In past times, we asked people where do they work. They typically identified a place, an office, and a location. Children asked this question too. My mom, dad, grandfather, grandmother, uncle, aunt; works at such and such place.

Today we most likely ask, what do you do?

This is significant cultural and verbal change with big ramifications. We go from a noun approach to a verb approach. Fixed location in the past, action and moving around in the present. More and more titles mean very little, what do you actually do. As an example, when we go to a traditional bank. It seems like everyone is either an assistant vice president or a vice president. But what do they do?

We live in a world where more people go to their customers, have “virtual” offices, have “home” offices. They get significant work activities done not on desktop computers (a fixed place) but rather with dramatically portable devices (think iPad, “smart phones” and related devices).

Now jump to an even bigger reality. This current and future world turns upside down traditional risk exposures. More focus should be applied to people and activities, rather than traditional capital exposures. In the past, it was easy to go to a fixed place and touch it, see it, smell it. Today exposures are in constant motion. Some we can see, many we cannot. The “cloud”, where is it? Work activities are being done where, when, by whom?

This blog post is long enough; this issue can be revisited again. It’s the big stuff.
BTW, guess where, when, and with what was this blog entry created?

True story:

During the 1960′s Space Programs there was a problem to be solved. When astronauts are in space with zero gravity, how are they supposed to write? Traditional pens do not work. American scientists took on this engineering challenge and created the ‘Space Pen’. This pen has a special pressurized ink cartridge which allows it to work when there is no gravity and no up or down. You can purchase Space Pens today. They are really cool and you can write at any angle; even upside down!

The Russian Space Program had the same challenge. Their solution was to use pencils.

In the present, there is no shortage of forms, checklists, and data collection. Whether they are electronic based or with physical paper. How much is enough?

A mentor said,”When solving problems, there are simplifiers and complicators.”

There are many who believe in the value of documentation. Yes, it is of value. Certainly some is necessary. But when is it too much? Do we sometimes create more problems and more liabilities as we add more documentation, procedures, etc.? This continues to be a basic concern of business owners, managers, and service providers. Often there are no clear answers. This certainly can be a focus area for enterprise risk management.

From a risk management view; all documentation, forms, and data collection must meet the following three criteria. First it must have a specific purpose relative to external stakeholders. This means it must be a ‘living’ document, procedure, data collection, etc. There can be no discrimination, not necessarily from a legal perspective but simply treating people the same.

Second, it must be ‘living’ in it’s usage internally. Everyone is properly trained, understands, and use consistently. Treating staff the same.

Third, it should be simple. This is succeeding in the task to be accomplished without going beyond. Or stated differently, staying on the ‘mission’ of the task. There should be no need for data duplication, nor vast detail that goes beyond the specific purpose.

So who are you, the simplifier or the complicator? The Space Pen or the pencil?

It’s summer and for many that means swimming in a pool. While a crowded swimming pool can be a negative, it can certainly be a positive when it comes to insurance. In Risk Management the foundation for “spreading risk” is by forming a “pool” of dollars to reduce the cost of financial loss to participants in the pool. This could be explained in a complicated manner but here are two basic examples:

1. A large number of homeowners get together and pool their dollars because they know that someone in the group is likely to have a no-fault, natural act of loss (lightning, windstorm, etc) at some time in the future. The cost per homeowner to participate in the pool is less than the cost of each individual being personally financially responsible for the full loss to any individual home.
2. A large number of people get together and pool their dollars because they know that someone in their group is likely to get seriously sick or need an operation of some sort at some time in the future. Again, the cost per person to participate in the pool is less than the cost of each individual being personally responsible for the full financial exposure.

What happens in example #2 (and #1) if an extra 15% or 20% of people could get the benefits of being in that pool without paying in money? What if that was considered acceptable and status quo? What if there was a way to get significantly more people paying into the pool of dollars so that the 15% to 20% was reduced to 0% to 5%? Would that cause the costs for the current contributors to the pool to go up, down, or stay the same?

Something to consider when suggesting why a more crowded pool can be a good thing…….

If it moves, we can make a sport out of it! Take a riding lawnmower and have lawnmower races, use a wheelchair and have wheelchair races. In the picture above is a sport called “autocross”. You use any car you have and race it. Typically a parking lot using traffic cones to create a course for the day. It’s a timed event, the goal being a quick time. While it may be a lot less dangerous than a course with many cars at once, it is a racing sport. What does this mean for your personal or business insurance program?

It VOIDS coverage. This means your policy effectively does not exist in the event of a claim either temporarily or permanently. For example, “normal” auto policies do not cover “racing”. So if you loose control damaging your vehicle or worse injuring yourself, passengers, volunteers, or spectators NO COVERAGE.

Another example is in the area of life insurance. In many policies, if you “race” in the first two years from inception of the policy NO COVERAGE. This coverage may have been for the purpose of covering a mortgage, paying for college, or sustaining a family.

There are other examples of sports that void insurance coverage. Something to consider is checking before you turn it into a “sport” and finding a solution that works for your need.

In 2010 the newest version of an Acord 25, Certificate of Insurance. form has been adopted on a state by state basis. This standardized form has been around for decades, what’s the big deal? Is this something to pay attention to?

