What changes are coming? In July of this year, the Department of Labor issued a notice of proposed rulemaking with major changes to the overtime exemptions currently in place. As it stands since 2004, employees may be exempt if their salary is at least $23,660 per year while performing executive, administrative, professional, outside sides, or computer duties. Exempt employees are not entitled to overtime pay while nonexempt employees are. Under the proposed rule, the exemption regulations relating to salary and job classifications are both under review. The current estimate is the starting salary point for overtime exemptions will be approximately $48,000 – so employees earning less than that may soon qualify for overtime, depending on their job classification. The Department of Labor estimates 4.6 million workers will be newly qualified for overtime, which is expected to directly affect employers beginning in 2016. How is trucking impacted? An overtime exemption for motor carriers is provided within the Fair Labor Standards Act. The exemption applies to any driver, their helper, loader, or mechanic employed by a motor carrier and whose duties affect the safety and operation of motor vehicles in the transportation on public highways of passengers or property in interstate or foreign commerce. An important note: this exemption does not address intrastate commerce; the assumption would be that drivers operating in intrastate commerce may be subject to overtime pay. In addition, the exemption does not apply to employee’s work affecting the operation of vehicles weighing 10,000lbs or less. One common misconception regarding the overtime exemption relates to who is defined as an employee engaged in “activities affecting safety.” As it stands today, this does not include dispatchers, office personnel, those who unload vehicles and those who load vehicles but are not responsible for the proper loading of it. This leaves employees with these job classifications subject to the new overtime rules if their salary is under the threshold. Action Items for Employers With these changes looking to take place for 2016, employers should carefully review and update their overtime policies as well as review employee job classifications as early as possible to be compliant with the rule. For more information, you can visit the Department of Labor’s Wage and Hour Division website at www.wagehour.dol.gov

Refrigerated coverage, often referred to as “reefer breakdown coverage” is essential coverage for any motor carrier who wishes to transport temperature-sensitive cargo.  Transporting goods across the country is already a risky business, so throwing in the additional risk of transporting perishable commodities can make the job much more challenging.  Whether you’re hauling fresh produce, seafood, dairy products, or any other refrigerated item, there are a variety of things that could potentially open a motor carrier up to unnecessary risk if the proper precautions are not taken. One of the simplest ways to avoid reefer breakdown claims is by making sure all drivers are properly trained to operate refrigeration units.  Making sure each driver checks the temperature gauges periodically throughout transit to ensure that the refrigeration unit is running correctly can help mitigate the risk of commodities spoiling. Drivers should keep a log (electronic or otherwise) of each inspection during the trip. This should include detailed maintenance and re-fueling logs. These logs can be very useful to an insurance company throughout a claim.  Performing an inspection before the trip can also help to point out any issues that could arise during delivery or if maintenance is needed.  Making sure to keep the unit fueled is also a major component that can very easily be overlooked during a time crunch. Motor Carriers along with the drivers should have clear communication with each shipper and/or broker to review and understand their requirements when hauling their goods. Many commodities can tolerate temperature swings of 5 or 10 degrees, but others require a constant temperature to keep from spoiling.  Some shippers might even require a constant temperature to be set for items that can actually tolerate some fluctuation.  Knowing these aspects ahead of time and maintaining detailed logs can keep perfectly acceptable cargo from being deemed spoiled due to the shipper’s requirements not being met. Every policyholder should become familiar with all cargo exclusions that might be listed in their insurance policy.  This is no different for refrigeration breakdown coverage.  Many times, this coverage comes with its own list of exclusions.  Sometimes the insurance carrier will allow you to haul fresh produce but does not allow meat or seafood as these items may spoil more quickly or have a higher risk of theft.  However, not all exclusions are specific to particular commodities. Some cargo forms will also exclude coverage for claims that arise out of operator error or will only cover the actual breakdown of the refrigeration unit.  If a driver sets the refrigeration unit to the wrong temperature and the load is rejected or the driver forgets to refuel during transit, this is an error on the driver’s part and may not be covered by insurance. Other insurance companies might require that a motor carrier keep detailed maintenance logs for reefer breakdown coverage to apply.  So if the reefer unit fails mid-delivery and there is no log to show when it was last inspected or when the last maintenance was performed then the claim may be denied. Policyholders need to communicate with their insurance agents regarding these risks to make sure the motor carrier is covered properly. Hauling refrigerated goods can prove to be very profitable if the right precautions are taken.  