured”, Complicating Payment Of A Submitted Claim For Structural Damage

The floor collapsed and dropped almost a foot, resulting in damage to the structures of both the lounge and the hotel.

The Luxor also sought compensation as an “additional insured.” The lease between the casino and developer required the latter to name Luxor as an additional insured on all policies. No doubt the Luxor assumed (that dangerous word!) that this language covered its exposure to loss.

However, the developer’s insurance policy restricted the coverage of an additional insured. Luxor’s entitlement was limited to indemnification for money it paid to people injured by the developer’s acts or omissions. The casino was not entitled to compensation for its own losses…

The casino invoked the Unfair Insurance Claims Practices Statute, a law adopted by numerous state legislatures.

The Luxor Hotel & Casino Hotel contracted with a developer to construct and operate a restaurant called the Cathouse Lounge (nothing is subtle in Vegas) on the mezzanine level. The developer gutted the space, made structural modifications and installed new fixtures and equipment.

One night during Cathouse’s third month in operation, while a large crowd was enjoying good food and fun ambiance, a portion of the structure began to buckle. The floor collapsed and dropped almost a foot, resulting in damage to the structures of both the lounge and the hotel. The lounge was evacuated immediately. Thereafter the county Department of Building Services ordered Luxor to close both the Cathouse and damaged portions of the hotel pending repairs. Luxor hired an expert to determine the cause of the floor’s failure. Turns out the renovations were insufficient to support the sizeable number of people the lounge attracted.

Both Luxor and the developer paid to repair the structural deficiencies and for damage to their respective property. The Cathouse reopened in three weeks and submitted a claim to its insurance company. The Luxor also sought compensation as an “additional insured.” The lease between the casino and developer required the latter to name Luxor as an additional insured on all policies. No doubt the Luxor assumed (that dangerous word!) that this language covered its exposure to loss.

However, the developer’s insurance policy restricted the coverage of an additional insured. Luxor’s entitlement was limited to indemnification for money it paid to people injured by the developer’s acts or omissions. The casino was not entitled to compensation for its own losses. Yikes!

This is a very significant limitation. Luxor was seeking compensation for costs of repairing structural damage to its own facility, replacing its own destroyed property and interruption of its business. The insurance company denied the claim based on the indemnification-only coverage, and the court upheld the denial. This was not the plan Luxor had in mind when it included the requirement that the casino be listed as an additional insured in the developer’s lease.

But lawyers are clever folks and Luxor was well-represented. The casino invoked the Unfair Insurance Claims Practices Statute, a law adopted by numerous state legislatures. This act requires, among other consumer protection provisions, that insurance companies respond to claim letters within 30 days of receipt. The insurance company in the Luxor case waited months before acknowledging the hotel’s claim. The penalty for violation is mandatory payment of the claim. This is true even though the policy does not otherwise cover the claim. So the court awarded Luxor the money it sought. Sometimes the back door can be a great alternative.

For more:   http://www.hotelworldnetwork.com/legal/read-your-insurance-contract-closely-then-read-it-again

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by | May 14, 2010 · 2:35 am

Hotel Industry Employee Injury Risks: Hotel Housekeepers Have “Higher Rates Of On-The-Job Injuries” According To Medical Journal

“…hotel employees — and especially housekeepers — have higher rates of on-the-job injuries, according to a report last year in the American Journal of Industrial Medicine…”

"...hotel employees — and especially housekeepers — have higher rates of on-the-job injuries, according to a report last year in the American Journal of Industrial Medicine..."

Housekeepers are prone to repetitive stress injuries from such continual work as changing sheets, washing bathroom floors and vacuuming, according to nine researchers who studied three years of government-required accident logs at five union-represented hotels.

(From a Chron.com article)    More surprising, however, is that Hispanic housekeepers had a proportionally higher rate of injuries than non-Hispanic cleaners, according to the study. The research didn’t address possible explanations for that.

The research was funded by the union Unite Here, which represents hospitality employees, but the problem also has captured the attention of the Occupational Safety and Health Administration.

It recently hosted a conference in Houston on health and safety issues facing Latino workers.