The answer is YES. As the most widely utilized form used within the insurance industry to satisfy documentation needs of individuals and organizations not in the insurance industry, that’s something. As a document that comes to courts every year in matters of coverage disputes, that’s something. As the first major upgrade in decades, that’s something. As a document with legal ramifications that has yet to have been tested in the courts with the hindsight of case law examples, that’s something.

This document has physical, structural, and technical changes included in this update not before witnessed in the modern insurance industry. To offer specific legal opinions for outcomes from various applications of this important form are at the very least premature in the absence of case law. Be wary of “experts” on this issue at this time.

Core areas of concern to focus on which will drive discussions and interpretations in the years ahead.

Difference Number One: Language previously on second page now on first page. In some older versions in use it stated that this language was supposed to be on the “backside” where it was not. Apparently someone realized that the insurance industry uses computers equipment rather than typewriters. No longer will the “second” page be orphaned.

Difference Number Two: The cancellation clause has been materially reworded. The prior “endeavor” wording is no longer present or an option.

Difference Number Three: The form has more coverage specific information capabilities.

What is the solution for success in the required use of this important form used thousands of times around the world every day? Definitely this is a matter for educational tracking. Definitely this is a matter for engagement and conscious decision making. And definitely this is a matter for active risk management.

“Brownfields” are abandoned, idled, or under-used industrial and commercial facilities where expansion or redevelopment is complicated by real or perceived environmental contaminations.

In city planning, brownfield land, or simply a brownfield, is land previously used for industrial purposes, or certain commercial uses, and that may be contaminated by low concentrations of hazardous waste orpollution and has the potential to be reused once it is cleaned up. Land that is more severely contaminated and has high concentrations of hazardous waste or pollution, such as Superfund or hazardous waste sites, does not fall under the brownfield classification.

Note that in the United Kingdom and Australia, the term applies merely to previously used land.

U.S. Perspective: The term “brownfields” first came into use on June 28, 1992, at a U.S. congressional field hearing hosted by the Northeast Midwest Congressional Coalition. Also in 1992, the first detailed policy analysis of the issue was convened by the Cuyahoga County Planning Commission. The U.S. EPA selected Cuyahoga County as its first brownfield pilot project in September 1993. The term has been in common use in other countries since about 1975.

Locations: Generally, brownfield sites exist in a city’s or town’s industrial section, on mountains containing abandoned factories or commercial buildings, or other previously polluting operations. Small brownfields also may be found in many older residential neighborhoods. For example, many dry cleaning establishments or gas stations produced high levels of subsurface contaminants during prior operations, and the land they occupy might sit idle for decades as a brownfield.

Barriers to redevelopment of brownfields: Many contaminated brownfield sites sit idle and unused for decades because the cost of cleaning them to safe standards is more than the land would be worth after redevelopment. However, redevelopment of brownfield sites has become more common in the first decade of the 21st century, as developable land grows less available in highly populated areas. Also, the methods of studying contaminated land have become more precise, and techniques used to clean up environmentally distressed properties become more sophisticated and established.

Some insurance agent calls their agency “Survival Insurance.” Are they saying that if you buy insurance from them, You Will Survive? If so, that sounds even better than confusing terms such as “all risk” coverage.

Insurance is a funding mechanism best used when all other options are impractical. Engineering away risk should always be considered. A great example is lightning protection. It’s been around since Benjamin Franklin, however some do not consider it’s ease of use and low cost for eliminating or mitigating risk. Today’s modern large cranes have three important characteristics.

1. They reach heights with capacities never before possible for our needs, whether unique buildings, windmills, cell towers. During construction phases these cranes represent the largest concentration of metal, at the greatest height, on the job site, which in effect become very large lightning “attractors.” They increase the potential of lightning strikes during a storm which increases risk of loss for both people and property.
2. The electronics and computers on board these cranes are substantial and of great value. Damage to the sensitive electronics yields a useless machine and a large claim event. Both in terms of straight property losses but more importantly, loss of use and all associated productivity.
3. The work environment and configurations do not make it practical or accessible to raise and lower booms to safety in the event of incoming storms that may release lightning.

Ironically, these same cranes are often required to have Federal Aviation Administrative lighting on the tips of booms, high in the air, to reduce the risk of aircraft collision. And yet there are no requirements for lightning protection. No regulatory requirements and no standardized systems in the marketplace that have gained acceptance.

There are some customized applications in the field but they are few and far between.  Perhaps this issue is where the notion of standardized and required “anti two block” devices were a generation ago?

Old school: OSHA issues citations & fines based on OSHA rules.

New school: OSHA issues citations & fines based on not following “manufacturer’s specifications and/or instructions.”

In this case, the contractor did not install manufacturer’s specifications for metal studs. In addition, a lot of sheetrock was sitting on the second floor when the building collapsed, killing one worker.

Question: Do you read every single manufacturer instruction and/or specification?

As well the $75,000 fine will not be the end of the story in terms of financial impact and effects on marketing and goodwill for those associated with project.

This fire occurred at Honeytree Apartments in the ‘west end’ of Richmond, Virginia. The good life? Not any more. Residents who lost all their “stuff” but more importantly their place to live. Very inconvenient. Property Owner of community will lose ten of thousands of dollars in rents alone. The community is not very attractive now, some folks may not want to renew, potential new customers may be more hesitant. What insurance was in place. Did the tenants have any coverage at all? Now is a heck of a time to find out what insurance may or may not be available by all who have or will suffer losses.