Sometimes the increased reward does not come without increased risk.  Ensuring that a motor carrier has the right training and procedures in place can mean the difference between a claim being covered or coverage being denied. Claims involving refrigerated goods tend to be more costly as there is a higher chance an entire load will be rejected.  Having proper driving training, and knowing the expectations of the shipper, as well as the insurance carrier, can save a motor carrier thousands of dollars in the event of a claim. References https://businessinsuranceusa.com/refrigerated-truck-insurance https://www.commercialtruckinsurancehq.com/refrigerated-truck-insurance https://www.colonialtruckinginsurance.com/programs/reefer-truck-insurance/ https://www.truckinginfo.com/article/story/2010/12/trailer-report-running-reefers-right.aspx

Making sure your drivers have quality trucks to drive can be an expensive task.  For many trucking companies, new equipment is being obtained via bank loan or it’s being leased from one of the many leasing companies available.  In either scenario, there is a potential gap in physical damage coverage between what the lien holder or leasing company values the equipment, versus what the standard insurance policy will cover.  This lease/loan gap in coverage can easily be addressed as long as business owners are reviewing contracts and notifying their insurance professionals of any loan or lease arrangements their company may have. To understand the coverage gap that exists, we first need to cover the standard valuation method used in most physical damage insurance policies.  This valuation method states the most an insurance carrier will pay in the event of a loss is the lesser/least of the ‘actual cash value’ of the damaged or stolen property, the cost of repairing or replacing the damaged or stolen property with other property of like kind or quality, the stated value for the damaged or stolen vehicle as indicated on an equipment schedule maintained with the insurance carrier, or the limit of insurance indicated on the physical damage policy.  “Lesser” or “least of” are keywords used by physical damage insurers in their valuation methods.  So let’s put together an example using the criteria below: Trucking Company ABC has a physical damage insurance policy with Insurer XYZ The policy has a per vehicle max limit of insurance of $150,000 The company has a leased truck (new) covered under the policy and documented on the schedule of insurance with the insurance carrier for $130,000 (what ABC deemed as appropriate) Nine months after ABC leases the new truck, it’s totaled in an accident.  Insurer XYZ uses the standard valuation language in determining how much ABC should be reimbursed for the loss.  Since the truck is totaled, Insurer XYZ will most likely reimburse ABC based on the actual cash value of the equipment……this means they won’t be getting the $150K max per vehicle limit of insurance and they won’t be getting $130K either (due to ‘lesser’ or ‘least of’ wording).  Insurer XYZ will likely obtain a few dealer quotes for the same type of truck and average them.  They’ll then likely take the VIN and all the specs of the truck and use NADA (www.nada.com) to obtain a valuation on the truck.  Using the average of the dealer quotes and valuation from NADA the insurer will then come up with a new average.  Adding in sales tax/title costs will then result in the reimbursement/fair market value they deem appropriate. So what does the scenario above have to do with lease/loan gap coverage?  Let’s assume the lease contract valued the equipment at $140K new with $1,000 of monthly depreciation.  This means that the contractual obligation to the leasing company at the time of loss was still $131,000.  If the actual cash value of the vehicle as deemed by Insurer XYZ turned out to be $110,000, then there would be a $21,000 gap in coverage which ABC trucking company would be responsible for.  To address this gap in coverage and contractual obligation to the leasing company or bank, a lease/loan gap endorsement should’ve been added to the physical damage policy.  Such an endorsement is designed for scenarios in which the valuation provided by an insurance carrier for a loss may differ from the equipment value stipulated in the lease/loan contract. The lease/loan gap endorsement may be configured in a few different ways depending on your company's needs and depending on what the insurance carrier can accommodate.  For instance, some insurance companies may opt to add a lease gap endorsement to your policy that simply requires you to list the vehicle value according to the lease/loan obligation.  In this scenario, the cost of the endorsement is the additional premium that would be paid due to the higher vehicle value(s) on the schedule maintained with the insurer.  Another lease gap scenario may be the addition of the endorsement for an additional charge.  The vehicle would still be listed on the schedule maintained with the insurance carrier for the actual cash value according to the insured; however, the endorsement would stipulate an additional amount of reimbursement available for vehicles under a lease/loan contract. The financial benefit of a lease/loan gap endorsement, when such a loss occurs, outweighs the cost of the endorsement itself.  Your insurance professional can help determine whether or not this exposure exists and what form of lease/loan gap endorsement will best meet your needs.

