SHARE:
Slow But Steady Growth
Two years ago, Florida's Community Health Purchasing Alliances (CHPAs) began with the goal of helping small businesses with 50 or fewer workers get easy access to health care [FT, Oct. 1995]. So far, it's been a modest success, with 4% of Florida small businesses, or about 17,000 employers, now participating in the program. "They're succeeding enough for their own survival," quips Bill Herrle, Florida state director for the National Federation of Independent Business.
The CHPAs also are slowly whittling away at Florida's 2.7 million uninsured. Of the 76,500 people who've signed up, 54% previously didn't have health coverage. Because CHPAs pool the buying power of small businesses, they often offer savings of 5% to 30% on premiums. The CHPAs offer more than cost savings, however. "The real advantage of CHPA is you can offer multiple health plans to a small employee group," says Terry McCorvie, executive director of CHPA Districts 4 & 7.
Statewide, 24 insurers participate through health maintenance organizations (HMOs), preferred provider organizations (PPOs) and traditional indemnity plans. Not all insurers operate in each district.
This summer, the CHPAs will introduce several new features designed to broaden their appeal:
Composite ratings. Starting this month, employees of businesses with 10 or more workers will pay a single premium rate. Previously, different age groups paid different rates. At smaller businesses, the age-based premium system remains. Health provider database. CHPA will provide insurance agents with a computerized database of information that ties doctors and hospitals to specific health plans or zip codes.
Employee leasing. In many cases, businesses that lease their workers now can insure them through CHPA .
Annual state subsidies for CHPAs will drop by 65% this year, to $525,000, from $1.5 million last year. McCorvie argues the program won't suffer, however, because the Legislature's subsidy was unexpected in the first place. He says, "Most of us budgeted for a zero state contribution."
Small businesses interested in CHPA should contact their insurance agent or call
1-800-4MY-CHPA.
--
Risky Business
Small business owners typically groan when the topic turns to workers' compensation insurance. And why not? In the early 1990s, the sky-rocketing cost of insuring workers threatened to put many of Florida's small companies out of business.
Reforms enacted by the Florida Legislature in 1993, however, cut workers' comp rates for most employers by more than 10%. Since then, rates have remained flat. With increased competition and the implementation of managed care, costs likely will hold steady for the rest of the 1990s.
Workers' compensation insurance protects businesses from potential suits related to on-the-job accidents and occupational diseases. It pays medical claims, workers' lost wages and other disability benefits. National insurance companies that deserted Florida in the 1980s have been coming back to the state since Florida reformed its workers' comp insurance system in 1993. That means more competition for the state's self-insurance funds.
Along with competition, managed care likely will be key to holding down future workers' compensation insurance rates and getting injured employees back to work quickly. As of Jan. 1, workers' compensation medical claims must go through a managed care system similar to the networks run by commercial health care providers. Small-business owners are "interested in making sure the injured employee gets the right kind of care," says Fred A. Hunt, president of the risk and insurance solutions group for Riscorp Inc., a Sarasota-based provider of managed care for workers' compensation. "There's always the goal of a quick rehab and return to work."
But on-the-job injuries typically have taken up to twice as long to mend as similar non-workplace injuries, says Carol D'Alessandro, Southeast regional director for MetraComp Inc., a workers' compensation managed care company. That's partly because a lack of coordination and communication among physicians, employers and workers lets workers take advantage of the system, stringing out their time away from work. With managed care, a "gatekeeper" physician coordinates care with the goal of giving injured employees appropriate treatment, cutting costs and reducing the number of lost-time days. "It will get them out of the workers' comp welfare system," says D'Alessandro. Florida is also experimenting with a single insurance policy to cover employees around the clock for accidents and illnesses, whether job-related or not. This summer, pilot single-policy programs begin in Hillsborough, Pinellas, Pasco, Dade, Broward and Palm Beach counties.
--
Safety Net
Poring over the fine print of an insurance policy isn't much fun. But, as any business owner who survived Hurricane Andrew can attest, the right insurance coverage can make or break a company.
It's not cheap, but unlike home owners, business owners haven't seen the post-Andrew cost of property insurance skyrocket. "The general consensus among policymakers is that the commercial property-casualty market wasn't jolted as much as the residential home market," says Bill Herrle, Florida state director of the National Federation of Independent Business, which represents more than 23,000 Florida small businesses.
Insurance costs for both residential and commercial property are on the rise, however, and many experts predict substantial increases in the future. To make educated insurance decisions, an owner should spend a few hours analyzing his or her company's assets and risks. Determine what's covered and what's not under current policies, then talk to an insurance agent or broker about how to fill in gaps and update limits to match current property valuations.
Begin a business insurance review by evaluating property and liability coverage, the two key types of protection.
Property. "Replacement cost" coverage pays to replace or rebuild buildings and other physical assets, as long as the property is insured for its replacement value at the time of its loss. "Actual cash value" coverage reimburses the policy holder only for the depreciated value of the property. Malachy T. Hogan, executive vice president of Aon Risk Services Inc. of Florida in Boca Raton, says go for the replacement coverage even though it costs a bit more. He explains, "The object of any insurance policy is to give you back what you had before."
Liability. If someone sues, this coverage protects a business from financial loss as a result of injuries, deaths or property damage caused by a business' products, operations or employees. "Premises and operations" coverage pays when a business is legally responsible for an injury claim if, say, someone slips and falls on the company's property. "Products and completed operations" coverage, commonly called product liability, helps pay for monetary losses that result from injury or damage caused by a company's product. A type of liability coverage required in Florida is commercial automobile insurance. It covers vehicles owned by the company or, alternatively, any vehicle operated by the company's employees.
In most cases, property and liability insurance policies are sold packaged with other special coverage, including:
Flood. The National Flood Insurance Program (NFIP), operated by the federal government, provides much of the flood insurance available nationwide. For the best protection, make sure both the building and contents are covered by your policy, even though mortgage lenders generally require insurance only on the building. Through the NFIP, a small business' buildings and contents each can be insured for up to $500,000.
Windstorm. It's expensive and generally comes with high deductibles, but very important in Florida, says Hogan. Type of construction, size of the structure, proximity to water and location in the state all will determine cost.
Business Interruption. When a business owner must close because of an insured property loss, a business interruption policy called "business income insurance" pays ongoing expenses such as rent, utilities and some or all payroll expenses. "Extra expense insurance," another type of business interruption coverage, reimburses for special expenses that help a business minimize total loss by getting up and running. For example, if a business can restart operations in a week, rather than a month, by paying a surcharge to ship replacement equipment by air express, the extra expense insurance would cover the air express charge. Keep in mind that the bulk of interruptions occur in the first 30 days after a disaster or accident, so check the policy's waiting period.
How much insurance is enough? Find out how much insurance is carried by comparable businesses in your area and use that as a guide. To hold down insurance costs, consider accepting a higher deductible. And by the way, it's important to take a lesson from Andrew's victims and put original copies of insurance documents in a waterproof, fireproof container or safety deposit box. For more information about insurance for Florida small businesses, request the Department of Insurance's "1995 Small Business Consumer Guide," 904/922-3100 or download it from the Internet (http://www.dos.state.fl.us/fgils/insurance/95sbiz.htm).
