The RISQ RECAP:
November 6th – November 10th, 2023
Each week, you’ll find specially curated news articles to keep you up to date on the ever-evolving world of insurance and risk management. The articles are divided out between items relevant to Property & Casualty, Employee Benefits/Human Resources, and Compliance. We’ve included brief summaries of each item as well as a link to the original articles.
PROPERTY & CASUALTY
Right Turn on Red? With Pedestrian Deaths Rising, US Cities Are Considering Bans “Sophee Langerman was on her way to a bicycle safety rally in Chicago’s Lakeview neighborhood in June when a car turning right rolled through a red light and slammed into her bike, which she was walking off the curb and into the crosswalk. The car was moving slowly enough that Langerman escaped serious injury, but the bicycle required extensive repairs. To Langerman, it`s another argument for ending a practice that almost all U.S. cities have embraced for decades: the legal prerogative for a driver to turn right after stopping at a red light.” Full Article – Insurance Journal
Three Passengers Sue Alaska Airlines After Off-Duty Pilot Accused of Trying to Cut Engines “Three passengers sued Alaska Airlines, saying they suffered emotional distress from an incident last month in which an off-duty pilot is accused of trying to shut down the engines of a plane while catching a ride in the cockpit from Washington state to San Francisco. In the complaint filed Thursday in King County Superior Court in Washington state, San Francisco residents Matthew Doland and Theresa Stelter and Paul Stephen of Kenmore, Washington, alleged that the pilot should never have been allowed in the cockpit because he was suffering from depression and a lack of sleep.” Full Article – Insurance Journal
EMPLOYEE BENEFITS, HUMAN RESOURCES, & COMPLIANCE
Winston & Strawn LLP: Benefits Bulletin — IRS Increases PCORI Fees Payable in 2024 “The new Patient Centered Outcomes Research Institution (PCORI) fee for policy and plan years that end on or after October 1, 2023 and before October 1, 2024 is $3.22; an increase of $0.22 per covered life as compared to the PCORI fee assessed on or after October 1, 2022 and before October 1, 2023.” Full Article – Winston & Stawn LLP
Self-Funded Plan’s Guide to Gender-Affirming Coverage “Whether or how a group health plan (GHP) should cover gender-affirming care is a complex and evolving legal issue. This is especially true of self-funded GHPs, which are generally not subject to the nondiscrimination provisions of the Affordable Care Act (ACA). Both state and federal law are still unsettled. Self-funded GHP sponsors must carefully consider numerous legal factors.” Full Article – Hall Benefits Law
ACA Reporting Benefits Brief “The reporting requirements under the Affordable Care Act (ACA) have been in effect since 2015. Many employers are already familiar with the rules. However, some employers, particularly those that have grown in size, may lack clarity regarding their reporting obligations under the law. As the deadlines for the 2023 ACA reporting roll near, it is important to review the basics of reporting, including any changes that may be applicable for the 2023 reporting year.” Full Article – Acrisure, LLC
Reminder: Gag Clause Attestations Due by Year-End “[1] Review applicable contracts to ensure that they do not contain prohibited gag clauses. [2] If the group health plan is fully insured, confirm that the insurer will make the Attestation on behalf of the plan. [3] If the group health plan is self-insured, it may be possible to delegate the responsibility for completing the Attestation to the plan’s TPA. [4] Review existing agreements with insurers/ TPAs to ensure that the agreement includes a ‘compliance with applicable law’ provision.” Full Article – Faegre Drinker Biddle & Reath LLP
Agencies Propose Extensive Modifications to Regulations Implementing Surprise Billing IDR “Several provisions of both the interim final and final regulations, as well as related agency guidance, have been vacated in a series of cases brought by an association of health care providers. In response, the agencies recently issued proposed regulations addressing IDR fee issues raised by the litigation and, among other things, partially shut down and reopened the federal IDR portal multiple times. The agencies now propose additional regulations to adjust the IDR process and change the fee structure. Here are highlights.” Full Article – Thomson Reuters / EBIA
Fact Sheet #66e: The Davis-Bacon and Related Acts — Compliance with Fringe Benefit Requirements “The following practices may lead to violations under the DBRA, resulting in failure to pay the applicable prevailing wage rate: [1] Misclassifying laborers and mechanics for the type of work performed; [2] Failing to obtain prior approval from the DOL for unfunded fringe benefit plans; [3] Failing to annualize (or incorrectly annualizing) the hourly equivalent of fringe benefit amounts. [4] Paying hourly rates and/or fringe benefit amounts pursuant to a Collective Bargaining Agreement (CBA), where the CBA specifies rates lower than those required in the applicable wage determination; and [5] Improperly taking credit towards fringe benefit obligations for certain expenses.” Full Article – Wage and Hour Division, U.S. Department of Labor
STATE & INTERNATIONAL COMPLIANCE
In addition to the RISQ Review, RISQ Consulting also provides a resource that features changes and updates to State and International Compliance measures. We’ve included brief summaries of each item below, and also provided links to the original articles if you’d like to read further.
