What is a Reservation of Rights Letter?

You file a claim with your insurance carrier. The carrier acknowledges the claim and starts their investigation.

 A week or so passes and you receive a Reservation of Rights letter.  What is it and what does it mean?

 A Reservation of Rights letter will typically mean one of three things:

1. The carrier is investigating the claim and may think you are not liable for the claim. In this instance, you would have had coverage if you were liable so they mostly likely will continue to defend you if a lawsuit arises.

2. The carrier needs more time to investigate. This ties in with #1; however, the claim might be moving quickly and the carrier wants to make sure their investigation is thoroughly completed.

3. The carrier has noted in the letter that policy language could cause this claim to be denied, but they are still moving forward until that can be fully determined.

Insurance policies are complex contracts. Reading your policy when you receive them is a best practice but is always recommended. At a minimum, read the headings on the exclusion pages. If something concerns you, call your agent for an explanation.

Sean Leigh

Commercial Risk Advisor




The benefits of a Master Policy


We have all heard the phrase “Cheaper by the Dozen." This means that things are handled more efficiently as a group than individually. This same principle can be applied to insurance as well. More specifically, property owner’s insurance and whether that be rental properties, apartments, or other commercial buildings, there are many benefits to an insurance consumer that can be achieved by combining multiple insurance policies into one master policy. 

The first benefit, and probably the one that consumer’s value the most, would be the premium saved by combining policies. Using the “Cheaper by the Dozen” example, say you own 12 rental properties and currently insure them all on their own separate policies, each costing you $1,000 for the year ($12,000 total). If you could combine them into one policy, the larger premium amount will allow you to gain a “bulk discount” of say, 10%. Your annual insurance premium would then drop from $12,000 to $10,800, saving you $1,200 per year. Over an extended period of time this kind of savings could really add up. With the larger premium for the portfolio you may be able to better absorb a loss vs. a single location premium.

In addition to saving you money, combining your insurance policies will make your life easier. Imagine reducing 12 separate renewal dates into just one common effective date. Handling everything once a year instead of 12 different times will make the task of managing your insurance portfolio much simpler and give you more time to focus on growing your business. 

To find out more about the many other benefits of combing your insurance policies into one master policy, I can be reached at 405-507-2734 or nbritten@pi-ins.com

Percentage deductible? What is that?

What is a “percentage deductible?”

A percentage deductible is a calculated deductible based off of the total insured value on your property policy.  For example: you have your hotel or apartment insured for $3,000,000; the contents insured for $250,000; and, your annual receipts/business income insured for $250,000. Your total insured value would be $3,500,000.  With a 1% wind/hail deductible, your deductible would be $35,000.  

I know this topic may seem elementary, but I’ve spoken with several clients and learned they had been misinformed on how a percentage deductible works. 

As your agent, I will always strive to get a flat deductible. Questions? Let’s talk. 


Understanding co-insurance in today's commercial property market

What is Co-insurance?
Most people associate co-insurance with health insurance; however, it’s not exactly the same thing when dealing with property coverage.  The co-insurance clause was implemented as a tool to ensure property owners were not under insuring their properties.  

How does it work?
Just like car dealers use the NADA Guide for car values, we use the Marshall Swift & Boechk (MSB) guide for commercial building values.  Now, these are not market values but rather rebuild estimates. At the time of a loss, our adjuster enters information in the MSB system to determine the rebuild cost of a property.

An example:
Let’s say your property is insured for $500,000 and the insurance policy has an 80% co-insurance clause, meaning you must insure the property for 80% of the cost to rebuild it.  If the adjuster determines that the cost to rebuild is $1,000,000 then the minimum you can insure the property for is $800,000 (80% of $1,000,000). Since the property is insured for $500,000, the claim check will now show a co-insurance penalty because the property was under insured. his is calculated by dividing what you should have insured the property for into the amount you did insure it ($500,000/$800,000 = .625). The penalty figure is multiplied by the loss amount, which let’s say is $50,000 and that amount is listed on the claim check ($50,000 x .625 = $31,250). A claim check for $31,250 on a $50,000 loss and that’s without even applying the deductible!

I say all this not to confuse you; but rather, to take the burden of calculating the building value of your property off your shoulders.

We know the questions to ask and the information to gather to provide you with the best insurance coverage for your property.

Let’s talk.

Real Cost of Your Property Insurance

What is your TCOR (Total Cost of Risk) for your Property Insurance?

Property Insurance Real Cost

Many Businesses look at their Insurance Premiums as their cost of risks from year to year and do not take into account what their real costs associated with their property exposures are.  You hear a lot of discussions about Workers Comp and Liability when talking about Total Cost of Risk but very little is said about your property exposures. 