Many myths exist about captive insurance – and most are simply inaccurate, unhelpful, and holding far too many trucking companies back from achieving their best results. Regardless of the many misconceptions, we’re here to share the truth about member-owned group captives and the advantages they provide to best-in-class trucking companies. Myth 1 – My Company’s Too Small for a Captive One prevalent perception about captives is that they are reserved only for the largest companies. While it’s true that single-parent captives are generally formed by larger organizations, small to midsize companies can also enjoy the benefits of a captive by joining other like-minded companies in a member-owned group captive. Group captives specifically exist to bring together mid-sized businesses so they can gain the insurance negotiating power of their bigger competition. Yes, certain types of companies are stronger candidates for group captive insurance than others– primarily well-performing businesses that actively invest in their safety programs. These best-in-class companies that remain in the standard market can actually end up limiting their growth in the long run by subjecting themselves to the same adverse market as other businesses that might not be of the same caliber. Myth Debunked When it comes to who is best suited for a captive, it’s not only for the largest organizations. The truth is, only the most safety-conscious, financially strong, and best-performing companies are a good fit. Myth 2 – One Catastrophic Loss Will Bankrupt the Captive What happens if you have a million-dollar claim while in a captive? Despite common perception—the captive is not likely to face bankruptcy. Ultimately, this myth stems from a general misunderstanding of how captives truly work. When people hear ‘self-insurance,’ they often assume that means they are on the hook for every potential claim and dollar spent. In reality, part of the members’ premiums are allocated to the group’s loss fund to pay for claims (up to a certain retention), and the remaining goes towards a re-insurance program that protects members from any larger losses. Some companies may hesitate to take higher deductibles or retentions because of perceived uncertainty. However, this is exactly how insurance is designed to work and is most cost-effective when you retain and proactively manage as much risk as possible, and only use insurance for catastrophic losses. Myth Debunked Catastrophic claims are often unpredictable and can happen to even the safest companies. In the captive, part of your investment is always in reinsurance to limit the loss and protect members from larger-than-expected claims and any subsequent issues. Myth 3 – I’ll be Stuck Paying For Everyone Else’s Losses In the traditional insurance market, it’s no secret you are sharing risk with the entire industry – both the good and the bad. Regardless of your loss history, rates are impacted by the collective insurance marketplace, not your individual experience – meaning the best-performing companies are paying for those with poor performance and more claims. So what’s different in the captive? The most crucial differentiator is that you know who your risk-sharing partners are. You choose them. Members are all similarly situated trucking companies who share a commitment to safety and have common financial interests. Yes– by pooling your exposure and risk of loss, you have accepted the possibility of paying for the other’s losses. However, the captive is strategically managed to predict and control losses and members only assume risk in the smaller, more predictable loss layer – the remaining is protected by reinsurance. Myth Debunked In both the traditional market and in a group captive, there is risk-sharing – the difference is simply with whom. The captive is designed to group like-minded, safety-conscious companies that have a positive loss history and continue to manage risk and improve costs. Not to mention, group captives are specifically structured to retain only predictable losses and transfer catastrophic loss through reinsurance coverage to protect the captive. Myth 4 – Captives are More Expensive As covered earlier, in the traditional insurance market, companies transfer risk to a third-party insurer that collects a premium and requires a deductible – if you have a good loss history, the premium you pay subsidizes the other insureds whose losses are not as good. This option gives you little control and your good performance is to the benefit of the insurance carrier. While the upside to the traditional market is simplicity and low start-up costs, the disadvantage is often exorbitant rate hikes, capacity issues, and claim disputes – all meaning more expensive premiums and sunk costs. Captives have proven to be less costly and more efficient because the structure provides a premium rate that reflects the organization’s unique exposures, as opposed to market rates that reflect industry averages and typical exposures. While it’s true that there are upfront costs in a captive, these initial costs should be viewed as an investment. Captive insurance is generally part of a company’s long-term strategy, where the investment into the strategy typically generates a return in the form of dividends. Myth Debunked Captives are a true performance-based insurance solution. It’s an investment that generates an ROI, not an expense like a traditional insurance program. A well-run captive will reduce insurance costs, and improve cash flow and members will share in the underwriting profits that typically would go back 100% to your insurance carrier. Why Join A Captive? Choosing to join a member-owned group captive is a strategic business decision that requires a detailed assessment of your risk exposures, appetite for retaining risk, and long-term commitment to loss control. The key reasons so many Cottingham & Butler clients are choosing the captive over traditional insurance include: Minimize and stabilize the cost of insurance Customized insurance coverage Proactive risk and claims management Direct access to the reinsurance market Improve cash flow and return of underwriting profits Key Takeaways: There are plenty of myths that exist about captives, most of which are designed to make the programs seem scary and risky, but it’s important to remember: You don’t need to be a mega-corporation to qualify for a group captive, but your company should be financially sound and maintain a favorable loss history Reinsurance is built into the captive to protect members from catastrophic claims events Captive members share risk with only the best like-minded, safety-conscious companies who have a favorable loss history and are committed to managing risk and improving costs A captive is a long-term investment that reduces insurance costs, improves cash flow, and rewards great performance by sharing in the underwriting profits To determine if a member-owned group captive is right for your company, contact a member of the Cottingham & Butler transportation team.

