El Niño is Coming! Have You Protected Your Business?

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By Carl Santa Maria, CPCU

After five years of drought, the risk of flooding is not likely top of mind for business owners in the Western U.S. But with a wet El Niño weather system on its way, flooding is a very real risk this year.

According to FEMA’s National Flood Insurance Program (NFIP), individuals and business owners should prepare for the possibility of flood damage caused by the heavy rains typically associated with El Niño. The fact that we have been in a prolonged drought actually makes the risk greater as the ground is hard and parched, making it less able to quickly absorb moisture. This increases the chances of flash flooding during heavy rain storms. And in areas damaged by wildfires, the risk of mud slides is increased because the plants that stabilize soil have been destroyed.

If you haven’t acted to protect your business, here are some facts to consider:

  • Between 2010 and 2014, the average commercial flood damage claim was $89,000, according to NFIP.
  • Of all businesses affected by disasters such as floods, 25 percent never re-open.
  • More than 20 percent of claims on NFIP policies are for properties outside of mapped high-risk areas.

FEMA recommends the following actions to prepare for flooding:

  • Purchase a flood insurance policy if you do not already have one.
  • Review your current insurance policy; become familiar with what is covered and ensure the limits adequately protect your building(s) and equipment.
  • Make an emergency kit, plan evacuation routes, and keep important papers in a safe, waterproof place.
  • Itemize and take pictures of possessions.

All basic flood insurance is underwritten by the U.S. government through NFIP, with excess coverage available through commercial carriers. As with any type of insurance, risk is a primary cost factor. To understand your risk, check FEMA’s Flood Insurance Rate Maps (FIRMS). FEMA has mapped the entire country based on flood risk, and these ratings heavily dictate insurance rates. Another pricing factor is the FEMA Community Rating System (CRS), which sets rate discounts based on individual communities’ actions to prevent flooding. Both FIRMS and CRS are easily searchable on NFIP’s FloodSmart.gov website.

Forecasters are predicting a very wet season that will provide some relief from the drought, but will also increase flooding risks. Regardless of your risk profile, talk to your insurance broker as soon as possible about protecting your business from flood damage.

Carl Santa Maria is Chairman and CEO of Santa Maria & Company (SMC), a risk management consultant and commercial insurance broker in the San Francisco Bay area with deep expertise helping companies protect what is most important to them: their assets, their employees, and their futures. Contact SMC at 925-956-7600 or online at www.smcrisk.com.

Santa Maria & Company:  Experts in Risk Management and Providing Peace of Mind

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Insider Advantage: Three Reasons Former Underwriters Make Better Brokers

By Craig M. Santa Maria

I’m sure you’ve heard the old proverb: “Walk a mile in another man’s shoes before judging him.” It’s a good lesson in empathy and tolerance and certainly helps prevent a lot of misunderstanding and conflict.

The basic tenet that shared underwriterexperiences create greater understanding is relevant in all types of personal interactions, even purchasing insurance coverage for your business. In my experience, a broker who has “walked in the shoes of” an underwriter has a significant advantage in putting together the most appropriate coverage solution with the most
favorable terms.

In my eight years as an underwriter and 14 years as a risk adviser and broker, I’ve found there are three key advantages underwriters-turned-brokers have when negotiating on your behalf:

  • They present your business more favorably – The job of an underwriter is to measure risk exposure and determine the premium that must be charged to insure that risk. With intimate knowledge of how business risk is measured, former underwriters are best able to improve the underwriting process in a way that addresses concerns and makes your risk profile most attractive.
  • They use their experience and knowledge to suggest terms and pricing – Underwriting experience enables a broker to proactively develop a cost and coverage model that has a high probability of success.
  • They use time to your advantage – The underwriting process can require considerable time and resources. Underwriters are stretched for time and capacity, so your company must compete for adequate attention. Many times the process is mismanaged, resulting in reflexive rejections or last minute offerings, leaving you little time to review and negotiate. A seasoned broker with an underwriting background will have strong, trusted relationships with carrier decision makers. This will eliminate inefficient uses of time, good will, and resources, resulting in a better negotiation and more agreeable terms.

When the time comes to renew your existing coverage or make changes to meet the needs of your business, talk with a broker who has solid underwriting experience. I think you will clearly see a positive difference in their ability to meet your risk insurance needs.