The Total Cost of Risk (TCOR) is defined as the overall costs associated with running corporate risk management program.  These include such items as:

  • Insurance Premiums
  • Deductibles
  • Uninsured Losses or Losses exceeding Insurance Limits
  • Risk Control or Safety Expenses
  • Management's time in dealing with issues (claims, contractors, moving tenants)
  • Reputation with Insurance Companies (future premium increases)
  • Loss of Reputation in Community
  • Fines (City, State, Federal)
  • City or State Mandates (ordinances) that force upgrades after a loss

When looking at these issues, most would have to agree that avoiding the loss is by far the best way to lower your TCOR and a key component of risk management.  Even though many say that there is not much they can do to lower their risk cost or, “it is just luck” that could not be further from the truth. 

Here are some items that can lower your TCOR for your property exposures:

  • Inspections of Property to identify problems to prevent losses
  • Fire safety equipment such as extinguishers, alarms, & sprinklers
  • Properly Value Properties before loss
  • Contractor Hiring & Risk Management Transfer
  • Proactive improvements to property such as electric, roofs, plumbing, etc.
  • Disaster Recovery Plan
  • Tenant Screening where applicable

We will explore these in future articles.

Chris Moxley, CIC, CRIS

Commercial Umbrella Liability - What Limit should I carry?

Umbrellas and Excess policies are important because they give you additional (higher) limits on multiple policies by purchasing one policy.  Most cover General Liability, Automobile, and the Employers’ Liability part of Workers’ Compensation Insurance. Umbrellas are written on their own form and often contain broader coverage than their underlying policies plus they offer drop down coverage for these situations.  Excess policies follow the underlying policies and are only as broad as the polices they encompass.

I have been asked several times what Umbrella Limit a company should carry? While there is no definitive answer to this question, companies should begin their analysis by using the net worth of their company as a guideline.  For example, the more you have, the more you should carry. Companies with substantial property values that have appreciated over time should look to  more than just their financial statements to determine asset values. They should also look at the current market value of their properties. 

We all hear of large losses that put companies out of business, where there could not have been enough coverage purchased to cover the loss. I have personally seen accidents that exceeded $2,000.000 but I have not seen anything over $10,000,000.   This is why I am a proponent of dividing your companies into separate entities if it makes sense to do so. Whether or not you do this, keep in mind that the higher limits you obtain, the less each incremental layer will add to your premium. For example, let’s say the first $1,000,000 of the umbrella  costs $2,000.  The next $1,000,000 might cost $1,000 and the 3rd $1,000,000 might cost $500 for a total premium of $3,500 for a $3,000,000 umbrella.

Whatever you do, take the time to properly protect your company.  You spent a lot of time building your business, so spend the time to make sure you get to keep it.

Cyber Nightmare

Emerging Risks 

Cyber Liability Insurance - Professional Insurors Business Insurance OKC.

Data Breach or “Cyber Crime”

 As a Commercial Risk Advisor, I am seeing numerous stories and articles related to a new Emerging Risk that is affecting thousands of businesses and millions of people across the world.  What could a risk of this magnitude be you might be wondering?  The answer is Data Breach or Cyber Crime.  This has become such a problem that the cost of loss is the highest in history at around $5.5 million and climbing.  This type of risk comes in many forms such as viruses, internet fraud or identity theft, to name a few.  The hackers are becoming more deviant and savvy about how they attack organizations sensitive information.  One article indicated that a company overseas did not even know their system had been breached for nearly 7 months!  That is a long time for unwanted criminals to be inside a large organizations database collecting personal information.  A growing concern now is the amount of employees inside the organizations that are helping these criminals breach databases and assisting in their crime.  According to DataBreach Today.com, in 2011 the FBI charged 22 individuals in California for stealing $8 million from three large banks.  The individuals charged were either inside prison orchestrating the crime or worked for the banking institutions themselves.  That type of risk is very hard to catch even with the best security measures in place simply because employees will know their way around the system.  On October 3, 2012, Nationwide Insurance Company of Columbus, OH and Allied Insurance experienced a data breach and it affected 534 Oklahomans.  The compromised information included social security numbers, driver’s license numbers, birthdates and even their marital status.

In Germany, crime statistics compiled by the police indicate that about 60,000 cases of cybercrime were recorded in 2011.”  These are alarming statistics being released and as business owners and citizens we should be very concerned with the safety of our personal information and how it could affect the business itself due to such a loss.  If a person experiences identity theft they only have 90 days to dispute the charges, file police reports and resolve the crime.  If the theft goes unnoticed by an individual for more than 90 days, the debt becomes theirs to pay off.  Now let’s think about this for just a moment.  If a major organization doesn’t even notice they have been breached for 7 months, how would one individual know they are a victim within 90 days?  That means it is time to start being vigilant about this risk and protecting yourself, your business and your clients.   

Risk Management of Data Breach

What You Can Do

 An article posted on Entrepreneur.com in April 2010 reports the Federal Trade Commission posted these 5 steps you can take to help prevent a data breach.