As cyber attacks continue to rise at a staggering pace within the transportation sector– increasing 186% between June of 2020 and June of 2021– it’s become crucial to take advantage of the tools available to defer criminals from targeting your business. Multi-factor authentication (also commonly called MFA, 2FA or two-factor authentication) is a critical component of your ability to avoid becoming a victim of a cyber-attack.  If your organization completes electronic payments to and from clients, shares valuable client or employee data via email, or simply stores its financial data on devices, it is extremely important that, along with additional cyber-safety training, you consider a MFA solution. While no cyber security method is foolproof, using multi-factor authentication can add an extra layer of security to your online accounts. So how exactly does multi-factor authentication work? What Is Multi-Factor Authentication? While complex passwords can help deter cyber criminals, they can still be cracked. To further prevent cybercriminals from gaining access to employee accounts, MFA is key. Multi-factor authentication adds a layer of security that allows companies to protect against compromised credentials. Through this method, users must confirm their identity by providing extra information (e.g., a phone number or unique security code) when attempting to access corporate applications, networks and servers. With multi-factor authentication, it’s not enough to just have your username and password. To log in to an online account, you’ll need another “factor” to verify your identity. This additional login hurdle means that would-be cyber criminals won’t easily unlock an account, even if they have the password in hand. A more secure way to complete multi-factor authentication is to use a time-based one-time password (TOTP). A TOTP is a temporary passcode that is generated by an algorithm (meaning it’ll expire if you don’t use it after a certain period of time). With this method, users download an authenticator app, such as those available through Google or Microsoft, onto a trusted device. Those apps will then generate a TOTP, which users will manually enter to complete login. Why Multi-factor Authentication and Password Management Is Important Due to the increasing number and severity of cyber-attacks, and the ballooning costs associated, it has forced most insurers to more closely examine the security policies and procedures insureds have in place. History has shown that implementing MFA is incredibly effective at combating cyber-attacks, and as such, cyber insurers have begun requiring organizations to implement MFA in order to receive coverage. Obtaining cyber coverage without MFA in place is very difficult and without it, your business will most likely encounter less coverage options. Having become a standard part of the cyber insurance application, many underwriting partners will not even consider applicants who have not implemented some form of MFA on their devices. Proactively preparing for this is key to obtaining the best coverage on the market. Furthermore, ongoing password management can help prevent unauthorized attackers from compromising your organization’s password-protected information. Effective password management protects the integrity, availability and confidentiality of an organization’s passwords. Above all, you’ll want to create a password policy that specifies all of the organization’s requirements related to password management. This policy should require employees to change their password on a regular basis, avoid using the same password for multiple accounts and use special characters in their password. As a client of Cottingham & Butler, we want to work with you to understand why implementing MFA into your IT practices is so critically important and provide you with solutions to make the process as seamless as possible. Some solutions we provide include: Vulnerability scans of your network to identify potential opportunities to protect your business. Consulting services to help develop a cyber strategy. Implementation services that are designed to help you select, design, and implement a MFA solution as well as other key network security components. As a business owner, you can choose to improve security and protect your business proactively, or sit back and take a reactive approach. Here at Cottingham & Butler, we firmly believe it’s not if, but when and how severe, which is why we recommend completing our free cyber insurance risk assessment to know your gaps and build a plan to protect your operations from the inevitable. Contact your Cottingham & Butler representative to learn more.

The past year has seen labor shortages across industry lines. According to a recent study from the Society for Human Resource Management, nearly 90% of businesses are having a hard time filling open positions. These shortages are a result of various factors, many of which are related to individuals reevaluating their employment priorities due to the COVID-19 pandemic. Such shortages can carry numerous consequences for businesses. Specifically, a depleted workforce increases the likelihood of current employees being overworked and employers having to hire inexperienced or less qualified workers to fill available positions. Together, these issues can cause employees to become prone to making mistakes or getting involved in accidents on the job—thus creating elevated business liability risks. With this in mind, employers must do what they can to mitigate labor shortages and related liability concerns. Steps Businesses Can Take To combat labor shortages, employers should consider the following guidance: Increase pay. Providing more competitive wages can help employers retain existing workers and attract new employees within their respective industries. Offering sign-on bonuses may also improve employers’ hiring capabilities. Offer additional benefits. A range of employment benefits can assist employers in maintaining an ample workforce. These benefits may include remote work capabilities, flexible scheduling, additional paid time off and well-being stipends. Reward existing employees. Employers can also use rewards and incentives to help retain current workers. These incentives may include monthly bonuses for top performers or extra discounts on business merchandise (if applicable). Limit business hours. To ensure existing employees feel properly supported in their roles, employers may need to adjust their business hours. Doing so can prevent employees from being overworked amid understaffed shifts. To minimize potential liability risks caused by labor shortages, businesses should consider these measures: Ensure effective onboarding processes. Especially if labor shortages require employers to hire inexperienced workers, it’s critical to have proper onboarding protocols in place. These protocols can equip new employees with the knowledge and resources they need to succeed in their roles. Provide routine training. Employers should have all of workers—regardless of experience—engage in regular, job-specific safety training. This training will help promote a safety culture and minimize the risk of workplace accidents and injuries (as well as related liability concerns). Schedule regular check-ins. Finally, it’s vital for employers to check in with their workers on a frequent basis. Keeping such consistent communication will motivate employees to share any safety concerns or other work-related issues that arise, allowing employers to remedy these problems before they cause liability incidents. For more information, contact us or reach out to your Cottingham & Butler representative today.

