Adrian Southfield Ann Arbor

Kapnick Insurance Group Quarterly

Summer 2009

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From Risk Management

Issues to Trends in

the Benefit Marketplace

Q U A R T E R LY

New Format! Benefits and Property &

Casualty Now Combined

2 INSURANCE QUARTERLY | Summer 2009

Inside This Issue | Corporate Highlights

Market Features

3) HR PROFESSIONAL TOPICS - Curb Post Downsizing Stress Syndrome 4) LEGISLATIVE UPDATE - Health Coverage Tax Credit 5) HEALTH MANAGEMENT - Wellness + Work Comp 6) RISK SERVICES - eTools: Risk Services Center 7) PROPERTY AND CASUALTY INDUSTRY NEWS 8) FINANCIAL STRATEGIES - Retirees get RMD Holiday | CLIENT CORNER - Service Brands International

Kapnick Corporate Highlights Introducing the KICK Team

Kapnick Insurance Group has assembled a team of professionals from various divisions and departments within the organization - including Property & Casualty, Employee Benefits, Risk Services, Claims Management and Account Marketing - who understand the unique needs of businesses in the Life Sciences and Information & Network Technology industries. Together they work to develop customized insurance solutions for their clients. Working with top-rated insurance companies, they offer a number of specialty coverages including: • Professional Liability (E&O) • Directors and Officers Liability (D&O) • Data Loss - Virus • Clinical Trials Liability (Blanket) • Worldwide Product Liability – Punitive Damage • Intellectual Property and Trademark • Customized Employee Benefits • Employee Benefit Compliance Assistance Contact the KICK Team to schedule a no-obligation consultation at 888.263.4656, x1140 or KICKTeam@kapnick.com. To learn more visit www.kapnick.com/KICK.

3 Adrian Southfield Ann Arbor

HR Professional Topics MARKET FEATURES

When these symptoms are present, management and human resources must take proactive steps to curb these feelings before others are affected. Those who still have jobs probably feel grateful that they can still come to work, but they may also be fearful for what is to come. When fear combines with the burdens of work, job stress is increased and Post-Downsizing Stress Syndrome can become prevalent. In fact, many times employees can become so focused on their own efforts to save their jobs that their actual performance and tasks slip.

These negative feelings can also manifest into

workplace rebellion, such as theft of office supplies, products, electronics and food items. In addition, monetary theft (padding expense reports, vanishing cash, etc.) is also a concern when employees are suffering at their jobs.

To assist employees during these tough times, consider the following actions:

1. Acknowledge employee fears surrounding their jobs and the workforce.

2. Be open with employees about management decisions and ask for suggestions to rectify problems.

3. Develop new ways to improve older products and processes with the help from your employees.

4. Recognize employees for their achievements and contributions.

5. Communicate the future of the business often with employees in meetings, on the company intranet site, in newsletters and in blogs.

Curb Post-Downsizing Stress Syndrome

Many individuals are extremely resilient and can get going when the going gets tough. In fact, as layoffs happen around them, many employees work harder, think smarter and take more responsibility for getting things done. Yet, there are some who tend to protect themselves first, blame others for their problems and act inappropriately at work. According to the Society for Human Resource Management (SHRM), many employees feel less motivated as the economy declines, have an increased fear of being laid off and are stressed over their growing workload as they take on the tasks of others who have already been laid off.

According to the University of New Hampshire Whittemore School of Business and Economics, some employees who work in environments hit hard with layoffs actually suffer Post-Downsizing Stress Syndrome, a response to vast layoffs and increased job stress. Symptoms of this condition include:

• Difficulty concentrating at work

• Irritable attitude towards others and a negative outlook

• Heightened anger towards management and feelings of mistrust

• Higher absenteeism

• Substance abuse

• Family problems

• Health problems

• Sense of hopelessness about the future

4 INSURANCE QUARTERLY | Summer 2009

Legislative Update

Changes that Affect Certain Groups of HCTC-eligible Individuals:

Training and waiver requirements have changed for certain TAA recipients, making it easier to be eligible for the HCTC.

Section 1899 F of the TAA Health Coverage Improvement Act of 2009 temporarily extended COBRA benefits for HCTC-eligible individuals through the time frames listed below (but not beyond December 31, 2010). Employers are responsible for extending COBRA benefits for these individuals and should check with their counsel if they have questions about the new law..

TAA-eligible and ATAA-eligible individuals can receive COBRA for as long as they continue to meet the definition of TAA-eligible and ATAA-eligible individuals.

PBGC benefit recipients can receive COBRA as a lifetime benefit, and in the event of the benefit recipient's death, their surviving spouse and dependents can receive COBRA for an additional 24 months.

COBRA Health Insurance Continuation Premium Subsidies make individuals ineligible for the HCTC during the same month. If you receive a 65% COBRA Subsidy through your former employer – a new program established by the economic stimulus bill – you will not be eligible to receive the HCTC during that same month. The new COBRA Program is different from the HCTC Program. Need More Information About These Changes?

New information will be posted as it is available, so please refer to www.irs.gov for the latest information. Please be aware that some of the HCTC materials available to you have not been updated to reflect these recent changes.