CALIFORNIA
California Passes New Law Mandating Workplace Violence Prevention Plan for Employers
“On September 30, 2023, Governor Gavin Newsom signed SB 553 into law, establishing a new written Workplace Violence Prevention Plan (“WVPP”) requirement for nearly all California employers.” Full Article
– Sheppard Mullin Richter & Hampton LLP
MASSACHUSETTS
Massachusetts Amends Paid Family and Medical Leave Law
“As of November 1, 2023, the Massachusetts Paid Family and Medical Leave (PFML) law will permit employees to supplement their PFML benefits using accrued paid time off (PTO), such as sick or vacation pay. Employers cannot require that employees use their accrued PTO while receiving PFML benefits but must permit employees to do so.” Full Article
– Morgan, Lewis & Bockius LLP
ILLINOIS
New Illinois Law Mandates Certain Employers Offer Pre-Tax Commuter Benefits Starting January 1, 2024
“Open enrollment season is upon us, but employers who employ a substantial number of employees in Illinois may have a surprise in a new benefit that must be offered. Illinois recently adopted the Transportation Benefits Program Act (HB 2068; P.A. 103-291) (the “Act”) which aims to promote the commuter benefits available to employees who use or may use public transportation to commute to and from work.” Full Article
– Michael Best & Friedrich LLP
COLORADO
Legislative Update: Colorado Proposes New Rules for Tipped Workers, and More State and Local Efforts to Eliminate the Tip Credits
“Proposed New Rules Under Colorado’s Overtime & Minimum Pay Standards Order Would Narrow Employers’ Use of the Tip Credit and Tip Pools.” Full Article
– Seyfarth Shaw LLP
NEW YORK
New York Narrows the Scope of Employee “Invention Assignment” Provisions
“On September 15, New York enacted Labor Law Section 203-f, limiting the enforceability of invention assignment provisions in employment agreements. Under the new law, employers do not have rights to any employee inventions created on the employee’s own time and without the use of employer resources or trade secrets.” Full Article
– Troutman Pepper Hamilton Sanders LLP
- Published in Blog
Understanding the Impact of Biosimilars on Employer Health Care Costs
This article is from RISQ Consulting’s Zywave client portal, a resource available to all RISQ Consulting clients. Please contact your Benefits Consultant or Account Executive for more information or for help setting up your own login.
Rising health care costs will likely continue to impact employers in the foreseeable future. The introduction of biosimilar drugs as an alternative to biologics may bring value to health care by offering cost savings and increasing employee access to necessary medications. While biosimilars can help employers mitigate rising prescription drug costs, employers will need to learn more about them before considering how their health plans can accommodate these newer drugs.
This article explores biosimilar drugs and their impact on employers’ health care costs.
Biosimilar Overview
Unlike generic drugs, biosimilars are not identical to their reference biological products (also called the brand-name counterpart) and aren’t created from synthesized chemicals. A biosimilar drug is a biological product produced from living organisms—humans, animals or microorganisms. Approved by the Food and Drug Administration (FDA), biosimilars are similar to the reference drug (a previously FDA-approved biologic), but have no significant clinical differences. Compared with biologics, biosimilars have the same strength, dosage and potential side effects but provide the same treatment benefits.
The FDA rigorously evaluates biosimilars to validate their efficacy, safety and quality. The FDA has approved over 40 biosimilars; however, not all are commercially available.
Biosimilars are safe and effective treatment options for many illnesses, including chronic skin and bowel diseases (e.g., psoriasis, irritable bowel syndrome, Crohn’s disease and colitis), arthritis, kidney conditions and cancer. They can potentially increase access to lifesaving medications at a lower cost.
Impact on Health Care Costs
As prescription drug costs continue to rise, employees are realizing increased out-of-pocket expenditures for the medications they and their families depend on. Specialty drugs, including biologics, are the fastest-growing part of drug costs.
The Biosimilars Council estimates that 1.2 million people will have access to more affordable biologic medicines by 2025 due to the availability of several leading biosimilars. The exclusivity period for the following drugs either has ended or will expire before 2025, which will open the door for biosimilar approval:
- Humira (adalimumab) for rheumatoid arthritis (RA), Crohn’s disease and ulcerative colitis
- Remicade (infliximab) for RA, Crohn’s disease and ulcerative colitis
- Neulasta (pegfilgrastim) to prevent infection following chemotherapy
- Enbrel (etanercept) for RA
- Avastin (bevacizumab) to treat eye diseases and different types of cancer
- Lucentis (ranibizumab) to treat eye diseases
- Rituxan (rituximab) to treat certain autoimmune diseases and types of cancer
Five of those seven products are among the country’s biggest-selling brand biologics, accounting for more than 30% of total biologic sales in the United States. The research further suggests that women, lower income and elderly individuals stand to benefit most from access to biosimilars. Utilization demographics of those previously-mentioned specific products reveal that 86% of patients are older than 40, 67% are women and 42% are low-income.
Research suggests that large and self-insured employers have the most to save regarding biosimilars. According to The ERISA Industry Committee (ERIC), in 2018, self-insured employers in the United States could have saved $1.4 billion by promoting the use of biosimilars in their employer-sponsored health plans. Furthermore, ERIC research found that patients who took the biosimilar medicine paid, on average, 12% (about $300) and 45% (about $600) less out of pocket than those who took the biologic.