The proliferation of benefits administration systems has changed the landscape of employee benefits, enabling employers to offer more benefits to employees with significant efficiency gains in enrollment, billing, and communicating eligibility to insurance companies and claims payors. Technology has significantly reduced human error with paper forms and keying in incorrect data. However, benefits administration systems have their own challenges and require correct building/programming of plan rules to ensure accurate enrollments. There is one way to get it right and many ways for systems to be wrong. The benefit plan feature with the greatest opportunity for incorrect administration is Voluntary Life Evidence of Insurability rules (EOI). These are the rules specifying when employees can elect Life insurance without requiring medical underwriting and how much benefit they can obtain. Not all benefits administration systems can manage the complexity of these rules (age, timing, and income rules all at the same time) or can manage the rules completely without regular human intervention. If the system does correctly limit election amounts or the human intervention step to approve or pend elections does not happen, the full election will show as active, and the corresponding payroll deduction will be taken from the employee’s paycheck. However, in the event of a claim, the insurance company is only responsible to pay the benefit amount the employee qualified for under the written rules of the policy. There have been numerous lawsuits over the past few years on this exact situation. The rulings vary by district court as to IF anyone is liable to pay the claim (usually, yes someone is) and WHO is liable – the employer, the insurance company, or both. Is only the employer liable as their system did not manage the rules correctly? Does the insurance company infer liability as they passed the responsibility of eligibility management back to the employer but collected premiums without eligibility verification? You may wonder why the technology vendor providing the benefits administration system is not mentioned. Read your vendor contract. Regardless, the situation is a bit of a mess to the extent that Prudential recently entered into an agreement with the DOL stipulating how they would manage these claims situations without going to court. The short answer to that agreement is Prudential will pay the claim, but the employer will compensate Prudential, and everyone will make sure the plan rules are correct in the employer’s benefits administration system. No, we do not expect every insurance company to enter into an agreement with the DOL, but they are all watching the courts and DOL very carefully. Depending on the circumstances, some insurance companies are still in the deny first phase of strategy. Others will pay the claim with documentation of what happened and confirmation of system audit and correction – sometimes requiring a financial agreement with the employer. Other companies have stated they will agree to pay the first claim error of an employer’s plan with written agreement confirmation the employer system rules have been corrected, and further incorrect enrollment claims will not be paid. The purpose of this article is not to scare anyone away from benefits administration systems or from offering Voluntary Life or other voluntary plans. The advantages of technology and the evolution in the value of voluntary plans far outweigh the negatives. The purpose is to make you aware and provide tips to help avoid evidence of insurability (EOI) claims challenges. Confirm the Evidence of Insurability rules of every plan, every year. Contact your insurance companies and ask them to confirm the rules of your plans for the year. Confirm the system rules are correct for annual enrollment and ongoing enrollments, every year. Some tech vendors may try to take shortcuts in programming rules for “full open enrollment” and not take steps to verify transition to ongoing enrollment rules or they may not understand the difference between a “one time” open enrollment offer vs the ongoing plan rules. Test EOI rules in your system with actual employee scenarios before beginning annual enrollment. Specifically, test situations of employees increasing elections or adding coverage for the first time as a late entrant. Trust, but verify. Confirm the benefit deduction data flowing to payroll is based on approved elections and not pended elections. It is critical the payroll deduction matches the approved amount based on plan rules. If an employee completes EOI and is approved for additional benefits, the benefits and deduction amount will start at a future date communicated by the insurance company, retro deductions will not be required. Review what you are communicating to employees at new hire or annual enrollment and be sure your materials include disclaimers regarding eligibility. If necessary, seek guidance from the insurance company on appropriate disclaimers.

The Situation A leading Milk Cooperative in the U.S., responsible for marketing over 5 billion pounds of milk annually, faced a daunting predicament. Their insurance program was subject to an unprecedented triple-digit rate increase, accompanied by a drastic reduction in coverage limits. The stakes were high, and decisive action was imperative to safeguard the cooperative's interests. Our Results In response to the pressing challenges, Cottingham & Butler swiftly mobilized its specialized Food & Agribusiness platform. With a keen understanding of the industry's intricacies, we embarked on a strategic intervention aimed at optimizing coverage and containing costs without compromising on protection. Rate and Premium Savings Mid-term Cancel Re-write: Through adept restructuring of the property program, we orchestrated a mid-term cancel re-write that yielded substantial savings. The property premium was slashed by an impressive $675,000, resulting in a remarkable 28% reduction. Coverage Enhancements Expanded Property Limits: By augmenting the total property limit by $50 million, we bolstered the cooperative's resilience against unforeseen contingencies. Elevated Flood & Quake Protection: Recognizing the significance of comprehensive coverage, we substantially raised the Flood & Quake limits from $10 million to $150 million. Removal of Detrimental Coverages: Several restrictive coverages, including the burdensome 1/12th limit of indemnity attached to the business, were judiciously eliminated to streamline the insurance framework. “After a painful insurance renewal, we embarked on a quest to find a new broker who could partner with us, to not only right the program in the short-term, but provide creative and long-term solutions into the future. After meeting with Cottingham & Butler, the choice was clear. They stood above the rest due to their partnership philosophy, strong focus on safety and risk management, and extensive knowledge and expertise from their passionate team.” Safety Management Innovative Technological Integration: Introducing our proprietary fire and risk technology platform, we revolutionized safety management protocols. This cutting-edge solution proved instrumental in mitigating the frequency and severity of unique operational risks. Streamlined Safety Processes: Leveraging the expertise of Cottingham & Butler's in-house safety team, we optimized safety protocols and eliminated the dependency on a third-party safety company. This strategic realignment resulted in annual savings of $60,000, enhancing operational efficiency. Through meticulous analysis and strategic interventions, Cottingham & Butler successfully navigated the complex landscape of insurance challenges faced by the Milk Cooperative. Our tailored solutions not only delivered substantial cost savings but also fortified the cooperative's risk management framework, ensuring long-term sustainability and resilience in an ever-evolving industry landscape.