 1.  Take Stock- know what information you’re keeping, how far back it goes and which records qualify as sensitive.

 2.  Scale Down- Only collect those pieces of data that you really need to make your business more efficient.  Do not store credit card numbers you don’t need or make the clients give their social security number as an identifier unless absolutely necessary. 

 3.  Lock it- Keep physical records in locked boxes and secure locations and digital records must have safeguards. 

 4.  Pitch it- Information such as paycheck stubs, bills and investment records etc. should only be kept for one full year.  After a year, get a shredder and shred the information.

 5.  Plan ahead- Prepare for the worst.  Put an action plan in place for how you will handle a data breach. 

 A risk such as this does not discriminate on the size of the business.  No business is too small or too large to be a victim.  Criminals don’t care where they get the information or how much they do get, as long as they achieve their goal.  As a Commercial Risk Advisor, I strive to advise you on these types of risks and how they could impact your business.  There is a financial risk due to these types of crimes.

With that information now being known, take the appropriate steps to minimize your exposure. First, I would consider is purchasing a Crime Policy and a Cyber Liability policy.  These polices can be called numerous other names such as Technology Liability, Data Breach Liability or Computer Fraud, to name a few.  It is very important that you are covered for your financial loss as well as the third party’s financial loss.  These policies are very inexpensive especially if you compare the numbers to what an actual loss could cost a company.

Insurance is about bringing you back to whole after a loss.  Risk Management is about being proactive, minimizing your risks and having strategies in place to make you more prepared to handle risks as they surface.  Make sure that you can recover from this widespread and now worldwide threat.  Educating yourself is crucial in protecting yourself.  The more you know, the better you will be protected.  There are other numerous ways that we can help you discover your risks and implement the best plan of action for you and your growing business.        

Traveling Abroad on Business

Professional Insurors provides this commercial insurance solution.

Below is a great article from Risk & Insurance magazine relating to traveling abroad while on business.  A good story for Oklahoman's with regards to the oil & gas industry. 


The steel door to the jail cell in the Mexican town of Tuxpan closed with a jarring “clank”.

On the other side, a police captain walked away, coughing once, before moving out of sight.

For the moment, Ernie Herrerra, a field engineer for a Fresno-based oil exploration company, was alone in that jail cell. He was alone and in acute pain.

He knew, above all else, that he had to stay calm.

He had to think, he had to. But it had all happened so quickly.

He felt like he was in a dream, but it wasn’t a dream. The throbbing in the back of his neck made that all too clear for him.

Ernie had just finished a day working with core sampling crews in the Mexican state of Veracruz. There were three crews in action, probing for the kind of crude find that would make his company and its business partner, a major multinational energy conglomerate, very happy.

It had been a long, hot day, driving dirt and gravel roads, visiting the test sites, talking to the drilling teams, gathering data for his report back to headquarters.

He was finished, driving down from the foothills to his hotel room in the town of Tuxpan, when he saw a jeep barreling towards him on the mountain road.

Ernie had almost no time to react before the jeep was on him; four young men, joyriding from the looks of it. Too late, the driver saw Ernie’s SUV.

The other driver overcorrected first one way, then, overcorrected the other way.

With the driver laying on the brakes, the jeep skidded head-on into the front of Ernie’s vehicle. It was going about 35 mph when it hit Ernie.

Even though he saw it coming, Ernie was whipsawed by the impact.

Lights flashed behind his eyelids as his head was thrown back against his headrest and then tossed forward into the deploying airbag. The force of the backward motion was so severe that Ernie heard something crack and felt a jolt of pain run through his upper neck and the back of his skull.

In intense pain, Ernie wasn’t sure if he should even move.

What he could see inside the jeep was harrowing. One of the passengers in the backseat was convulsing from what looked like a serious head wound. The driver was unable to move, seemingly pinned into his seat by the wrecked steering wheel.

One of the uninjured passengers was trying to tend to his badly injured friend in the back seat. The other uninjured passenger pulled out his cell phone and dialed feverishly.

Panic overwhelmed the scene as it appeared the severely injured young man in the back seat could be in his death throes

From the snippet of the cell phone conversation that Ernie was able to catch, it sounded like the uninjured passenger was talking to the police and blaming Ernie for the accident.

The Tuxpan police chief himself soon arrived, accompanied by an ambulance squad.

The squad was too late for the poor boy in the back seat of the jeep. He was motionless and not breathing.

As emergency crews worked to safely extricate the driver of the jeep, the uninjured passengers, apart from consoling each other, were on their phones, breaking the horrible news to the relatives of the deceased passenger.

Shocked as he was by the death of the young passenger, and weakened by his own injury, Ernie could never have been prepared for what happened next.

The police chief questioned him, asking if he had been drinking and whether he was speeding when the accident happened.

Next he asked for proof of financial responsibility.

“You mean Mexican auto insurance?” Ernie said.