Ford Motor Co. (Ford) is one such organization exploring biosimilar substitution plans and having success. Ford required new and current users of Remicade to convert to Inflectra. Since the transition began in 2019 and an expansion to four other biosimilars, Ford has saved nearly $5 million.
By 2025, the Biosimilars Council reports that biosimilars will save the national health care system up to $183 billion. With many Americans relying on their employers for health coverage, more employers are considering biosimilars as a viable solution to lower health expenditures and pass savings to their employees. Not only can employers potentially reduce specialty drug costs, but also promote better health outcomes for their employees and their families.
Summary
Biologics account for much of specialty drug costs and are typically cited as a leading driver of rising prescription drug costs. As the potential for biosimilars continues to grow, more employers may consider promoting them to help realize cost savings in their health plans and offer less expensive drug alternatives to their employees.
Contact us to learn more about health care cost mitigation trends.
- Published in Blog
Biden Signs Executive Order Addressing AI
This article is from RISQ Consulting’s Zywave client portal, a resource available to all RISQ Consulting clients. Please contact your Benefits Consultant or Account Executive for more information or for help setting up your own login.
President Joe Biden issued an executive order (EO) on Oct. 30, 2023, to establish standards for artificial intelligence (AI) safety and security, protect privacy, advance equity and civil rights, and advocate for consumers and workers. It also seeks to promote innovation and competition and advance American leadership around the world while ensuring responsible and effective government use of AI.
Directed Actions
The EO seeks to build on the voluntary commitments of 15 leading companies by:
- Requiring developers of the most powerful AI to share their safety test results and other critical information with the U.S. government
- Developing standards, tools and tests regarding AI’s safety, security and trustworthiness
- Protecting against the risks of using AI to engineer dangerous biological materials
- Protecting against AI-enabled fraud and deception by establishing standards and best practices for detecting AI-generated content and authenticating official content
- Establishing an advanced cybersecurity program to find and fix critical software vulnerabilities
- Ordering the development of a National Security Memorandum on AI use and security
The EO also seeks to address privacy concerns by calling for the passage of bipartisan data privacy
legislation and directs actions to prioritize federal support for accelerating the development and use of privacy-preserving techniques. It calls for action to strengthen privacy-preserving research/technologies and privacy guidance for federal agencies, develop guidelines for federal agencies to evaluate the effectiveness of privacy-preserving techniques, and evaluate how agencies collect and use commercially available information.
To advance equity and civil rights, the EO directs actions to provide clear guidance to landlords, federal benefits programs and federal contractors; address algorithmic discrimination; and ensure fairness in the criminal justice system. In support of workers’ rights, the EO calls for actions to develop principles and best practices, produce a report on AI’s potential impacts on the labor market, and study and identify options for strengthening federal support for workers facing labor disruptions.
In the pursuit of innovation and competition and advancement of American leadership, the EO directs action to catalyze AI research; promote a fair, open and competitive AI ecosystem; and expand the ability of highly skilled immigrants with expertise in critical areas to study, stay and work in the United States through existing authorities. The EO directs action to expand bilateral, multilateral and multistakeholder engagements to collaborate on AI; accelerate the development/implementation of vital AI standards; and promote the safe, responsible and rights-affirming development and deployment of AI abroad.
To ensure responsible and effective government AI use, the EO directs action to issue guidance for agencies’ use of AI, help agencies acquire specified AI products and services, and accelerate the rapid hiring of AI professionals. The White House states the administration will work with allies and partners to govern the development and utilization of AI. For more information, contact us today.
- Published in Blog
The RISQ RECAP:
October 30th – November 3rd, 2023
Each week, you’ll find specially curated news articles to keep you up to date on the ever-evolving world of insurance and risk management. The articles are divided out between items relevant to Property & Casualty, Employee Benefits/Human Resources, and Compliance. We’ve included brief summaries of each item as well as a link to the original articles.