The Trade Adjustment Assistance Health Coverage Improvement Act was recently passed as part of the American Recovery and Reinvestment Act of 2009. The health coverage tax credit (HCTC) is changing as a result of this new law.

Changes That Affect All HCTC-Eligible Individuals:

The HCTC now pays a greater portion of your health insurance costs. The tax credit has increased from 65% to 80% of qualified health insurance premiums. If you are a monthly HCTC participant, the 80% tax credit amount will be reflected on your HCTC invoice beginning in April 2009.

Newly enrolled participants will soon be able to receive a credit on their HCTC account for qualified health insurance payments they paid in 2009 while enrolling in the monthly HCTC Program. The HCTC Program will begin offering this option in August 2009.

The HCTC will soon be available to your family members for a longer period of time. Beginning in January 2010, qualified family members may continue receiving the HCTC for up to 24 months (but not beyond December 31, 2010) after the primary eligible individual experiences one of the following life events:

• Enrollment in Medicare

• Divorce

• Death

NOTE: The Trade Adjustment Assistance Health Coverage Improvement Act of 2009 expires on December 31, 2010. At this time, the changes to the HCTC – including the new timeframes for extended benefits – are only valid for the remainder of 2009 and 2010.

Federal Compliance Health Coverage Tax Credit

MARKET FEATURES

5 Adrian Southfield Ann Arbor

MARKET FEATURES Health Management

Most people would agree that healthier people are healthier workers. Therefore, healthier workers have fewer health claims. And what about healthier workers have fewer job-related injuries or illnesses? The logic seems sound, doesn’t it? Is there a place for wellness programs in Workers’ Compensation?

The popularity of wellness programs has grown

along with the yearly increase in healthcare costs. Today, a great majority of employers have some sort of program in place for their employees. Research has shown that addressing health improvement will help to slow the ever-rising cost of healthcare. In fact, several studies demonstrated a payback of $3 - $4 for every dollar spent on a wellness program.

So, is the Workers’ Compensation side taking

advantage of the wellness program craze and the potential 3-to-1 return on investment? According to Nim Traeger, director of Casualty Services for Travelers Risk Control, there is not a tremendous penetration in their client base, and not to the degree that they’d like to see them. In a recent survey, Specialty Risk Services asked clients whether health and wellness should be part of a risk management program, and 82% “strongly agreed.”

Historically, there has been a lack of connectivity

between risk management and employee benefits, which has limited the coordination of health promotion and wellness initiatives.

At most companies, benefits managers and insurance specialists exist in different parts of the business, so they’re probably not even in the same room when a wellness program is discussed, much less consider how they might work together. It’s a matter of seeing the overall health of the individual and how it relates to every aspect of the company.

The potential effect of a wellness program may not

need to be spelled out clearly in ROI numbers, however. Just look at the effectiveness of safety programs, which many people say offer a close parallel. Just as safety and loss control initiatives can mitigate and prevent injuries, so can health and wellness.

The bottom line is that Workers’ Compensation

specialists should at least be at the table for discussions on implementing a wellness program and making the workforce healthier. The potential for reducing claims is there.

Importance of Breakfast: Ever wonder where the term “breakfast” came from? Your body needs to refuel after a long

night’s sleep – a “break” from the “fast.” Skipping breakfast leads to low blood sugar, fatigue, extra calories consumed at

lunch & dinner, irritability and poor attentiveness.

Sarah’s Health tip:

Wellness Wellness + Work Comp

6 INSURANCE QUARTERLY | Summer 2009

MARKET FEATURES

Expand your capabilities by subscribing to one, or all, of these fee-based supplemental tools:

Don’t miss critical training dates - track your training

automatically with Training Track! This add-on track allows you to schedule and record training sessions for your employees effortlessly, receive reminders of trainings coming due, plus keep records and easily run reports. Build behavior-based safety programs with Job Track:

• Get help with position descriptions • Adopt HR Best Practices • Align with ISO Standards • Create your Position Descriptions in minutes • Implement your Return To Work Position

Descriptions customized to your organization • Use our Example Library to supplement your

Position Descriptions

Keep up with hazard analysis:

• Export a PowerPoint for easy training • Build your Job Hazard Analyses quickly • Utilize our pre-loaded Hazard Analysis Library • Customize your Hazard Analyses to fit

your needs!

Organize, manage and provide access to your Material

Safety Data Sheets with MSDS Track. OSHA’s Hazard Communication and “Right-To-Know” standards require a MSDS for each chemical. With MSDS Software you can head toward compliance and organize your MSDSs.

e-tools Risk Services Center

Risk Services contact Mike Eckert for more info | mike.eckert@kapnick.com

Kapnick Risk Services Center, our unique, web-based risk management platform provides the capability of creating a culture of safety for your entire organization. It’s comprehensive, seamless, and easily accessible over the web - so you can access the tools and materials at your convenience, 24/7. Our platform has the collection of tools and materials that your organization needs to help you develop a risk management program designed to reduce injuries and improve profitability. These include:

Safety Library and Resource Center allows you to

search among hundreds of documents and OSHA regulations instantly. With the click of a mouse you can access safety policies and programs, safety training presentations, safety posters, toolbox talks and many more valuable documents. You can create your own personalized library of favorite and most-used documents so retrieving them for future use is a snap!