While OSHA doesn’t have a specific ergonomic standard — it was repealed by Congress in 2001 before it was scheduled to go into effect — the agency has the “general duty clause” as an enforcement tool. It requires that employers provide a safe and healthy place to work, Jordan Barab, deputy assistant secretary of labor for OSHA, said in a telephone interview.

http://www.chron.com/disp/story.mpl/business/sixel/7002756.html

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by | May 13, 2010 · 7:40 am

California Workers’ Compensation Insurance: Medical Provider Networks Now Account For Over 80% Of Injured Worker Medical Services

The latest data show network providers accounted for 83.1 percent of services in the first 30 days on claims for injuries from the first quarter of AY 2009, and 67.4 percent of the post-30 day services rendered on AY 2008 claims.

(From a CWCI.org release)   A new California Workers’ Compensation Institute (CWCI) study shows the percentage of medical services to injured workers delivered by network physicians jumped sharply immediately after Medical Provider Networks (MPNs) were introduced into the workers’ compensation system in 2005, and that both the network utilization rate and the percentage of workers’ compensation medical dollars paid to network providers have continued to climb over the past five years.

Using first-year medical service data from 891,918 California workers’ compensation claims with 2004-2009 injury dates, CWCI measured the percentage of injured worker outpatient medical services rendered by network providers before and after MPNs began operations in January 2005. The results show that the network utilization rate rose from less than half of first-year physician-based services for 2004 job injuries to nearly 2/3 of the services for 2005 injuries – the first claims in which treatment in the initial 12 months could have shifted to MPNs. Furthermore, the data show that the trend toward the use of networks has continued, with network providers accounting for nearly ¾ of physician-based services for 2008 injury claims.

 http://www.cwci.org/press_release.html?id=164

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by | May 8, 2010 · 5:42 am

Hotel Flood Insurance: Gaylord Opryland Resort (Nashville, TN) Purchased Maximum $50 Million Flood Insurance And Is Unsure If Coverage Will Be Sufficient

The $1 billion-plus hotel on the banks of the Cumberland River had $50 million in flood insurance. Asked whether that amount would be enough to cover the damages, Reed said: “Maybe, but we just don’t know.”

That amount was the maximum level of flood insurance Gaylord could buy from any insurer “because we sit next to the Cumberland River,” Reed said. The company had tried to buy more, but couldn’t find any insurer willing to go above $50 million of coverage.

(From a Tennessean.com article)   It could be up to six months before the flooded Gaylord Opryland Resort and Convention Center reopens, and the full extent of damage is still being assessed, Gaylord CEO and Chairman Colin Reed told The Tennessean today.

“We have water in the tunnels; we have no understanding of the damage to the power plant. It could take three months, four months, five months or six months. The fact of the matter is that until we get the water out, we just don’t know,” Reed said.

He also said the hotel’s staff will remain on the payroll for at least the next six weeks and will play a role in helping the vast facility rebound. It’s unclear what happens with people’s pay after that initial period.

A flagship of Nashville’s tourism industry, the Opryland Resort & Convention Center was evacuated Sunday night as floodwaters spilled over the Cumberland River, filling parts of the hotel with 10 feet of water. Electronics systems and other high-tech equipment are at risk.

It will take a week to get floodwater pumped out, Reed said, and by then the company may have a better understanding of the full extent of damages. “Until we’re able to get to the technology, we just don’t know.”

http://www.tennessean.com/article/20100506/BUSINESS01/100506076/-1/nsitemapXML/Opryland-hotel-may-be-closed-for-six-months

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by | April 23, 2010 · 5:45 am

Spa Pool Risks: Hopsitality Owners Should Be Aware Of Microorganisms Present In Spa Pools And Take Steps To Prevent Proliferation

 The risk potential of contact with pathogens through spa pool use has been exacerbated through the promotion of the therapeutic properties of spas. Spa treatments can provide suffers of muscular skeletal disorders, such as rheumatism, relief from pain. However, this has become confused with mineral spa treatments for general ailments. Consequently, many people suffering from common illnesses, such as influenza or digestion complaints, frequent leisure spa pools hoping to gain some relief from their symptoms. Unfortunately, such practice can introduce the bacteria into the Spa system and consequently increase the risk of infection for other bathers.

(From a NalcoEurope.com posting)   Spa pools are the third most common cause of legionnaires disease and are known to harbour other bacteria that can cause serious skin complaints and even blindness.

