Paul's Web Blog

Archive for November, 2011

Although it’s a slightly different issue, you are probably following the failure of Penn State to deal with the allegations of sexual assaults made against the football team’s former defensive coordinator. With two senior University officials resigning and facing felony charges alongside the alleged molester, the reputation of the football team and the University has taken a major hit. If we translate this into slightly less extreme situations in the workplace, there are always opportunities for employees to “abuse” each other, using the word in its widest form. It can be a boss bullying staff in the hope it will encourage them to work harder, or one employee finding it offensive to work alongside someone thought to be gay. Once there’s a sexual element, the seriousness of the matter grows rapidly. Offering better working conditions or other rewards for sexual favors can quickly become sexual assaults. There are two quite different issues that arise.

The first is the need for all businesses to have a formal workplace policy defining the different forms of harassment and discrimination, backed up by mandatory training programs to raise awareness and produce a better atmosphere. There’s some evidence to suggest many abusers are unaware of the effect they have on others. By alerting them to the problem, some respond constructively. If the others fail to respond, this can trigger the first step along the disciplinary process to terminate their employment. From a legal point of view the aim should be to implement a zero-tolerance policy. While this will not prevent litigation against the business, it will certainly reduce the level of damages awarded against it. The second issue is to avoid any retaliation against the accuser. When a relatively new recruit into the business accuses a senior manager of sexual harassment, there’s a tendency to defend the reputation of the manager. After all, he or she may be a colleague or friend. This can result in pressure being put on the accuser to withdraw the allegations and, if this is refused, penalties being imposed. All forms of retaliation aggravate awards of damages against the business. If this employee makes a formal complaint, liability issues may bankrupt the business.

The Equal Employment Opportunity Commission reported more than 11,000 allegations of sexual harassment in 2010. Remember there’s no limit on the amount of compensation an employee can claim for sexual harassment. Even if you are fortunate and the award is low rather than in the millions, the loss of reputation and the legal costs can be enough to finish the business. So, as you are reviewing your own workplace policies, you should also be talking with your small business insurance advisor about the cover provided by the Employment Practices Liability Insurance Policy. Why should you insure? As a small business owner, you have a multitude of everyday tasks to keep the business on track. You have to delegate the operational side of the business to managers and rely on them to implement your strategies. The first you may know about a sexual harassment claim is when the law suit arrives. Small business insurances can protect you from financial disaster but this does not absolve you from responsibility. You should enforce a zero-tolerance policy in any event.

It’s a sad fact of life but machines work for less than human beings. In the good old days, every machine needed a human to watch over it and make sure it did not mess up. Now all you do is plug in these new generations of clever computerised things and they can work for days and weeks without ever having to step outside to enjoy a cigarette. It’s enough to make Karl Marx turn over in his grave as the workers of the world have slowly been losing the power to sell their labour. But inside every silver lining is a pig’s ear, or something. If a business can operate with fewer human beings, it’s making big savings that can be passed on to us, the customers. If you’re still able to find work and can afford to insure your car, this is a good thing. If you’re one of the replaced humans and now find yourself on the scrap heap of life, this is bitter medicine.

Automation brings reduced premium rates at two different levels depending on where the savings in labour are made. If the insurer has to employ a call centre full of people (hopefully not offshore to maintain what employment opportunities remain for local people), this is a moderately expensive operation. But if all the selling of policies is effectively automated, all the savings in labour costs can be passed on to you as discounts. For example, the Co-operative offers an 11% discount for buying online. When you add this to other features like a no-claims bonus rising to 70%, it makes them one of the cheapest companies in the insurance business.

But, the most interesting company is Swiftcover. Although set up as an independent, this is now a subsidiary of the Axa Group, selling out in 2007. It’s advertised as the first company relying 100% on the internet to sell its policies and deal with claims. To a greater or lesser extent, all the other major companies have a mixed strategy depending on face-to-face sales through High Street offices, the telephone, the internet and indirect sales through agents and brokers. Through Swiftcover’s website, you can buy a policy online and print out your cover note. If there are any changes to be made to the policy, this is done online. In the unhappy event of having to make a claim, you have a choice of an online process or a telephone call. This is a prize-winning company for its innovation and the cost-savings it offers. Although it now employs some 250 people in England for dealing with more than half-a-million policyholders, this is a fraction of the workforce in other major insurers.