“Responsibility, proof of financial responsibility!” the chief said to him in Spanish.

Ernie panicked a little, and didn’t grasp what the chief was asking for. He had just grabbed a co-workers’ SUV to get back to his hotel room and had no idea what sort of coverage, if any, had been purchased.

“No,” was all he said, repeating it three times to the insistent chief.

“It’s illegal, your driving here,” the chief said. “You are under arrest.”

The chief took Ernie’s cell phone and practically dragged him from the SUV, even though anyone could tell that Ernie had a serious neck injury.

Ernie felt that if he was moved at all without neck support the consequences could be dire.

Ernie was bilingual, had to be for this assignment. But that did him no good with this police chief.


Ernie told him he felt he was seriously injured and shouldn’t be moved. Ernie had to grind his teeth together to fight the pain when they threw him into the police cruiser and took him to this jail cell at the police station.

Now, in the cell, Ernie realized just how vulnerable he was. He had no cell phone, and even if he did, he was totally unprepared for this situation.

He had never been given any information on legal or medical assistance should he be injured or incarcerated in a foreign country.

He wracked his brain. He was young, only 32, and had a pretty good memory. There was nothing about this in the employee handbook that he could remember.

He had been briefed on the risks of foreign travel, but he felt given his health, his innate common sense and his language skills that he’d be okay no matter where he went.

There was no one in the country he could have called besides a drilling engineer, even if he had a cell phone. What had seemed like a manageable situation was now revealed for what it was, a nightmare in the making.

Most of his conversations with supervisors before he boarded the plane in Sacramento focused on communication protocols, cyber security for the highly valuable data he would be sending to headquarters and to the company’s partners in Houston on the potential for big oil finds.

As far as protection for him, any kind of safety net, there was none. His neck hurt, but his brain was going numb with the enormity of it all.

Ernie’s accident happened on a Friday afternoon. It took 48 hours for his geology team members to put together that he was missing.

No one at Ernie’s hotel knew where he was. The team tried local hospitals, fearing he’d fallen ill or been injured. They discovered nothing.

“You think he could have been arrested?” one of the team members said.

“Doubt it,” said another. Ernie was such a straight arrow.

But sure enough, when they went to the Tuxpan police to file a missing persons report, that’s where they found Ernie.

Ernie eventually got a visit from one of his team members, an oil geologist, in jail. The geologist called headquarters and told executives there that Ernie was in custody.


In the meantime, Ernie’s superiors had been able to convince local contacts for their industry partners that Ernie needed to be released from jail immediately on medical grounds.

Four days after the accident, and still with no pain killers in him, Ernie is transported by federal police to Veracruz, where an X-ray reveals that he sustained a fractured cervical vertebrae.

Ernie is on a plane to San Diego, his neck in a brace, and finally medicated, when the recognition of his company’s failure to provide him with adequate insurance, and by extension adequate medical and legal assistance in a foreign land, begins to dawn on him.

“There is no way I should ever have been in that position,” he says to himself as he pops another extra strength pain killer. The more he thinks about it, goaded by the pain he is in, the angrier Ernie gets.

When Ernie lands, he calls his buddy Mike Flaherty, with whom he attended undergrad at the University of Arizona.

Mike is now an attorney specializing in employment law and international business.

“I mean am I missing something here? Did this company leave me exposed unnecessarily?” Ernie asks Mike.

“I’m in a foreign country and I spend four days in jail with a broken neck. Literally, a broken neck,” Ernie says.

“I think they have a liability there,” Mike said. “The local car rental companies in Mexico can only give your company so much in coverage, about $55,000,” he said. “Your company should have known that and made more coverage available to you.”

“With that one passenger dying and the injury to the other, your company could be looking at a serious liability and I’m not even taking into account your pain and suffering,” Mike said.

Mike sees Ernie’s case as an open and shut instance where a company failed to adequately protect an employee traveling in a foreign country.

Ernie is seen by a specialist upon his reentry to the United States in San Diego. The specialist determines that the failure to immobilize Ernie’s neck when he was first injured, and the fact that he endured four days in that state with no relief, have added to the possibility that Ernie will suffer a permanent weakness in his neck.


Ernie was happy to have gotten the job he had. He viewed the oil industry as an exciting place, where a young engineering graduate could travel and make a good living. But the way the company let him down in Veracruz he could not let stand.

“Ernie, can we talk?” the executive who recruited him said in one of several voice mails to Ernie that go unanswered.

Ernie just sat and listened to the voice mails.

“I’m done talking to you,” he said to the phone and to no one.

In addition to the costs of medical treatment and patient transportation within Mexico, Ernie’s company is facing a civil action from Ernie alleging that the company failed to adequately protect him while traveling in a foreign country.

The story of Ernie sitting in a stifling jail cell in a foreign country with a neck injury plays very effectively with a jury. The jury finds that the combination of a permanent injury with the pain and suffering that Ernie endured as a prisoner resulted in significant monetary damages.