Sydney Connolly, a Dubuque native, had grown up hearing about Cottingham & Butler within the community. In 2019, Sydney decided to apply for the summer internship program, having heard from a number of peers about their positive experiences. “What drew me to C&B were the opportunities. I struggled with choosing a major in college and deciding what I wanted to do after graduating. The insurance industry was the last thing on my mind, but C&B seemed like a place that would let you create your own path forward and would allow for continuous growth.” The internship gave Sydney a crash course in the complex industries of insurance and wellness, as well as an introduction to the unique culture of Cottingham & Butler. In 2020, Sydney interned once again, eager to continue exploring what the company had to offer. Following her graduation, Sydney came on-board full-time as a Benefits Technology Analyst, where she helps implement benefit administration systems for clients, leveraging her innovative sensibility and attention to detail to ensure accurate information is available to employees and employers alike. “The most satisfying thing about this job is getting to develop relationships with our clients and working with them and the rest of the benefits team to come up with creative solutions to solve their problems.” Sydney attributes a good portion of her professional development to the people that have surrounded her from day one. “Starting your first professional job out of school is intimidating, but the team you’re surrounded with gives you an unmatched network of support and mentorship that encourages success and independence,” Sydney said. “It’s great to see the innovative things C&B does to help our clients, but it’s even great that they give you the skills and tools you need to become part of that innovation process where you feel like you’re really making an impact.” >> Ready to join a team that provides you with the flexibility and independence to develop your ideas? Explore our careers page and discover where you belong!

Earlier this year, the Departments of Labor, Health and Human Services, and the Treasury (Departments) issued FAQ guidance on the prohibition of gag clauses under the transparency provisions of the Consolidated Appropriations Act of 2021 (CAA). These FAQs require health plans and health insurance issuers to submit their first attestation of compliance with the CAA’s prohibition of gag clauses by Dec. 31, 2023. Plans and issuers must annually submit an attestation of compliance with these requirements to the Departments. The first attestation is due by Dec. 31, 2023, covering the period beginning Dec. 27, 2020, through the date of attestation. Subsequent attestations, covering the period since the last attestation, are due by Dec. 31 of each following year. Prohibitions on Gag Clauses A gag clause is a contractual term that directly or indirectly restricts specific data and information that a health plan or issuer can make available to another party. Effective Dec. 27, 2020, the CAA generally prohibits group health plans and issuers offering group health insurance from entering into agreements with health care providers, TPAs or other service providers that include certain gag clause language. Specifically, these contracts cannot restrict a plan or issuer from: Providing provider-specific cost or quality-of-care information or data to referring providers, the plan sponsor, participants, beneficiaries or enrollees (or individuals eligible to become participants, beneficiaries or enrollees of the plan or coverage); Electronically accessing de-identified claims and encounter information or data for each participant, beneficiary or enrollee upon request and consistent with privacy rules under the Health Insurance Portability and Accountability Act (HIPAA), the Genetic Information Nondiscrimination Act (GINA), and the Americans with Disabilities Act (ADA); and Sharing information or data described in (1) and (2) above or directing such information to be shared with a business associate, consistent with applicable privacy rules. For example, if a contract between a TPA and a health plan provides that the plan sponsor’s access to provider-specific cost and quality-of-care information is only at the discretion of the TPA, that contractual provision would be considered a prohibited gag clause. Plans and issuers must ensure their agreements with health care providers, networks or associations of providers, TPAs or other service providers offering access to a network of providers do not contain provisions that violate the CAA’s prohibition of gag clauses. Gag Clause Compliance Attestations Health plans and issuers must annually submit an attestation of their compliance with the CAA’s prohibition of gag clauses to the Departments. The first attestation must be submitted no later than Dec. 31, 2023, covering the period beginning Dec. 27, 2020, through the date of the attestation. Subsequent attestations are due by Dec. 31 of each following year, covering the period since the last attestation. According to the Departments’ FAQs, health plans and issuers that do not submit their attestations by the deadline may be subject to enforcement action. Covered Health Plans The attestation requirement applies to fully insured and self-insured group health plans, including ERISA plans, non-federal governmental plans and church plans. Additionally, this requirement applies regardless of whether a plan is considered “grandfathered” under the ACA. However, plans that only provide excepted benefits and account-based plans, such as health reimbursement arrangements (HRAs), are not required to submit an attestation. Relying on Issuers/TPAs to Submit Attestation With respect to fully insured group health plans, the health plan and the issuer are each required to submit a gag clause compliance attestation annually. However, when the issuer of a fully insured group health plan submits a gag clause compliance attestation on behalf of the plan, the Departments will consider the plan and issuer to have satisfied the attestation submission requirement. Employers with self-insured health plans can satisfy the gag clause compliance attestation requirement by entering into a written agreement under which the plan’s service provider, such as a TPA, will provide the attestation on the plan’s behalf. However, even if