Craig Santa Maria is President and COO of Santa Maria & Company (SMC), a risk management consultant and commercial insurance broker in the San Francisco Bay area with deep expertise helping companies protect what is most important to them: their assets, their employees, and their futures. Contact SMC at 925-956-7600 or online at www.smcrisk.com.

 Santa Maria & Company:  Experts in Risk Management and Providing Peace of Mind

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Know Your Risks When Serving Alcohol at Company Events

By Craig M. Santa Maria

With Halloween behind us and shorter, colder days ahead, it’s time to begin planning for the festivities of the holiday season. For many companies, that means hosting an employee holiday party. Whether it’s snacks and drinks in the office or a gala dinner at a nice restaurant, this holiday tradition can expose your business to significant risk.

alcoholWhile alcohol is a part of American culture, especially during the holidays, over consumption can precipitate illegal or injurious behavior between guests, such as sexual harassment, and injuries or deaths resulting from drunken driving accidents. And if your company sponsored the event at which the offender was served alcohol, you could be held liable for damages.

James Wu, an employment attorney with Wu Castillo, P.C., in San Francisco and Walnut Creek, CA, notes that a California appellate court recently found an employer liable for the actions of an employee who became intoxicated during a company-sponsored holiday party, drove home safely, but later was involved in a fatal automobile accident when driving a co-worker home. “The appellate court overruled the trial court that originally determined the company was not liable, agreeing with the company’s contention that the person was able to drive home safely after the party,” says Wu. “However, the victim’s family appealed and the appellate court agreed that the man’s intoxication due to the alcohol consumed at the work party was a causal factor, so the company could be held liable for the fatality.”

This risk is not exclusive to holiday events. A few years ago, a company provided alcohol to employees during a company picnic, after which one clearly intoxicated employee was severely injured in an automobile accident. Others at the picnic attempted to prevent the individual from driving, but were unsuccessful. While the company was not held liable for the employee’s insurance claim, it did incur a significant cost in settling a civil lawsuit.

What are your risks?

As a business owner, you should understand your legal risks. While these laws differ from state to state, generally employers who provide alcohol at company-sponsored events are expected to exercise reasonable care to avoid serving minors and to prevent injuries or improper behavior by intoxicated guests.

Some employers avoid this risk by serving only non-alcoholic beverages at their employee events. But if you do choose to serve alcohol, Wu recommends the following things you can do to protect yourself and your guests:

  • Make the event voluntary and purely social. Avoid any business related activities, such as award ceremonies or business-focused speeches.
  • Ensure guests understand that rules governing employee conduct apply also at the event. These rules should be detailed in your employee handbook.
  • Limit the number of drinks served to guests by using drink tickets or a similar system
  • Offer a wide selection of equally attractive non-alcoholic drinks and plenty of food
  • Plan a program of activities to minimize the focus on drinking
  • Consider hiring a professional bartender to run the bar or host the event at a bar or restaurant with a liquor license. These professionals are typically trained to identify those who are intoxicated and limit consumption. They also incur some of the liability if an issue does arise, so be sure they are properly trained and insured.
  • Close the bar at least an hour before the party ends
  • Have plans in place to provide transportation home for intoxicated guests and/or hotel discounts/arrangements.
  • Do not encourage or organize any “after-parties” where guests might continue to drink after the company event has ended

What if something bad still happens?

If, despite your best efforts, a liability claim does arise from an incident caused by an intoxicated guest, your property and casualty insurance coverage will likely help defray the financial costs. Because policies, laws and circumstances can vary widely, it is important that you talk with your insurance broker about your risks and coverage before your event to be certain you are protected.

 

Craig Santa Maria is President and COO of Santa Maria & Company (SMC), a risk management consultant and commercial insurance broker in the San Francisco Bay area with deep expertise helping companies protect what is most important to them: their assets, their employees, and their futures. Contact SMC at 925-956-7600 or online at www.smcrisk.com.

Santa Maria & Company:  Experts in Risk Management and Providing Peace of Mind

Will Your Business Survive When It is Hacked?

By Carl Santa Maria

Image courtesy of chanpipat at FreeDigitalPhotos.net
Image courtesy of chanpipat at FreeDigitalPhotos.net

In 2014, JP Morgan Chase lost control of data in a cyberattack affecting 76 million households and seven million small businesses. Also last year, cyber criminals broke through the firewall at Sony Pictures Entertainment and stole employees’ personal data and corporate correspondence. Between recovery costs and lost business, the cost to mitigate the damage was staggering to both companies and continues to mount as they work to rebuild trust and regain customers.