PROPERTY & CASUALTY
Alliance of 40 Countries to Vow Not to Pay Ransom to Cybercriminals “Forty countries in a U.S.-led alliance plan to sign a pledge never to pay ransom to cybercriminals and to work toward eliminating the hackers’ funding mechanism, a senior White House official said on Tuesday. The International Counter Ransomware Initiative comes as the number of ransomware attacks grows worldwide. The United States is by far the worst hit, with 46% of such attacks, Anne Neuberger, U.S. deputy national security adviser in the Biden administration for cyber and emerging technologies, told reporters on a virtual briefing.” Full Article – Insurance Journal
Companies May Be Employers of Contract, Franchise Workers Under US Labor Rule “A U.S. labor board on Oct. 26 issued a final rule making it easier for workers and unions to hold companies liable for labor law violations by their franchisees and contractors, reviving an Obama-era standard heavily criticized by trade groups. The rule from the National Labor Relations Board (NLRB) will treat companies as so-called “joint employers” when they have control, even if it is indirect or not exercised, over essential terms and conditions of employment such as pay, scheduling, hiring and firing, and supervision.” Full Article – Insurance Journal
EMPLOYEE BENEFITS, HUMAN RESOURCES, & COMPLIANCE
Union Charge and Election Petition Filings Continue to Climb “Unions continue to dominate headlines, as the UAW strike persists and the union saga at Starbucks continues to unfold. Perhaps unsurprisingly, based on that, the number of charges alleging labor law violations and election petitions filed by unions with the NLRB still are on the rise as well.” Full Article – Barnes & Thornburg LLP
Senate Confirms New EEOC General Counsel as New Case Filings Climb “The Senate has confirmed Karla Gilbride as the EEOC’s General Counsel, following an almost two and a half year vacancy. As GC, Gilbride is poised to make her mark on the EEOC’s litigation program by directing and advocating for EEOC’s litigators, both internally and externally.” Full Article – Seyfarth Shaw LLP
Is Your HR Department Aware of the Latest EEOC Priorities? “Periodically, the EEOC (Equal Employment Opportunity Commission) lets us know what to watch out for. On September 21, the EEOC released its Strategic Enforcement Plan for years 2024-2028 (“SEP”), which tells us where the federal government is prioritizing its employment dollars.” Full Article – Dickinson Wright
NLRB Returns to a More Expansive Joint Standard “Today, October 26, 2023, the National Labor Relations Board issued a final rule that rescinds and replaces the Trump Administration’s 2020 rule establishing the current test for determining whether two entities are joint employers. This new rule will result in more findings that two entities are joint employers.” Full Article – Shawe Rosenthal LLP
Mark Your Calendars: EEO-1 Reporting Season is Almost Here! “Ready or not, reporting season is right around the corner. The Equal Employment Opportunity Commission (EEOC) recently announced that the 2022 EEO-Component 1 data collection will open on Tuesday, October 31, 2023, and the deadline for employers to file is Tuesday, December 5, 2023. In completing the EEO-1, all covered private employers and federal contractors have a mandatory legal obligation to submit and certify their workforce demographic data.” Full Article – Venable LLP
Religious Accommodations, Part Deux: Is the Religious Belief Sincere? “In Part One of this two-part bulletin, we explored the expansive meaning of religious beliefs entitled to an accommodation under Title VII and the reluctance of courts to second guess whether a belief is “religious” in nature. Even though the religious nature of a belief may not be an appropriate topic for inquiry, it is appropriate and necessary to differentiate between beliefs that are sincerely held as a matter of faith and those that are animated by a motive of fraud or deception.” Full Article – Constangy, Brooks, Smith & Prophete LLP
STATE & INTERNATIONAL COMPLIANCE
In addition to the RISQ Review, RISQ Consulting also provides a resource that features changes and updates to State and International Compliance measures. We’ve included brief summaries of each item below, and also provided links to the original articles if you’d like to read further.
CALIFORNIA
California Passes New Law Mandating Workplace Violence Prevention Plan for Employers
“On September 30, 2023, Governor Gavin Newsom signed SB 553 into law, establishing a new written Workplace Violence Prevention Plan (“WVPP”) requirement for nearly all California employers.” Full Article
– Sheppard Mullin Richter & Hampton LLP
MASSACHUSETTS
Massachusetts Amends Paid Family and Medical Leave Law
“As of November 1, 2023, the Massachusetts Paid Family and Medical Leave (PFML) law will permit employees to supplement their PFML benefits using accrued paid time off (PTO), such as sick or vacation pay. Employers cannot require that employees use their accrued PTO while receiving PFML benefits but must permit employees to do so.” Full Article
– Morgan, Lewis & Bockius LLP
ILLINOIS
New Illinois Law Mandates Certain Employers Offer Pre-Tax Commuter Benefits Starting January 1, 2024
“Open enrollment season is upon us, but employers who employ a substantial number of employees in Illinois may have a surprise in a new benefit that must be offered. Illinois recently adopted the Transportation Benefits Program Act (HB 2068; P.A. 103-291) (the “Act”) which aims to promote the commuter benefits available to employees who use or may use public transportation to commute to and from work.” Full Article
– Michael Best & Friedrich LLP
COLORADO
Legislative Update: Colorado Proposes New Rules for Tipped Workers, and More State and Local Efforts to Eliminate the Tip Credits
“Proposed New Rules Under Colorado’s Overtime & Minimum Pay Standards Order Would Narrow Employers’ Use of the Tip Credit and Tip Pools.” Full Article
– Seyfarth Shaw LLP
NEW YORK
New York Narrows the Scope of Employee “Invention Assignment” Provisions
“On September 15, New York enacted Labor Law Section 203-f, limiting the enforceability of invention assignment provisions in employment agreements. Under the new law, employers do not have rights to any employee inventions created on the employee’s own time and without the use of employer resources or trade secrets.” Full Article
– Troutman Pepper Hamilton Sanders LLP
- Published in Blog
Responding to the EEOC’s Increased Focus on Mental Health Discrimination
This article is from RISQ Consulting’s Zywave client portal, a resource available to all RISQ Consulting clients. Please contact your Benefits Consultant or Account Executive for more information or for help setting up your own login.