this type of agreement is in place, the legal requirement to provide a timely attestation remains with the health plan. Fully-insured carriers and self-funded plan TPAs will be taking one of three approaches: Provide and submit the attestation on behalf of the employer plan sponsor (least likely); Provide the attestation, which will require the employer plan sponsor to submit on their own (most likely); Refuse to provide the attestation, which will require the employer plan sponsor to determine whether their plan is compliant with the gag clause prohibition and submit on their own (unfortunately possible). Attestation Website The Departments launched a website through the Centers for Medicare and Medicaid Services for health plans and issuers to submit their gag clause compliance attestations. The Departments have also provided instructions for submitting the attestation, a system user manual, and a reporting entity Excel template for plans and issuers to submit the required attestation, all of which are available here. Action Items Note the approach of your carrier or TPA. These organizations are beginning to publish their response processes and will continue to do over the next few months. If you haven’t heard from your carrier or TPA, be patient and count on us to keep you informed about your compliance attestation obligations. If you must submit the attestation on your own, we will support your efforts to submit to the CMS website, utilizing the instructions published. Unfortunately, we cannot submit on your behalf due to how the website is configured – it must be either the carrier or plan sponsor. If it becomes apparent that you will be required to determine gag clause compliance on your own, we will support those efforts as well. We are in the process of gathering information from carriers and TPAs, evaluating if a tool can be developed or a third-party resource can be utilized. Please stay tuned. As always, if you have any questions about your obligations or your carrier/TPA’s response, please contact your trusted Cottingham and Butler service team member.

Contract bonds play a crucial role in the construction industry, providing financial guarantees and risk mitigation for various projects. However, recent trends and challenges have presented a bumpy path to success for both general contractors and sureties. The Impact of Contract Bonds on Construction Industry Challenges General contractors are paying a higher price for operating lines of credit. Interest rates for such credit lines have been on the rise. This increase in borrowing costs adds to the overall project expenses, impacting profitability and liquidity. Supply chain disruptions have led to material shortages, delays, and increased costs. These issues have necessitated meticulous planning, alternative sourcing strategies, and proactive project management to mitigate the adverse impacts on construction timelines and budgets. Sourcing skilled and reliable labor has been a problem for years and has only worsened in recent times. An aging workforce, declining interest in the trades among younger generations, and increased competition for talent leave contractors facing significant labor shortages. This not only affects project timelines but also puts additional strain on project costs as contractors may need to offer higher wages and benefits to attract and retain talent. Beyond these challenges, general contractors also face mounting soft costs. Expenses related to fuel, maintenance, insurance, and employees have all been driven up by inflation. Navigating the Changing Landscape with Contract Bonds The residential construction sector, which experienced a boom in recent years, is slowing. While the demand for housing remains strong, the ability to deliver projects at competitive prices becomes increasingly difficult for general contractors. This downward trend puts pressure on residential contractors to diversify and explore new avenues for growth. As a result, many are moving into the commercial construction field which will only further disrupt an unstable pricing and competition environment. We’ve seen many jobs in the $2M to $20M range with over 10 bidders and bid spreads running wild. The private commercial construction sector is also experiencing a shift. As the economy adjusts to changing circumstances, banks are adopting a more conservative approach in approving additional project limits, new project types, and projects in new territories. This cautious stance by banks has implications for developers seeking financing and in how sureties evaluate project risks; proof of private project funding is becoming a hard requirement rather than a simple question. Despite the challenges faced in the private sector, public work presents a contrasting picture. Public infrastructure projects, backed by government funding, have seen a surge in activity. Investment in infrastructure development, ranging from transportation to public facilities, has been a priority in many regions. The robust public sector presents opportunities for contractors to secure projects and sustain their operations amid the challenges faced in the private sector. When you combine these factors, the future is very clear. You need an unparalleled, partnership-minded construction insurance and surety team at your side to address this complex and ever-evolving suite of Insurance, Surety, Builder’s Risk, and Wrap-Up and Captive strategies. For more timely updates regarding the Surety, Finance & the Construction Marketplace, contact Ken today. Ken Fontana, Surety Manager Cottingham & Butler’s Risk Management Division 563.587.6341 | kfontana@cottinghambutler.com Ken began his career in the insurance industry in 1996 at the corporate offices of Horace Mann Insurance. After relocating to Wyoming, he spent several years managing corporate safety programs, insurance, and claims as the RMO for a nationally exposed company engaged in numerous state and federal contracts including operations at three military bases, the Denver Federal Center, and HUD program management. He has been a licensed insurance agent for 20 years with the last 10 focused strictly on contract and commercial surety. Ken’s relationships with the nation’s top sureties and his experience give him a uniquely well-rounded approach to your overall surety, bonding, and subcontractor default insurance needs.