His former employer, apart from losing a valuable employee, is now looking at significant premium increases next year, if it can get coverage at all.  The appropriate types and limits of insurance, as well as appropriate training of its employees may have let the oil exploration company and Ernie avoid much of this entire nightmare.


A failure to secure adequate amounts of in-country coverage and a lack of crisis preparedness adds up to major losses for an oil exploration company that sees a valuable employee injured in a foreign country.

1. Educate beforehand: As our story shows, the failure to educate an employee about the coverage network available to him and the full range of risks he could be exposed to in a foreign land could have dire consequences. Making sure an employee is briefed on how to protect himself during a crisis on foreign soil should be every bit as important as briefing him on the revenue-generating possibilities of the trip.

2. Know the coverage requirements in every jurisdiction: Different nations have different laws in place when it comes to the actions and legal rights of employees that are traveling on business. Our protagonist Ernie Herrerra was jailed because of a provision in Mexican law which requires a driver in an accident to show proof of financial responsibility or face immediate consequences.

3. Establish protocols for international travel crisis management: The time for creating well-understood protocols for managing a crisis on behalf of a traveling employee is before the employee gets on the plane, not after the crisis develops.  An entire crisis management safety net should have been constructed for Ernie Herrerra and wasn’t.

4. Purchase coverage at adequate limits: Is insurance coverage for an employee who travels internationally really the place to cut corners? It is oftentimes our most valuable employees that we trust with traveling to meet with clients or to explore other types of business opportunities. On the one hand, we want to protect these clients. On the other, these talented, top-tier performers, are the ones we can least risk alienating, or in this example, litigating against.

5. Do not lose contact: Perhaps the most frustrating piece of this story for the injured, traveling employee was that he lost contact with his company and his co-workers after his accident. If companies get one thing right in their crisis management plans they should make sure they know how to reach an overseas employee and have options for finding him or her if they drop out of sight.

My Property Insurance Deductible

Risk Management for Oklahoma business insurance clients provided by Professional Insurors Business Insurance OKC.

What does your deductible mean to you?

We are all familiar with our insurance policies having deductibles whether it’s for health insurance, auto and home insurance or commercial insurance.  In the past our standard deductibles (what we are most familiar to selecting) would range anywhere from $0-$2,500 for auto and home insurance, $250-$1,000 for health insurance and $1,000-$5,000 for commercial insurance.  Have you looked at your deductible in the last year?  Did you notice any changes to the deductible?

Right now in Oklahoma our deductibles vary greatly due to the catastrophic wind and hail losses we have sustained.  The loss amounts are in the billions of dollars for our state alone.  You might still see the above mentioned deductibles in your policy listed under “All Other Perils except Wind and Hail” and then you will see another deductible listed that states 1%-5% W/H (Wind and Hail) deductible.  What does that mean exactly?  That means that for a loss that is classified as a Wind and Hail loss, your deductible amount will be 1%-5% of the dwelling or building value listed on your declarations page.  For example, if the dwelling (house) is insured for $150,000 with a Wind/Hail deductible of 2% and you suffer a hail loss to your roof, your out of pocket portion for the claim would be $3,000.00.  Imagine what that figure would look like if your business was insured for $1.5 million and you had a deductible of 3% on wind and hail.  That’s a $45,000.00 deductible that you would be responsible for!  If you are a business owner that owns multiple locations, that deductible could apply to each location as well.  That is an amount that none of us would be happy about in the event of a loss.

As we get closer to 2013, we are seeing insurance rates and deductibles rise because of the catastrophic weather we have suffered across the nation and especially in Oklahoma.  Now is the time to really inform yourself on your coverage’s and deductibles and what they mean to your bottom line.  Taking a proactive role in risk management for your business and/or home insurance is imperative now more than ever.  There are many ways you can help reduce your hazards, and control your own premiums and coverage’s.  Talk to your agent and reach out to companies such as TCOR, Total Cost of Risk, for advice and direction for your upcoming renewal.  Even though we cannot prevent Mother Nature and across the board rate increases within the insurance companies, does not mean you can’t help control your own risks, coverage’s and deductibles.  Stay proactive and informed about your policy!   

Understanding the "Get me a Quote" Process

Professional Insurors Business Insurance provided this Oklahoma commercial insurance quote.

While many insurance agents may seem to provide quotes to customers with minimal information, there is high likelihood they are missing key coverage's.  Insurance companies are all different, however the one thing they have in common is they all like good information.  As an insurance agent it is my job to ask the questions that my insurance companies want to know.  Providing the insurance company with complete and accurate information will help tremendously in getting good pricing and good coverage.  Why would you want to pay for a policy that may not have the coverage you need?