As society’s understanding of mental health continues to grow, so has government acknowledgment and efforts to protect workers with such conditions. Workers who have a mental health condition, such as anxiety or depression, are often protected against discrimination and harassment at work because of the condition. They may also have workplace privacy rights and a legal right to reasonable accommodations to help them perform the essential functions of their jobs.
The U.S. Equal Employment Opportunity Commission (EEOC) enforces the Americans with Disabilities Act (ADA), a federal law that protects individuals with disabilities. In most cases, individuals with diagnosed mental health conditions are covered under the ADA.
This article highlights mental health conditions, outlines the EEOC’s enforcement plans and offers ADA compliance guidance for employers.
Mental Health and the ADA
The ADA only applies to employers with 15 or more employees. The law defines “disability” as a physical or mental impairment substantially limiting one or more major life activities. When qualified job applicants or employees have a mental health condition meeting those criteria, they have workplace rights under the ADA. The ADA Amendments Act of 2008 broadened the definition of disability to provide legal protections against employment discrimination for more individuals with disabilities, including people with psychiatric disabilities. “Psychiatric disability” and “mental illness” are often used interchangeably. The term “mental illness” is typically used in a medical context to refer to a wide range of emotional and mental health conditions. In contrast, “psychiatric disability” is typically used in a legal or policy context to refer to impairments covered under the ADA.
The National Institute of Mental Health estimates that about 18% of U.S. workers have a mental health condition in any given month. This means that psychiatric disability is one of the most common types of disability covered under the ADA. Since mental health conditions can substantially limit brain function, individuals with such disorders will usually be determined to have an ADA-covered disability. The following mental health conditions may qualify under the ADA:
- Attention-deficit/hyperactivity disorder (ADHD)
- Bipolar disorder
- Schizophrenia
- Generalized anxiety disorder
- Major depression
- Obsessive-compulsive disorder (OCD)
- Panic disorders
- Personality disorders
- Post-traumatic stress disorder (PTSD)
Examples of reasonable accommodations for an employee with a mental disability may include:
- Allowing the employee to telework
- Allowing more frequent breaks
- Alternating supervisor methods (e.g., providing written instructions and providing more frequent or different reminders of tasks and due dates)
- Changing the employee’s work schedule
- Changing the employee’s work location (e.g., moving to a quieter space or allowing the use of a white noise machine or headphones)
- Reassigning to a vacant position
- Permitting a leave of absence under the Family and Medical Leave Act, state law or company policy
EEOC Enforcement Plans
In fiscal year (FY) 2021, employee allegations of unlawful discrimination based on mental health conditions accounted for about 30% of all ADA-related EEOC-filed charges. That figure significantly increased from the 20% reported in FY 2010. Anxiety and PTSD are the leading conditions contributing to this trend.
The EEOC recently released its strategic enforcement plan (SEP) for FYs 2024-28, emphasizing a greater focus on discrimination against vulnerable populations, including employees with mental health disorders. The plan aims to focus and coordinate the agency’s work to advance equal employment opportunities sustainably.
Employer Guidance
Supporting employees battling mental health conditions is not only important for compliance reasons. While organizations seek to avoid liability under the ADA, support and guidance can help foster an inclusive environment for employees with mental health conditions.
Consider the following employer strategies to stay compliant and create a supportive culture:
- Monitor EEOC compliance. Organizations should stay current on all EEOC updates and consult local legal counsel before making any workplace changes. Employers can be proactive with compliance responsibilities by setting calendar reminders well before deadlines and meeting regularly to review compliance with EEOC guidance.
- Review workplace policies. Various workplace policies have the potential to generate discrimination claims. Employers can review and assess policies such as background-check practices, pre- and post-hire personality or behavioral tests, inequitable leave policies and unnecessary physical requirements.
- Review compensation practices. When reviewing their compensation practices, organizations may discover disparities that adversely affect employees based on certain protected characteristics. With a clearer picture, employers can then address those disparities to ensure equal opportunity.
- Train managers. Supervisors and managers can be trained to identify and respond to requests for reasonable accommodation to ensure decision-making isn’t based on outdated biases or misunderstandings about mental health.
- Train all employees. Mental health awareness can help fight the stigma often associated with conditions. Open and honest conversations about mental health can help foster an inclusive work environment. Training can help increase empathy and understanding to ensure all employees feel valued, respected and part of the team.
Summary
As outlined in the EEOC’s latest SEP, the federal government continues to crack down on organizations that discriminate against workers with mental health conditions. As such, employers should continually monitor for EEOC updates and review applicable workplace policies and practices that could cause a discrimination claim. Aside from compliance, mental health awareness is critical for fostering a successful and inclusive workplace environment.
Contact us today for additional workplace resources.
- Published in Blog
Understanding Protective Safeguards Endorsements (PSEs)
This article is from RISQ Consulting’s Zywave client portal, a resource available to all RISQ Consulting clients. Please contact your Benefits Consultant or Account Executive for more information or for help setting up your own login.