A commercial spa pool should be considered as any bath that consists of a self-contained body of water, which is recirculated, filtered, heated, and chemically treated but is not emptied and cleaned and refilled after each bather.

Due to the high water temperatures (30-40°C), availability of nutrients and convoluted design Spa pools are particularly prone to microorganism proliferation. Furthermore, due to the high level of contact between the bather’s skin and the spa surface, biofilms quickly form and so frequent cleaning is essential.

Continuous filtration to remove contaminants and the application of a disinfectant is imperative in order to ensure safe hygienic conditions.

Spa pools should not be considered as small swimming pools. Spa pools operate with much smaller volumes of water in relation to the number of bathers that use them. In addition, water temperatures are much higher as is aerosol generation and the general risk to bathers from the number of water borne pathogens.

The following table identifies the micro flora that are of particular concern in spas:

Bacteria Illness Description Other Detail
Shigella Diarrhoea, Fever, Nausea 1-3 day incubation, 4-7 day illness,
E Coli Diarrhoea, Vomiting, Fever 3-4 day incubation, & day illness
Giardia Gastroenteritis 7-12 day incubation, 7-10 day illness,
Cryptosporidium Diarrhoea, Vomiting, Fever, Cramps 7 day incubation, 10-14 day illness,
Legionella Flu Like Pneumonia Aerosols – SPA & HVAC
Pseudomonas Aeruginosa Follicultis – Swelling of Ear Canal Transmitted on Any Wet Surface
Mycobacterium spp Broken Skin Infections Bather Shed on Wet Surfaces
Mycobacterium. Avium Respiratory Illness – Flu Hypersensitivity pneumonitis Bather Shed.
Aerosol Transmission
Staphylococcus Aureus Skin, Wound, Eye & Ear Infections. Impetigo Bather Shed.
Leptospira Interrogans Weils Disease – Haemorrhagic Jaundice
Aseptic Meningitis		 10-20 day incubation, Pool Infected by Urine from Infected Humans and Animals

http://www.nalcoeurope.com/library/spa-pools-and-pathogen-risk-assessment.html

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by | April 22, 2010 · 6:29 am

Hospitality Industry Insurance: Directors And Officers Liability Insurance (D&O) Claims Rise Spurring Increase In Insurance Sales

“…agents report a slight uptick in D&O claims. Many believe these kinds of insurance claims will continue to increase, CAA reported…”

(From an InsuranceJournal.com article)   Austin, Texas-based Combined Agents of America LLC (CAA) members see a growing appetite among businesses and non-profits for directors and officers liability insurance (D&O), error and omissions insurance (E&O), and employment practices liability insurance (EPLI).

According to CAA, many of its 44 member agencies expect the growth to continue, and predict a rise in these kinds of claims because of the number of failing businesses in 2009 and the continuing layoffs.

“We have seen a rise in D&O and E&O. We used to quote it a lot, but not write it very often. Now, we write it most of the time when we quote it,” said CAA member Brent Borgstedte, CEO of GBS Insurance Agency of Bellaire, Texas.

CAA member Stephen Schmerbeck, president of Garrett Insurance Agency in Kerrville, Texas, said the renewal price for the professional liability products has remained stable.

Along with the increase in sales, agents report a slight uptick in D&O claims. Many believe these kinds of insurance claims will continue to increase, CAA reported.

http://www.insurancejournal.com/news/southcentral/2010/04/21/109183.htm

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by | April 21, 2010 · 7:08 am

Hospitality Industry Insurance: Health, Workers Comp And Liability Insurance Represent Fastest-Growing Expense For Hotel Operators

“….insurance is the fastest-growing expense for hotel operators in the country, according to an August report from PKF Hospitality Research, part of Los Angeles-based PKF Consulting…”

(From an InsuranceNewsNet.org article)   Though workers’ compensation insurance rates in California have fallen in the past year and a half, healthcare premiums continue to climb, the future of the Terrorism Risk Insurance Act is in question and property insurance is almost sure to increase after this year’s unprecedented hurricane season.

Last week, the California Medical Association released a report alleging workers’ comp insurers are interfering with and denying treatment to injured workers.