Good information equals a good quote.  Take for instance a landscape company and a work comp quote.  There are different rates for lawn maintenance, landscape gardening and clerical.  It is important as a company to break these down by payroll in order to get the best overall pricing and coverage.  And for general liability purposes, it's important for the insurance company to know exactly what work you perform.  If you are simply doing lawn maintenance that's pretty easy.  However, if you install waterfalls, pools, outdoor kitchens, etc, your liability increases.  The reason for this is you have more exposure for something going wrong.  Now, if you as a business owner subcontracts these bigger jobs out, the insurance company wants to know if your subcontractors have their own insurance.  The reason for this is because if they don't have insurance, your general liability would be the one paying in the event of a claim. 

Insurance is transferring risk.  You as a business owner buy insurance to transfer your risk to an insurance company.  The insurance company wants to transfer the risk to your subcontractors insurance if possible.  For more information, contact Sean Leigh.

NCCI Recommends a 7% Work Comp Rate increase for 2010 in Oklahoma

Professional Insurors Business Insurance OKC

NCCI just did it’s Annual Advisory Forum in Oklahoma City.  They are recommending a 7% increase in WC rates in Oklahoma for 1/1/2010.  We continue to have one of the most costly systems in the nation that delivers the least to the injured.  Our court system is outdated and must be changed to an administrative system. 

Click Here to download Oklahoma Data & Presentation from NCCI.com

City Fighting Workers' Comp Claim of Oklahoma Firefighter


City officials in Edmond, Okla., are challenging court rulings in favor of a firefighter who claims his colon cancer is a work-related injury because of the smoke, hazardous materials and chemicals he was exposed to on the job.

Tim Vernon, 45, is a 19-year veteran firefighter who is fighting for his workers' compensation benefits.

Oklahoma law presumes his stage four colon cancer is work related because of the nature of firefighting work. Workers' Compensation and Oklahoma Court of Civil Appeals judges agree Vernon is eligible for state financial help.

Edmond's attorneys believe the law is unconstitutional because it provides special treatment for firefighters and they want the Oklahoma Supreme Court to review the case.

If Vernon wins in the higher court, it will mean Edmond and other cities across the state are liable for firefighters who become ill with cancer or heart and lung problems on the job.

Edmond firefighter John Werhun also has been diagnosed with stage four colon cancer.

"Fighting cancer is hard enough without having to hire an attorney and fight for your rights that the Legislature thought we deserved," said Werhun, 28. "The burden of fighting a court case makes it that much harder to handle the (cancer) treatment."

Vernon added: "Not to do what the court said is asinine and arrogant. A lot is riding on this, not just for me, but all firefighters and their families. It has gotten a whole lot bigger than Edmond."

Gary Copeland, president of International Association of Firefighters Local 157, said a number of Oklahoma City firefighters also have been denied workers' compensation benefits in similar cases and have been forced to hire attorneys at their expense.

"We think municipalities are handling it wrong," he said.

Information from: The Oklahoman, www.newsok.com

Missouri Workers Comp Law to be Tested?

Will Decision Trigger Deluge of Lawsuits in Show Me State?
Almost 15 months after it heard arguments in the case, the Missouri Supreme Court issues a splintered decision in a constitutional challenge to the state legislature's 2005 workers' compensation reform that, among other things, limited the types of injuries covered. An attorney predicts a flood of lawsuits against employers as a result.
Go to the full story in Missouri Law
Go to the full story in Springfield Business Journal
Go to the full story in fox4kc.com (Kansas City)
Go to the full story in the Hays Daily News
Go to the full story in Business Insurance

Comp Treatment Costs Higher Than In Group Health, Says NCCI

Workers’ compensation systems pay higher prices to treat worker injuries than group health plans for the same ailments, according to a new study of comp fee schedules by the National Council on Compensation Insurance.

Among other discoveries, the study found that comp systems pay more than group health for specific services, which are used more often in comp than in group health in an attempt to get an injured worker back on the job as quickly as possible.

Care that physicians provide at hospitals and other facilities was found more likely to exceed workers’ comp fee schedules than care provided in their offices. NCCI said that this was partly due to the fact that the fee schedule need not always apply when facilities bill for such services.

NCCI reported that the comp rates were particularly higher than group health for specialty areas such as radiology and surgery.

The organization said that advocates of higher comp fee schedules argue that if they are too low, worker access to care will be compromised. Additionally, NCCI said that comp claims require an investment in more costly paperwork.

Further, the group suggested that rural areas may have a limited number of medical specialists.

NCCI’s study reported a shift to a greater proportion of medical services being provided by hospitals and other facilities and a lower proportion by private physicians. It also found that the higher prices paid by workers’ comp are associated with higher utilization of services.

The researchers wrote that higher reimbursements are a financial incentive to medical providers to perform more procedures on comp claimants, while comp insurers are more willing to pay premium prices for care most necessary to result in a patient going back to work.

