Stay on top of insurance costs

As the recession drags on, companies are looking for ways to cut expenses without cutting corners on coverage. Insurance agents from across the region weighed in on options for employers looking to save money while protecting their companies and employees.

“It’s a fairly competitive market, to be sure,” said agent Erik Nicolaysen of Chappaqua-based Nicolaysen Agency Inc. “The biggest problem customers have is recognizing their exposure to liability. They have no idea what’s up the road.” A lawsuit, a lengthy closure due to illness or a natural catastrophe can drastically alter a business owner’s ability to reopen once disaster strikes.

“The goal,” said Nicolaysen, “is to sit down with a good insurance agent and take a look at what is happening in your industry and workplace.  Some companies cut insurance they think isn’t necessary – then they have a disaster and never really recover. It’s best to have your agent shop around different markets to get the best price and best coverage.

Having an agent that knows your particular industry is a huge plus.” He is also a former Professional Insurance Agents president.

Scott Liebert, a certified insurance counselor for CLG Financial in Nanuet, advises companies to sit down and go line-by-line on their worker’s compensation insurance. “Yes, it sounds dreary but it’s a must. There are ways businesses can save on this expense. A clerical worker in an office is not at as great a risk as a painter on a scaffold, but if you don’t differentiate between your employees’ jobs, you end up paying  a higher rate than you should be. It’s imperative to have jobs correctly classified.”

Another area where employers can save money is by doing quarterly reviews on payroll expenditures, said Liebert. “Policies are rated on determining gross sales or payroll. For union shops, they may be having a downturn but they are still paying on a higher amount. For a retailer, look at your sales – are they where you predicted they would be? No one is doing great right now, so it’s important to make sure you are not overstating. These are areas where we are seeing more and more discrepancies.”

Workers compensation can also be costly if employers don’t differentiate between a serious injury and a skinned knee. “The employee who needs a bandage is not going to cost as much as a worker falling off a ladder,” said Liebert. “You need to protect yourself by going through your actual losses to make sure they are accurate. When an insurance company sees you have had a lot of claims for accidents, you need to point out if it was minor damage or it can cost you. The more losses, the higher your coverage will be. But if you can explain the costs, it can make a big difference in how much you’ll pay.”
Ed Shultz, president of Allan M. Block Agency in Tarrytown, says this recession is the worst he’s experienced in his lifetime. “Main Street businesses are hurting – we are seeing a lot of empty storefronts, even in the malls; between the mobility tax and the new taxes coming, people are cutting back on payroll and employee benefits. It’s tough to get a mortgage. Things are tight all over, but it’s not a good idea to cut back on insurance and there are new products out there. Coverage has been developed to protect businesses from cyber hackers and to protect them from liability lawsuits.”

Shultz points to one large retailer “who spent millions just to notify customers about a breach in its security system. As the Internet becomes more sophisticated, hackers are keeping pace. They will find ways to worm their way into a system and gather information – it’s a very real problem. As a result, it is spawning more lawsuits, whether they are legitimate or not.”

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