So, when you look at the UK car insurance market, Swiftcover is leading the way in offering real competition to the established brands. Although some report its performance has dropped since it sold out to the Axa Group, this is the spur keeping the majority of companies offering cheap car insurance cover. When you’re coming up for renewal, check out all the car insurance quotes coming through the search engines. If Swiftcover is not among them, get a quote direct and compare. Similarly, look for the promotional offers being made for buying direct through the internet. There are some real bargains to be made.

It seems that the traditional discrimination between male and female drivers will end very soon thanks to the European Court of Justice, which has approved the ban on price discrimination and set a three year period for the insurance companies to comply. This is certainly good news for male drivers, especially the younger ones, who are traditionally charged with higher premiums, and also means that female drivers will be subjected to higher premiums as a logical move by the insurance providers to split even the costs in order to comply with the new rules.

The debate over car insurance price discrimination has been a long and heated one. Traditionally male drivers were charged with higher premiums because they were more often involved in accidents if compared to female drivers. And knowing that the insurance providers deal only with risk factors when calculating their rates as a result female drivers were always getting better rates then men. There are a lot of explanations of why female drivers are less risky then men behind the wheel. Male drivers tend to be more aggressive on the road, driving faster and taking more risks. And this of course leads to more accidents and insurance claims filed by men. So, in fact the math behind such discrepancy in rates for different genders can be understood.

Still, knowing how the EU acts regarding any type of discrimination this car insurance feature was set to become the subject for discussion sooner or later. And what may look like a call for justice from the lawmaker and political point of view will certainly give the insurers a bit of a headache when deciding how to comply with the new rules. Because the usual methods of calculating insurance rates for different groups of drivers will have to be reviewed in order to exclude gender discrimination among customers.

Now it depends on how the insurance companies will choose to review their rate calculating methods in order to avoid price discrimination. One thing’s for sure, the insurance companies won’t let the new rules affect their revenues in any way. So it’s very likely that they will simply even out the extremes. This means that young male drivers will be charged with lower rates whereas adult female drivers will get higher premiums as to compensate the shift in rates for other car owner groups. And that’s the price we have to pay for eliminating discrimination.

We tend to hear a lot about aggressive drivers and see them every day on the roads. Insurance companies warn against such drivers and charge offensive risk-takers with much higher premiums for getting their cars insured. But what we don’t know is that more than a half of us turn into Mister Hyde the moment we get behind the wheel no matter how calm we tend to be out of the car. A recent study of 4.000 British drivers has indicated that about 40% of motorists experience a drastic personality change once they get into traffic. Two thirds of these drivers become more aggressive while a third becomes on the other hand more defensive and cautious. And it doesn’t really matter how aggressive the person is in everyday life.

The most aggressive group of drivers is of course younger males, that’s why they are always charged the highest by insurance companies. Male drivers generally tend to be more aggressive on the road than women, speeding, going on red and switching lanes too often. Yet this doesn’t mean that female drivers are all good and realist while behind the wheel. Talking on the phone while driving is another sign of carelessness and female drivers are known for this behavior too.

Yet the new police forces promise to take on reckless drivers since 2012 by introducing on-spot fines for driving near or above the limit. The new rules will set a minimum 80 pound fine and three points on the license to drivers caught speeding or creating risky situations on the road. These regulations will be introduced in England, Wales and Scotland the next year alongside new more rigorous regulations regarding drug-influenced driving to eliminate all loopholes for drunk driving. Moreover, courts will have more power to seize vehicles from aggressive and drunk drivers if they are caught on the scene.

If you tend to realize that your driving style is aggressive and can cause problems to other motorists you should consider going through a defensive driving course. This will certainly help to review your driving style but moreover it can also give you a little cut in car insurance premiums. If you find a defensive driving course that issues legitimate certificates that your car insurance company takes into account then you can use the certificate when renewing your policy in order to show that you’ve become a lesser risk to the company.