They said the more frequently used procedures are the most likely to be lobbied for higher fee schedule reimbursement.

Oklahoma: Senate Republicans seek to reform workers' comp system in '09 session

Republican lawmakers in the Oklahoma State Senate are hoping to reform the state's workers' compensation system when the 2009 legislative session kicks off in February.

The November elections gave Republicans a majority in the Oklahoma Senate for the first time in the state's history. Party leaders recently called for reform of the state's workers' comp system, which they branded "archaic and business-unfriendly."

Senate President Pro Tem Glenn Coffee, R-Oklahoma City, and Republican Caucus Chairman John Ford said the party wishes to improve the state's legal system and business climate by reforming the workers' comp system and continuing the charge to reform the tort process. Coffee said this will aid in lowering costs, creating jobs, attracting more physicians, and protecting the rights of all individuals in the state.

"Republicans have sat in the background in forming public policy for too many years now, but with thanks to the voters of our state, we will now have a seat at the head of the table," he said.

The 2009 legislative session begins Feb. 2 and runs through the end of May.

January 29, 2009

Copyright 2009© LRP Publications


OKC Business Insurance



Tuesday, February 3, 2009


11:45 a.m.-1:30 p.m.


Sportsman’s Country Club-

4001 NW.39


Expressway, Oklahoma City (One block west of Hefner Parkway

on 39


, N. side of the Road)

Speaker: Kim Holland, Insurance Commissioner

Topic: Oklahoma Insurance Commission Office overview and Anti-Fraud update



**Buffet lunch menu varies. Members of RIMS attend at no cost. Guests pay $12 to cover the cost of the meal. See Becky Robinson, Interim Treasurer.



E-mail Sherri Cain at:


or call (405) 745-1174.

2007-2008 Board of Directors

President: Judy Roof Vice President: Teresa Langston

Treasurer: Becky Robinson Secretary: Sherri Cain

745-1183      745-1174

Past Presidents: Charlotte LeMarr – 767-7206

RIMS Delegate: Carl Martincich - 302-6790



Please notify Sherri Cain of any changes in company representatives or member information.

Cost Benefits of a Safety Program

This was published on a Construction Safety Blog.  It can apply to any type of business so I published on my site. - Chris Moxley - Written by Robert F. Tilley, Jr.   
At a recent speaking engagement for business owners addressing how to implement effective safety programs, I had a question from a member of the audience-we'll call him Bob.  Bob asked why he should invest in safety. He told me he has insurance if an employee gets injured, he has a safety manual, OSHA has never bothered him and the only employee injuries so far have been minor.  Why should he do more if what he's doing now is working?  "Well Bob," I said.  "How much will it cost your business if an employee falls from a roof, and how much have those ‘minor injuries' cost you so far?" Needless to say, Bob, and everyone else in the audience that day were quite surprised as we revealed the actual costs of workplace injuries to their businesses.  Unfortunately, the only thing most employers are aware of is that they have to spend money to have an effective safety program, and that's where the train stops.  Successful companies, however, maintain very effective safety programs and pay the expenses involved even when business is slow and times are tough. Most employers maintain some semblance of a safety program at their company, either because they care about their employees or because they're required to by OSHA.  OSHA violations can range anywhere from just a warning, to $70,000 per incident with recent proposed legislation asking to raise fines even further into the range of EPA violations.  I would like to think that all employers care about their employees, but often profits come first.  What does that mean? It means one thing is certain-all employers care about their company because of the profits derived from it.   A for-profit business is created to make a profit 99.9 percent of the time.  You carry insurance to protect yourself and your business, you plan ahead to avoid unforeseen costs and cut expenses where they are not needed to ensure you are as competitive as possible while maintaining a good profit margin. Unfortunately, however, the cost of effective safety measures are all too often deemed an "unnecessary" expense.  When business is slow, what is the first expense to get to get cut? You already know the safety program.  Normally the responsibility gets transferred to the HR manager, and training and other expenses are cut which could really lead to disaster, especially for the new employee you just hired.  If you are not motivated to have an effective safety program by either OSHA, the threat of fines or care for your employees, one thing that will motivate you is the actual cost of a workplace injury to your business. So how much does it cost?Statistics and Costs

Every year in the United States there are over 6,000 workplace fatalities.  The greatest majority of these fatalities are men ages twenty-five to forty-four, of which there are approximately 30 million in the United States.  That means, using this example, just over 1 in every 6,000 men aged twenty-five to forty-four dies at work each year.

Even with these staggering numbers, this does not include deaths related to occupational illness. Another 50,000 workers die every year in the United States from occupational illnesses due to exposure to a workplace hazard.  These occupational illnesses include asbestosis caused by exposure to asbestos, silicosis which can be acquired from concrete cutting operations (and any work involving exposure to crystalline silica dust if not using proper respiratory protection) black lung disease for miners, or brown lung disease for textile workers, etc.  (Just an FYI, though not usually fatal, poison ivy is an OSHA reportable illness.)