The group, which represents about 90,000 California doctors, suggested its members might have to cut back or discontinue treating injured workers because of reimbursement issues, raising the specter of a renewed battle over workers’ compensation.

http://www.insurancenewsnet.org/html/HealthInsurance/2010/0409/Property–Health-Insurance-Top-Hotel-Chain-Worries.html

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by | April 17, 2010 · 6:58 am

Hospitality Industry Insurance: Finding The Right Insurance Broker With The Proper Insurance Products For Your Business Is Essential

(From a BusinessInsider.com article)   As an entrepreneur /executive one of the decisions you need to make is who to use to help you insure your company.  

 For some reason many people go to great lengths to do due diligence when selecting an attorney or accountant, but then spend thirty seconds deciding who should handle their insurance.  

Those people tend to do business with one (or more) of five types of people. 

So here are the five types you meet when you buy insurance – and how they could impact your company.

1. The Buddy  -  You’ve just set up your company and you need the basics – General Liability, Workers Comp, Property, etc.  The guy on your whiffle ball team, who also helped you with your homeowners insurance, says he can hook you up!  He has no experience working with other companies like yours, no relationships with insurers that are familiar with your industry.  But he’s a great guy and he assures you it’s a no-brainer. 

He sends you some applications to fill out. The questions seem odd, don’t really apply to your company – and most of all it takes a sh*$! ton of time for you to complete.

You fax them back, wait a couple of weeks and he surfaces with a policy and a bill.

The Result:   No thought went into anticipating what you may need next – like Errors & Omissions when you sign your first client contract (E&O is coverage that addresses claims that your product or service didn’t work properly or caused some kind of harm to someone), Directors & Officers when you get your first round of financing (D&O is basically coverage that protects the management team and board from claims that they mismanaged the company), global coverage when you open a sales office in the UK, etc. 

 The insurer you are with – let’s call them Quicksand Mutual – can’t provide any of those coverages. So when they come up, which will be sooner than you think, there will be a mad scramble to find these policies with different insurers, costing you time and more money.

You end up with a disjointed, patchwork insurance program with multiple insurers and no economies of scale by having everything in one package.  Since your buddy has no experience in your industry, he has no ability to provide services that may drive down your cost and reduce the likely hood of your having a claim. 

Now you can get away with the buddy’s insurance program for a while – but if you have a claim, or need advice on a contract or industry specific issue you will find out the hard way that he was not the right broker for you.

2. The Biggest Broker in the World!  Your company is the next Facebook.   You have some high profile VC board members.  You need to work with the Biggest Broker in the World! 

In fact, one of those board members knows one of the top executives from the Biggest Broker in the World! from his country club.

The Result:  The Biggest Broker in the World! handles the insurance for companies like Microsoft, Dell and Cisco.  Their best talent handles those accounts.  Their average account brings in $50,000 of revenue in both commissions and other fees. 

 All of your policies combined will throw off a total of twelve hundred bucks of income.  You will have a lot of questions and need a lot of hand holding.  Your company will change a lot over the next couple of years – hiring and firing, adding locations, new products, new client contracts, etc.  

The Biggest Broker in the World! assigns you to their D team – maybe a recent college grad, maybe a service center…..until you can be more profitable for them.  Like when you are about to have your IPO. 

You’ll wait won’t you?  And will you also please let them know when you are bigger, cause no one at their company even knows they insure you.

3. The Butcher, 4. The Baker, and 5. The Candlestick-maker …. You already bought a policy from the Buddy (for this segment let’s call him the Butcher).  Now you open an office in San Jose.  The Butcher doesn’t have a license in CA and suggests that you contact someone local out there.   He knows a guy from insurance school, the Baker. 

 You call the Baker and he is happy to set you up with a set of new policies for your California office! 

Next, you land that big round of VC money and the term sheet says you need Directors and Officers (D&O) insurance.  The Butcher and Baker both say they can do it for you but you’re not so sure.  This one seems a little more sophisticated.  The VC suggests a broker that they use, that specializes in D&O insurance, the Candlestick-maker. 

This guy drives his Benz to your office, tells you about how he handles the D&O insurance for the last four IPO’s in the country and assures you that you are with the right broker (NOTE: some brokers specialize in specific types of policies as opposed to industry segments where they can handle all types of insurance for that niche.  This happens a lot with D&O as the premiums are usually high, and there is little or no service work involved – so they throw off a lot of income to a broker.  Hence the Benz.). 