These are high profile examples, but if you think a data breach can’t happen to you, think again; every company in every industry is at risk.

According to Ponemon Institute’s 2015 Cost of Data Breach Study, sponsored by IBM, in which 350 companies from 11 countries participated, the cost to recover from a data breach is highest for U.S. companies at $217 per lost record.  Of the 62 U.S. companies participating, nearly 43% (27) experienced a data breach in 2014 with an average total cost of $6.53 million. The cost to recover is substantially higher in some industries, such as healthcare, with an average cost of $363 per record lost.

While your business isn’t likely as data rich as JP Morgan Chase, your data is equally valuable, your defenses likely are not as strong, and you are less likely to have the resources to recover from a significant breach. So what should you do to protect yourself and your company?

Minimize Your Risk – A breach can occur through the intentional acts of insiders and outsiders, as well as security lapses and employee errors. Assess these three layers of protection and close any gaps:

  • Administrative – These are policies and procedures that limit access to confidential data and information and dictate their usage. As technological protection gets stronger, hackers are increasingly targeting the weakest link in the protection chain: humans. Make sure everyone in your organization knows how to detect and prevent what is termed social engineering fraud.
  • Physical – How do you securely store or dispose of paper and electronic devices containing confidential data? Your trash can be a criminal’s treasure. Even an old cell phone can be a hacker’s key into your system. A recent study by Kroll Ontrak and Blancco Technology Group found that used electronic devices sold on popular e-commerce sites still contained residual data that could be used to victimize individuals and companies.
  • Technical – These are the safeguards within your electronic network: firewalls, intrusion detection, encryption, etc. Every time your IT security team closes a gap in your protection, criminals are finding new ways to slip through. If you are not monitoring your security constantly, you will quickly lose control.

Prepare to Respond – While your administrative, physical and technical safeguards will minimize your risk, odds are you will be victimized at some point. Do you have an incident response plan in place to quickly respond and minimize the damage? More importantly, have you trained your team and tested your plan regularly to ensure it is sufficient?

Protect Yourself – As cybercrime has increased, insurance carriers have introduced coverage to help victims minimize their overall cost and increase the likelihood they can recover. This coverage is still very affordable, however coverages vary widely. It can be very difficult to sort through the nuances between policies. A high-quality risk consultant and insurance broker can help you assess your risks and build a coverage plan that will keep you in business.

The catastrophic consequences of cybercrime end the dreams of unprepared business owners every day, in every industry, in every part of the world. Don’t risk a lot for a little. Protect your valuable data, prepare to respond, and insure what you’ve worked so hard to build.

Carl Santa Maria is Chairman and CEO of Santa Maria & Company (SMC), a risk management consultant and commercial insurance broker in the San Francisco Bay area with deep expertise helping companies protect what is most important to them: their assets, their employees, and their futures. Contact SMC at 925-956-7600 or online at www.smcrisk.com.

Santa Maria & Company:  Experts in Risk Management and Providing Peace of Mind

Our business is helping to protect yours

Carl Santa Maria

By Carl Santa Maria

Since the founding of Santa Maria & Company in 2001, we have experienced significant changes to our world. We have endured 9/11, witnessed the dot com bubble burst, seen an explosive housing market and then witness it crumble, we have felt the great recession and its slow recovery, seen miraculous advances in disciplines from technology to medicine, iPhones and iPads and promising gene therapies. Things move fast.

New threats have emerged. Issues of privacy, data breach, cyber liability, terrorism, to name a few. All the while, our businesses continue to contend with responsibilities to our employees, customers, members of the public and making sure our own assets are protected from danger.

When this firm was founded, it was my vision to build the best team in order to provide the best solution every time. As you read about the various services and solutions that we deliver, I think you will see that underlying each segment is a commitment from our people to achieve that goal. We believe that our diverse skill sets can serve businesses which are large and complex as well as small firms and start ups that need traditional support. Our business is helping you protect yours.

We intend to position ourselves as advisers of high quality and take our place beside your accountant, attorney, banker, and other professionals.

You can count on us. This is our promise to you.

Santa Maria & Company: Experts in Risk Management and Providing Peace of Mind

Learn more about Santa Maria & Company at www.smcrisk.com.

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