In addition to deaths, there are over 6 million U.S. workers that suffer non-fatal workplace injuries with an estimated cost to U.S. businesses of around $128 billion annually.  A person's life or health is obviously priceless, but incidents and injuries carry a tangible cost to business, one quarter of each dollar of pre-tax corporate profits, to be exact.

The actual cost of a workplace accident or illness to your organization depends on a few different things.  Costs depend on how many employees you have, how many incidents you have, the type of work you do and the value of your materials, products or services.    For companies that may be experiencing a tough time financially, any losses are serious.   Even for a large employer, losing an employee on a job who is skilled in their trade, for even a few days, can have a much larger impact on profits than the actual direct costs might suggest.  With smaller businesses this would be magnified because they often have very little buffer when it comes to accidental losses.  A serious incident could not just make it difficult to get by, but put them out of business.  In fact, according to a recent study, 60 percent of companies experiencing a serious disruption that lasted more than nine days went out of business.

"But Wait, What about My Insurance?  Isn't My Business Covered?"

Insurance only covers what is detailed in the policy, and it usually only pays for serious injuries or damage. Workers' compensation does cover all employee injuries, but you will end up paying for the cost of that injury and more-we'll get into that later.  Some of the costs that are not covered by insurance include lost time, sick pay, damage or loss of product and materials, lost time and failure to keep schedule, extra wages for overtime and temporary labor, investigation time and expenses, OSHA fines, loss of contracts, legal costs and loss of company reputation, to name a few.

The uninsured costs differ between businesses, the type of work being done, insurance and type injury.  No matter how you look at it, though, the uninsured costs are many times greater than the insured costs.  If your business is a ship, costs are like an iceberg. Most of the costs are hidden beneath the surface and are not immediately visible, but you feel it when you run into them.  Studies have shown that the insurance premium to uninsured cost ratios for the construction industry generally range from 1:9 to 1:41. That means that for every $1 paid in insurance premiums, the company has to pay an additional $9 to $41 themselves for losses arising from incidents.  Another way to look at it-uninsurable expenses often run up to as much as 4 times more than the actual costs covered by insurance.

Workers' Compensation Insurance
It may surprise even the financially savvy how much you can save on your insurance by being safe.  A poor claims record will affect the amount a company pays in insurance premiums.  Depending on the number of incidents a company may have, insurance premiums can increase, and coverage may even be cancelled.  Insurance companies set a base rate for a particular industry, and the number of incidents you have directly affects how much you pay as your base rate.  This is called an experience modifier.  Your workers' compensation insurance premium is determined by this easy formula:

Payroll x Workers' Compensation Rate x Experience Modifier

Workers' compensation rates reflect the average claim cost per $100 of payroll.  Workers' compensation rates can take a huge chunk out of your profits if you are not safe.  The average worker's compensation rate for construction is 7 to 8 percent of your payroll, but can be lower for executives, around 2 percent, or 25 percent for more high risk activities.  According to the U.S. Census Bureau, construction claims comprise around 21 percent of the total claims for all industries.  This is quite a large number considering that only 5.7 percent of the U.S. workforce is in the construction industry. 

An experience modifier of 1.0 means your company's workers' compensation claims experience is no better or worse than your industry.  If you have a lower experience modifier, you pay less. 

For example, if your business had a 1.47 experience modifier because of increased incidents and injuries and paid $85,958 in premiums, but reorganized, got serious about safety, and got down to a .82 experience modifier, your business would only be paying $47,950.  That is almost a $40,000 savings.  That $40,000 with a 9 percent profit margin equates to approximately $445,000 in new business each year! 

There are other savings to be had.  Many businesses find that by improving workplace safety and health standards, their investments are repaid by improved productivity and efficiency, less employee absence, good company reputation, less turnover and improved quality of work.  Tackling the causes of incidents and injuries is not unnecessary overhead, but an investment in your business.  An investment in an effective health and safety program is as valuable as any other for your company.  The American Society of Safety Engineers found in a recent study that for every dollar spent on a quality safety and health program, businesses saved $8.  That's a healthy return on investment.

An investment into an effective safety and health program for your business is just that, an investment.  Not only is it unethical to risk an employee's health or safety to save money and cut costs, but in reality, it does just the opposite.  It creates unnecessary risks, costs and headaches.  A safe company with limited incidents and injuries will not only have an increased profit margin, but will be more appealing to potential clients and good employees.  Successful businesses plan for the future, for growth and for potential risks.  Safety should play a key role in your strategy and is the reason long-term successful businesses invest so much into their safety and health programs, because as I am sure some of you know, gambling isn't a good long term, or short term investment.  Play it safe with safety.  You may skimp by for a while, but the house always wins.

Robert F. Tilley, Jr. is with SafeTek USA.