When it comes to property insurance, it’s not just about securing a policy; it’s about fully understanding its nuances to ensure you have the highest level of protection for all your assets. In some cases, misunderstanding the details of your property coverage can mean the difference between safeguarding your investments and costly oversights.
One often overlooked policy detail is the protective safeguards endorsement (PSE). These endorsements, embedded within many commercial property policies, stipulate specific safety and security measures businesses must uphold. Failure to adhere to these measures can leave your property vulnerable and lead to insurers denying claims when disaster strikes. As such, business owners and property managers must recognize, understand and actively maintain the conditions set by PSEs to ensure the integrity of their insurance coverage and the safety of their commercial property.
What Are Protective Safeguards Endorsements?
In property insurance, PSEs are conditions of coverage requiring policyholders to ensure that specific protective devices and services are installed, maintained and in proper working order. Regarding property insurance, common examples of PSEs include automatic sprinkler systems, automatic fire alarms, burglar alarms, leak detection systems, security services and surveillance systems. If the PSE conditions are not met, the insurer will likely not pay for losses incurred.
For example, if a fire damages a restaurant and a subsequent investigation finds that the sprinklers weren’t functioning properly, an insurer can deny coverage due to a PSE.
The common types of PSEs added to a commercial property policy include:
- Fire protection system endorsement—An endorsement stating losses resulting from fire will not be covered by the insurer if fire alarms, sprinkler systems and other fire prevention systems are not in use or maintained.
- Security systems endorsement—States that security equipment like closed-circuit television (CCTV), motion sensor devices, weapon detection systems and intruder alert notification systems must be operational and retained. It may also require a service contract with security personnel.
- Water detection systems endorsement—Requires the use and upkeep of water detection equipment like water sensors and leak detectors in areas where water damage can occur, including toilets and laundry areas.
- Heating system endorsement—Requires insureds to utilize and maintain hot water radiators, furnaces and boilers, solar heaters and similar devices.
- Automatic commercial cooking exhaust and extinguishing system endorsement—Requires commercial kitchens in the food service industry to operate and maintain automatic fire extinguishers, hood exhaust fans and wet chemical systems.
Implications for Policyholders
PSEs have a variety of implications for policyholders. Chiefly, if an insured has a PSE in their policy, they are responsible for:
- Monitoring protective devices and keeping them in proper working order; and
- Notifying the insurer promptly of any malfunction or impairment of protective devices or services listed in the PSE over which they have control.
Beyond these obligations, there are a number of benefits to PSEs. Notably, since PSEs encourage loss prevention measures, they can positively impact the cost of premiums. In many states, insurers provide a premium discount or credit when such an endorsement is attached to a policy.
Key Considerations for Policyholders
There are essential considerations for policyholders when dealing with PSEs:
- Compliance with endorsement—Policyholders need to meet the conditions of the endorsement to prevent claims denial.
- Periodic inspections—Some endorsements may require regular inspections of protective devices and services.
- Ongoing maintenance—Having protective devices serviced at recommended intervals is necessary to comply with PSEs. Building owners and landlords may need to clarify in their agreements which party is responsible for maintenance duties and how to keep detailed records of maintenance activities.
- Notification responsibility—PSEs mandate that insurers be promptly informed when protective devices are suspended or turned off, even for repairs. It’s essential for policyholders to establish protocols—like where and how to send notices—for proper notification.
- Understanding potential impairments—To ensure that all listed systems, devices and services remain functional, it may be necessary for property owners and tenants to consult experts, such as system vendors or engineers, to learn how non-impairment can be maintained.
- Communication with insurer and broker—Insureds should maintain open dialogue if any change is made to systems or if they have concerns about compliance.
Conclusion
Commercial property insurance policies that have PSEs impose additional duties on insureds. To avoid the hassle of being denied coverage, ensure that protective devices and services are well-maintained and functioning as intended, and notify insurers immediately if these are suspended or impaired.
By taking these necessary steps, property owners, managers and tenants can better protect their interests and ensure they have the coverage they need when it matters most.
Contact us today for more information.
- Published in Blog
The RISQ RECAP:
October 23rd – October 27th, 2023
Each week, you’ll find specially curated news articles to keep you up to date on the ever-evolving world of insurance and risk management. The articles are divided out between items relevant to Property & Casualty, Employee Benefits/Human Resources, and Compliance. We’ve included brief summaries of each item as well as a link to the original articles.