Preventing workplace injuries and fatalities is crucial for organizations of all sizes and across sectors. Without safety initiatives in place, organizations could experience increased incident rates, higher workers’ compensation costs, reduced productivity levels, and diminished staff morale. Fortunately, various technological solutions can help organizations mitigate potential hazards and protect their employees from harm. In particular, artificial intelligence (AI) has emerged as a valuable safety tool. This article provides more details on AI technology, outlines how it affects workplace safety, and highlights the ways it can help specific industries identify and minimize occupational hazards. Overview of AI Technology AI technology consists of machines, computer systems, and other devices capable of simulating human intelligence processes. In other words, this technology can perform a variety of cognitive functions typically associated with the human mind, such as observing, learning, reasoning, interacting with its surroundings, problem-solving, and engaging in creative activities. Workplace applications of AI technology are widespread, but some of the most common include the following: Computer Vision Technology: This technology can be paired with surveillance systems, drones, wearable sensors, and smart devices to help monitor images and video footage captured at a worksite. When combined with additional occupational data (e.g., time, location, and operational guidelines), such technology can also detect potential worksite issues, deliver alerts regarding these issues, and provide suggestions to avoid them. Natural Language Processing Systems: Sometimes called chatbots, these systems can analyze both written sources and spoken details to extract key information at a rapid pace, producing in-depth reports and summarizing worksite data in seconds. Predictive and Prescriptive Analytics Engines: Such technology relies on existing research and worksite documentation to help predict future scenarios and offer recommendations for successful outcomes. How AI Technology Affects Workplace Safety Organizations could leverage AI technology in several different ways to help boost their workplace safety efforts. Specifically, such technology can be utilized to accomplish the following initiatives: Hazard recognition—AI technology can help improve overall worksite visibility and call attention to hazardous situations (e.g., fallen objects, clutter, and debris) before they cause injuries. Further, this technology can identify workplace trends or patterns that have the potential to cause incidents going forward and outline steps to correct these concerns. Certain AI technology can even help catch unsafe behaviors or possible medical conditions displayed by employees in real-time and provide immediate guidance. For example, such technology may detect that an employee is showing signs of fatigue while operating heavy machinery and suggest that the worker take a break to rest and recover before continuing the task. Employee training Implementing AI technology within workplace safety training can give employees the opportunity to experience realistic simulations of different hazards they may encounter in their roles and review proper responses in a controlled setting, such as how to wear personal protective equipment (PPE) correctly or react to a chemical spill. Employees can also use AI chatbots on the job to obtain key information from workplace safety manuals or policies and get answers to any other safety-related questions prior to starting a task (e.g., requesting tips for manually lifting a large item). Equipment maintenance AI technology can help assess workplace equipment for wear and tear or other types of damage and deliver notifications when it’s time for periodic maintenance or critical repairs, thus reducing the risk of such equipment malfunctioning and causing serious incidents and injuries. In some cases, this technology could also offer detailed maintenance instructions to help employees take greater ownership in caring for equipment, promoting a safer and more efficient work environment. Incident detection and reporting Besides recognizing hazards, AI technology can quickly identify when workplace incidents and injuries occur (e.g., computer vision technology detecting an employee slipping and falling on the floor), paving the way for timely response measures and potentially improving recovery outcomes. Additionally, AI chatbots could help expedite incident reporting processes through the use of voice transcription features, as well as allow for more advanced data analyses to determine incident causes and prevent similar scenarios in the future. Safety compliance Finally, AI technology can help bolster compliance with applicable workplace safety regulations— whether it’s OSHA or industry-specific standards—by monitoring employees for noncompliant behaviors (e.g., skipping essential safety protocols or neglecting to wear necessary PPE) and ensuring worksite documentation meets all relevant requirements. Ways AI Technology Benefits Specific Industries Here are some examples of how AI technology can help identify and minimize occupational hazards within certain sectors: Construction As it pertains to the construction industry, AI technology can allow for more timely fall detection among employees who work at heights. In addition, such technology can be paired with wearable sensors or smartwatches to monitor employees’ vital signs and detect early indicators of heat-related illnesses while working outdoors, significantly reducing the likelihood of heatstroke and related complications, or—in severe cases—fatalities. Manufacturing In the manufacturing industry, AI technology can perform some of the most difficult and dangerous tasks with ease, removing the need for employees to complete these activities manually and eliminating the risk of related errors and injuries. For instance, such technology can inspect elevated worksites, hazardous structures, and production equipment in areas that are hard for employees to access via drones. Conclusion As a whole, it’s evident that AI technology can make all the difference in helping organizations improve their workplace safety initiatives and minimize potential incidents and injuries. Contact us today for additional risk management solutions.