He sets you up with a state of the art D&O policy.  It is the most expensive insurance policy you have ever seen.

The Result:  You have three brokers. 

 None of these characters communicates with the other.  You have overlapping coverages and therefore are paying duplicate premiums. 

None of them feel like they are “in charge” of your account, so they don’t make any recommendations, review/update coverage or take much of an interest in your company. 

None of them realizes you have salespeople working from their homes in 6 States and now each State’s insurance department is fining you for non-compliance on Workers Comp. 

You have bills coming in from 3 agents, at least 3 insurers and your bookkeeper can’t figure out which bill is for which policy.  A new client contract calls for evidence (a certificate) of insurance.  Hmmmmm, guess you gotta call all 3.  You have a claim and are unsure which policy would cover it, so you call all 3 brokers, none of whom think their policy will cover it. 

But go ahead and send it in; the insurers will fight it out.  Ahhh, music to your ears while your company is getting sued…

What to do instead:  So, when it comes time to get insurance – maybe the bank, landlord or VC is requiring it – rather than just hiring anyone so you can check a box and move on, spend a little extra time selecting your broker.  It will pay dividends down the road.  Here are some questions you should consider asking a prospective broker:
  •  What other companies in my industry/like mine do you work with?
  • Can I call someone at those companies and ask about your work?
  • My company is poised for growth an we expect a lot of moving parts – and insurance is not our main consideration.  How will you help us stay on top of these changes so we don’t miss anything?
  • Do the insurers you work with specialize in my niche and offer industry specific coverage?
  • What special services do you provide that will help me save time, reduce my premiums and minimize the possibility of us having a claim?
  • How much time should I expect to spend on completing applications?
  • Can you describe your smallest and largest clients?
  • Do you handle all areas of insurance for companies like ours or just one type of coverage?
  • Do you have any group buying programs where I can leverage the power of a bigger group in my industry?

Read more: http://www.businessinsider.com/the-5-brokers-to-avoid-when-buying-small-business-insurance-2010-4?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+businessinsider+%28Business+Insider%29&utm_content=Yahoo%21+Mail#ixzz0lK2TIRmK

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by | April 3, 2010 · 6:42 am

Employment Practices Insurance: Wage And Hour Lawsuits Threaten 80% Of Employers Who Are Not In Compliance With Wage-And-Hour Laws

Now outranking discrimination lawsuits, measured by both number of filings and size of settlements, employment practices lawsuits have become an unforeseen calamity for companies across all industry sectors, the firm said.

Typically, wage-and-hour suits involve allegations that employers have failed to pay wages for time worked, or failed to pay at rates required by law.

According to Advisen, the Department of Labor (DOL) estimates that 80 percent of employers are not in compliance with applicable wage-and-hour laws.

(From a Property-Casualty.com article)  Insurers have been slow to respond with coverage for wage-and-hour lawsuits that have been an escalating threat to companies of all sizes over the past decade, Advisen Ltd. said in a new study.

The 21-page report, “The Threat of Wage-and-Hour Lawsuits,” examines the drivers of these suits and explores recent developments in wage-and-hour litigation. Additionally, it includes a survey of insurers that provide possible coverage.

Typically, wage-and-hour suits involve allegations that employers have failed to pay wages for time worked, or failed to pay at rates required by law.

According to Advisen, the Department of Labor (DOL) estimates that 80 percent of employers are not in compliance with applicable wage-and-hour laws.

Now outranking discrimination lawsuits, measured by both number of filings and size of settlements, employment practices lawsuits have become an unforeseen calamity for companies across all industry sectors, the firm said.

Alterations made to the Federal Labor Standards Act (FLSA) by the DOL in 2004 were originally intended to clarify definitions to make it easier for companies to comply. Instead, it brought focus to the issue and sparked awareness among the plaintiff’s bar, according to the report.

Advisen noted that the DOL and certain state labor departments have stepped up enforcement efforts in recent years, and the DOL has ramped up its Wage-and-Hour Division under the Obama administration.

http://www.property-casualty.com/News/2010/3/Pages/Wage–Hour-Suits-A-Growing-Uninsured-Risk-Advisen-Finds.aspx

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