PROPERTY & CASUALTY
‘Forever Chemical’ Bans Face Hard Truth: Many Can’t Be Replaced “As lawmakers around the world weigh bans of cancer-linked “forever chemicals,” many manufacturers are pushing back, saying there often is no substitute for the compounds. Minnesota and Maine have passed legislation to effectively outlaw the use of per- and polyfluoroalkyl substances, or PFAS, in nearly all products by the early 2030s. Dozens of other states are also considering curbing their use. And the European Union’s Chemical Agency has proposed a widespread ban.” Full Article – Insurance Journal
Governments and Firms Should Spend More on AI Safety, Say Top Researchers “Artificial intelligence companies and governments should allocate at least one third of their AI research and development funding to ensuring the safety and ethical use of the systems, top AI researchers said in a paper on Tuesday. The paper, issued a week before the international AI Safety Summit in London, lists measures that governments and companies should take to address AI risks.” Full Article – Insurance Journal
EMPLOYEE BENEFITS, HUMAN RESOURCES, & COMPLIANCE
What Are the Health Plan ID Card Transparency Requirements? (PDF) “For plan years beginning on or after January 1, 2022, any physical or electronic plan or insurance identification card issued to group health plan participants or beneficiaries must clearly state … [1] any applicable deductible; [2] any applicable out-of-pocket maximum limitation; and [3] a telephone number and internet website address through which the individual may seek consumer- assistance information.” Full Article – Thomson Reuters / EBIA
Text of IRS Notice 2023-70: Insured and Self-Insured Health Plans Adjusted Applicable Dollar Amount for PCORI Fee Imposed by Sections 4375 and 4376 (PDF) “The fee imposed by sections 4375 and 4376 helps to fund the Patient-Centered Outcomes Research Trust Fund (PCORTF) and is calculated using the average number of lives covered under the policy or plan and the applicable dollar amount for that policy year or plan year.” Full Article – Internal Revenue Service (IRS)
Fiduciary Governance: HIPAA and Cybersecurity Best Practices “Plans considered ‘covered entities’ under HIPAA are subject to privacy and security rules governing individually identifiable health information. Plan sponsors must implement their plans’ physical, administrative, and technical safeguards to protect e-PHI against cyberthreats. Fiduciaries should not stop at HIPAA-covered health data but should equally safeguard any personally identifiable information of employees in connection with their welfare benefit plans.” Full Article – Nixon Peabody
10 Important Issues for Employers During the 2024 Open Enrollment Season “[1] Affordability of group health plan [2] HDHP/HSA limits [3] Updated CHIP notice [4] HIPAA notice of privacy practices [5] Summary of Benefits and Coverage [6] Annual compliance notices. [7] Wellness program notices [8] Life insurance evidence of insurability [9] Premium payments for fixed indemnity/specified disease insurance [10] Coordinate with insurer/TPA on NQTL comparative analysis and gag clause prohibition compliance attestation.” Full Article – Dickinson Wright
Transparency in Coverage Update: Status of Current Enforcement and Future Rulemaking “All covered plans will need to move ahead with publishing machine-readable files with prescription drug cost information, but future guidance will be issued on the implementation timeline for those plans that have relied on the enforcement delay. Also, plans that use alternative reimbursement arrangements for in-network providers will no longer be able to use the safe harbor that was previously available for reporting in-network rates.” Full Article – Slevin & Hart, P.C.
New Illinois Law Mandates Certain Employers Offer Pre-Tax Commuter Benefits Starting January 1 “Beginning January 1, 2024, a covered employer must make available a pre-tax commuter benefit to covered employees. Covered employees are those employees who work an average of at least 35 hours per week. The Act applies to covered employers with at least 50 covered employees in one of more of [certain specified] locations. Illinois is not the first jurisdiction to enact such a law; employers with multi-state operations should confirm which states and municipalities in which they operate may require the adoption of the same or similar type of program.” Full Article – Michael Best & Friedrich LLP
STATE & INTERNATIONAL COMPLIANCE
In addition to the RISQ Review, RISQ Consulting also provides a resource that features changes and updates to State and International Compliance measures. We’ve included brief summaries of each item below, and also provided links to the original articles if you’d like to read further.
CALIFORNIA
Employees in California Get a Bump in Paid Sick Leave
“Governor Gavin Newsom approved Senate Bill No. 616 (SB 616), which significantly increases the amount of paid sick leave required under California’s existing paid sick leave law. Employees are still entitled to accrue paid sick leave at a rate of not less than one hour for every 30 hours worked, but under SB 616, the accrual cap has been modified from six days or 48 hours to 10 days or 80 hours.” Full Article
– Snell & Willmer LLP
MASSACHUSETTS
Important Change to Massachusetts PFML Law: Employees May Supplement (Top Off) PFML Benefits with Vacation, PTO and Sick Time
“Effective November 1, 2023, the Massachusetts Paid Family and Medical Leave (PFML) law will allow employees to supplement (i.e. “top off”) benefits received from the Commonwealth of Massachusetts with any available accrued paid leave (e.g., sick time, vacation, PTO, personal time, etc.).” Full Article
– Seyfarth Shaw LLP
ILLINOIS
Illinois Passes Sweeping Amendments to Day and Temporary Labor Services Act, Affecting Staffing Agencies and Companies That Contract with Them
“Governor Jay Pritzker signed into law House Bill 2862, approving sweeping amendments to the Day and Temporary Labor Services Act (“DTLSA” or the “Act”). Since then, the Illinois Department of Labor (IDOL) has issued administrative regulations and proposed rules that are currently working their way through the notice-and-comment process.” Full Article
– Taft Stettinius & Hollister LLP
CONNECTICUT
Taft Stettinius & Hollister LLP Connecticut Stifles Employees’ Access to Their Earned Wages
“Earned Wage Access (or EWA) programs are popular programs that allow employees to access their salary or wages that have already been earned, prior to the scheduled payroll date. Many argue that these beneficial programs are not truly ‘loans’ because employees are accessing their own money without paying the high fees charged by payday lenders.” Full Article
– K & L Gates LLP
NEW YORK
New York State Limits Employers’ Ability to Access Social Media
“Beginning in March 2024, New York employers will be restricted from accessing employee social media accounts. The new law, A.386, amends New York’s labor law and will restrict employers from requesting, requiring, or coercing an employee or applicant for employment to provide their username and password to social media websites.” Full Article
– Gordon Rees Scully Mansukhani LLP
- Published in Blog
Wrongful Collection of Data Explained
This article is from RISQ Consulting’s Zywave client portal, a resource available to all RISQ Consulting clients. Please contact your Benefits Consultant or Account Executive for more information or for help setting up your own login.