In those good old, bad old days of driving, you just passed the test, got your licence, and answered the call of the roads. Never mind singing “key of the door… never been twenty-one before”, having a licence was opening the door to freedom and throwing away the key. You could go anywhere, anytime and, except for pesky laws about speeding and not crashing into things, there were no parents, no authority figures looking over your shoulder and telling you what to do. Bliss! Then came the first signs of change. To protect lorry drivers against excessively long hours (and to protect other road users who were being mown down by sleeping lorry drivers), the tachograph was announced. Suddenly, all drivers were united in their opposition to this “spy in the cab”. We threw up barricades to defend our rights. Ah, such happy days of demonstrations without the police kettling you into confined spaces and beating you to death with their batons. And it all came to naught. The tachograph with its easily forged paper disk was duly installed and life went on. Now, it’s standard for a tamperproof digital tachograph to be fitted in all new vehicles and there are spying cameras at traffic lights, on motorways and most other roads with a bad accident record, waiting to take pictures of us as we duck and weave through traffic.

Well, innovation never stops and what was a good idea for LGV drivers could be a black box coming to your car. It’s all the fault of the Norwich Union which introduced the pay-as-you-drive policy back in 2007. Little did they dream of the volume of business. In fact, they were caught short without enough black boxes to fit. So how does it work? Well, back in the days when insurers worked out your premium in pencil on the back of an old envelope, everyone guessed when, where and far how you were going to drive. Now technology answers all the questions without any actuary having to lick a pencil to get it to write. This inconspicuous box records the time of day, where you drive and how far you drive. This data is sent to the insurer who works out whether you “did good” and sends you an itemised bill, i.e. you decide the amount you pay by your actual driving record. There’s a sliding scale depending on the time of day and the type of road with you paying more to drive long distances in heavy traffic conditions when the risks of an accident are highest.

The good news for UK car insurance policy holders is: the less you drive, the more you save. This really could be your route to really cheap car insurance. All you have to do is sacrifice your right to privacy. The Big Brother sitting in the insurance office will know exactly where you drive. Naturally, the data will be protected and no-one should tell your partner of those trips to that “friend” of yours or that you were the getaway driver in that bank robbery last Tuesday. You know the risks. If this is for you, get car insurance quotes for pay-as-you-drive.

No matter which part of the country you look at, there’s been a steady increase in the premium rates businesses are expected to pay for their group health plans. The blame for these increases is spread around fairly evenly. Washington is at fault because, in passing the Affordable Care Act, it failed to introduce any effective measures to control the cost of health care. The result has been an explosion in price of both drugs and the delivery of treatment in hospitals and clinics. Since none of the manufacturers or healthcare providers are sure what will happen in the future, they are adding extra margins to their prices now so that, if there are controls introduced in years to come, they will have a good cushion to play with.

In addition to the price increases, insurers have been increasing the deductible so that, in many cases, claimants are now having to pay $2,000 or more before the insurer parts with a cent. The final insult has been the proposed rate increases. For example, Aetna Health requested the NY Insurance Commissioner for increases of between 27 and 33% in 2010. Although the Commissioner reduced the requested increases by 10%, this is a startling hike when the general level of commercial activity is so low. With small businesses struggling to make a profit, they cannot simply increase their own prices. This is forcing some very tough choices. To pay for health insurance, small business are postponing investment or the owners are using their personal savings to subsidize their employees. Such are the needs of the day when so many owners think of their employees as part of the family.

Yet it’s at this point we come to a slightly strange phenomenon. You can say what you like about President Obama and the Affordable Care Act (and most probably say some unprintable things) but the man and his team are not without foresight. Included in the Act is a Small Business Health Care Tax Credit. Washington foresaw the possibility of short-term premium rate increases, so it decided to offer help to all small businesses that continued or introduced health insurance for their employees. The Treasury has just published a report showing only a fraction of small businesses have claimed their credit. When the Act was going through the House, the Congressional Budget Office estimated the initial demand for credits would cost the government some $2 billion in the first year of operation. Yet, of the more than four million small business that are eligible, less than one-quarter-million have applied for the credit.

It’s entirely possible the offer of help is considered an act of Big Government to be resisted, or perhaps small businesses live in ignorance of the credit, or the form to claim the credit is too difficult to understand, or the work to make the claim does not produce enough money to make the work cost-effective. No matter what the reason, the small business insurances portfolio is more expensive than it needs to be. Even if the savings are only marginal, small businesses should not deny themselves this help. Business insurance is expensive enough as it is without firms adding to their woes. This is something you should discuss with your accountant.