Certificate of Insurance Tracking (COI Track) helps

you manage your Certificates of Insurance before a problem occurs. Get email generated alerts automatically for expiration dates, liability limits and other customized criteria. Generate reports and analyze your Certificates of Insurance based on a variety of criteria.

With Incident Track you can document incidents in

minutes including unsafe behaviors, near misses, incidents, OSHA recordables and claims. You can generate standard reports and get in-depth graphing and tracking capabilities that allow you to track and analyze your incidents by several criteria.

7 Adrian Southfield Ann Arbor

Property & Casualty Industry News MARKET FEATURES

owner or general lessee who finds himself with a vacant building on his hands may not want to, or be in a position to, rebuild, which means that any covered claim reverts to actual cash value, defined as replacement cost less physical depreciation. Try having a conversation with a property claims adjuster about how much depreciation should apply to a vacant building.

In summary, at minimum vacancy means 1) some things that used to be covered aren’t anymore, and 2) you’ll only get 85¢ of a depreciated dollar for any claims that are covered.

Last thought: as a practical matter all of this may only apply during the first few months of vacancy. Once that property policy comes up for renewal, you are obligated to disclose the condition of vacancy (concealment or misrepresentation of material conditions could be grounds for voiding coverage). Insurance can be had for vacant buildings, but it is expensive and limited. Let us know early if this is a situation you may find yourself in.

It’s a sign of the times that more buildings of every

type (commercial, residential, mercantile, etc.) are becoming vacant these days. This has implications for any property insurance policies covering these structures. The standard building and personal property policy form has specific conditions that directly apply to vacant buildings.

First, a definition: what does “vacant” mean? In the case of a building insured by the owner or general lessee, the standard policy says a building is vacant unless at least 31% of its total square footage is being used by the owner or a lessee to conduct normal operations. There is an exception to this condition in the case of buildings under construction or renovation.

Temporary vacancy is allowed, but if a building is vacant under the preceding definition for more than 60 consecutive days before any loss or damage occurs, coverage is subject to new limitations. The policy no longer covers the perils of vandalism, sprinkler leakage (unless the system has been protected against freezing), glass breakage, water damage and theft. For all other perils still covered, there’s another twist: the policy will only pay 85% of what it would otherwise be required to pay.

The next section of the policy conditions, valuation, also comes into play here. It’s common to find buildings insured to full replacement cost value, defined as the cost to repair or replace a building with one of comparable material and quality and used for the same purpose. The kicker with this is that you have to actually replace the building “as soon as reasonably possible”. A building

To access and read additional articles focusing on P&C topics including:

♦ Occurrence and Claims Made Policies ♦ Insurance and Indemnification in Service Contracts ♦ RV Insurance

visit www.kapnick.com and click on Property & Casualty News

under What’s New

Vacancy Conditions in Property Insurance Policies

“Ufer & Co. - A Member of Kapnick Insurance Group - put together a health care plan that provided better coverage for our employees and it saved us money. Our franchises use the health care plan to find and keep good employees. The program is accepted in all 50 states, but I can make a call and have someone from the Ufer office here in 30 minutes. That’s great service.”

servicebrands.com

Email rene.carpenter@kapnick.com to be featured in the client corner - great PR for your company!

Financial Strategies

David McKinnon CEO - Service Brands International Molly Maid, Mr. Handyman, 1-800 Dry Clean and Protect Painters

The Worker, Retiree, and Employer Recovery Act of 2008 Retirees and Retirement Plan Beneficiaries get an RMD Holiday!

The Act suspends Required Minimum Distributions (RMDs) 2009 for IRA holders and qualified plan participants who are currently required to take RMDs for 2009. Generally, individuals age 70-½ and older are required to take distributions from their IRAs and Qualified Plans. Plan beneficiaries who are subject to the five-year-rule, meaning their distribution must be taken within five years, are given an extra year before they must liquidate the accounts since they are allowed to bypass 2009 when determining their five-year period.

Impact of RMD “Holiday” on You: If you are age 70-½ or older, or are the beneficiary of an IRA or qualified plan, this temporary RMD “holiday” will allow you to keep your money invested rather than force withdrawals during a time when market volatility is wreaking havoc on plan balances. Further, suspending the 2009 RMD will reduce your taxable income if you elect to take advantage of this opportunity. Reducing taxable income may reduce your overall taxes. This communication is a general discussion of the relevant federal tax laws. It is not intended for, nor can it be used by any taxpayer for the purpose of avoiding federal tax penalties. This information is provided to support the promotion or marketing of ideas that may benefit a taxpayer. Taxpayers should seek the advice of their own tax and legal advisors regarding any tax and legal issues applicable to their specific circumstances.

RMD Holiday │ Retirees get an RMD Holiday

Contact us at Kapnick Insurance Group: 888.263.4656 | www.kapnick.com

Want your company in the client corner?

MARKET FEATURES