Businesses of all sizes and sectors may be subject to unlawful data processing claims. According to the International Association of Privacy Professionals, lawsuits focusing on whether businesses lawfully collect and use personal data have been steadily increasing. These claims can cause significant financial and reputational damage to companies.
As businesses analyze the risks associated with personal data collection, they must be familiar with an evolving regulatory landscape and take steps to address their exposures. This article provides more information on what wrongful data collection is and areas of concern. It also provides tips for businesses to mitigate the risks associated with wrongful data collection.
What Is Wrongful Data Collection?
What constitutes wrongful, or unlawful, data collection varies by jurisdiction. While there currently isn’t an overarching national consumer data privacy law in the United States, several states have enacted legislation that affords individuals those protections. Aspects of U.S. laws also apply to certain sectors (e.g., the Health Insurance Portability and Accountability Act, or HIPAA, applies to health care) and individuals (e.g., children receive data protection through the Children’s Online Privacy Protection Act). Additionally, different laws are in place internationally. This range of legislation can make it difficult for businesses to understand the various rules that are in effect.
Even though it may be complicated, businesses have the duty to comply with applicable data privacy laws. For example, depending on the jurisdiction, there may be regulations that dictate how or if an organization may collect, use and share personal data. There may also be requirements for the business to inform consumers that data is being collected and to allow the consumer to opt out of that collection. Failure to adhere to relevant laws may be considered wrongful and businesses may be subject to fines and potential litigation.
Areas of Concern
Certain aspects of personal data collection are areas of concern. Examples of areas laws may regulate include:
- Biometric data—Collection of data regarding unique physical characteristics (e.g., fingerprints, faces, voice patterns) has been regulated by some jurisdictions. For example, Illinois has enacted the Biometric Privacy Act, which forbids businesses from collecting biometric data unless the business has informed the individual about the data being collected, provided information on how long it will be stored and received written consent.
- Pixel tracking—The use of pixel technology to track how individuals use websites to target advertisements may be subject to regulations. For example, under the European Union’s General Data Protection Regulation, pixel tracking technology may only be used if an individual consents, while the California Privacy Rights Act (CPRA) requires users to be notified of the implementation of pixels and how they will be processed.
Additionally, the United States Video Privacy Protection Act (1988), originally enacted to prevent the disclosure of personal information obtained from renting videos, has seen a modern application in lawsuits involving data collected through pixel tracking. Furthermore, HIPAA can be used to safeguard patients’ confidential health data that may be exposed to third parties utilizing pixels.
- Genetic information—Data that is compiled from the analysis of a person’s biological sample and involves genetic material (e.g., DNA, genes, chromosomes) may also be subject to regulations. For example, the Genetic Information Privacy Act in California provides its residents with rights and protections over their data when they use direct-to-consumer genetic testing companies.
- Precise geolocation—There may be legal obligations regarding collecting and processing data that is used to locate a consumer within a specific area. For example, the CPRA requires individuals to receive notice and the right to limit the use and disclosure of that precise geolocation information.
Risk Mitigation Strategies
It is essential for businesses to implement risk management strategies to reduce the likelihood of lawsuits, reputational damage, and regulatory fines and penalties stemming from wrongful data collection claims. Examples of techniques to consider include:
- Weigh the benefits and drawbacks of data collection and determine if alternative marketing strategies that do not require data collection exist.
- Provide notice and obtain consent before collecting, processing, using, sharing or selling personal data.
- Allow individuals to opt out of having their personal data collected.
- Limit personal data collection to only what is necessary.
- Monitor regulations as they are quickly evolving.
- Conduct audits of data collection practices to ensure they conform to applicable regulations.
- Provide education to employees on proper technology use and applicable legislation.
- Review insurance coverage with a licensed professional to determine if coverage is available for wrongful data collection claims.
Conclusion
Claims of wrongful data collection are rising, and businesses should take steps to mitigate their exposure to this risk. For more information and risk management guidance, contact us today.
- Published in Blog
Human Resources Developments and Considerations for 2024
Dec 14th, 2023
December 14th, 2023 at 10 AM AKDT
Description | This webinar will review impactful human resources compliance related topics and developments from 2023 and look forward to the traditional and evolving HR areas employers should be prepared to navigate in 2024.
Presenter | Craig Weller, JD
Here is the registration link | Register HERE
- Published in Events