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The Wisdom of

Risk Management “Fix The Roof When The Sun Is Shining”

By

Carol Corporales

San Diego’s “Go-To” Commercial Insurance Broker

10717 Sorrento Valley Rd., San Diego, CA 92121

CONTENTS

1. What Makes Risk Management Effective…

2. Why Companies Want Commercial Insurance…

3. Stories Of Workplace Matters That Didn’t Go Well…

4. Why Worry?…

5. What Clients Say…

6. Close…

7. Corporate Insurance Quick Reference Guide (Printable)…

Carol L. Corporales, Commercial Insurance Broker - Wateridge Insurance Services 858.202.6187 [email protected] www.clc-insure.com Lic. #0E08247 #0827781

mailto:[email protected]

http://www.clc-insure.com

What Makes Risk Management Effective

Friends who know I’m an insurance broker make fun of me.

How boring, they say, feeling certain the insurance industry is an unexciting place. They are so wrong.

Commercial insurance is not a dull thing. It’s actually quite fascinating.

Especially if you like business….I do.

Commerce is much more like traveling through the wild west on horseback and not knowing what’s behind the next rock than it is boring.

Which is why risk management and insurance, how they combine to help control and maintain the financial health of companies and safeguard the lives of so many is vital for businesses and the world…

That’s more than interesting. It’s sensational.




Coverage against risk and liabilities is best served when viewed as a great degree more than just an expense or a necessary evil.

Insurance companies take on risks that no one else wants to carry and help sustain the existence of enterprises.

My industry and I protect against the exposures, care deeply about safety and restore businesses and lives pretty much every day, in many ways.

When businesses and people are harmed, insurance helps heal them.

It’s skillful, meaningful work that we take seriously on your behalf. Likewise, the decisions you make and the steps you take towards having the correct protection could mean everything to your people one day.




And that’s the best part…

How the focus and effort towards risk and liabilities management is worth even more than the attention we pay to it when we consider the value and importance of the human well-being it helps to protect…

The work we do matters a lot….I may not be able to solve all of your problems, but I promise, you won’t face them alone.

And that’s because I’m 100% focused on your success and the healthy financial future for your company.

Traditionally, and still today, the best way to have questions answered is to pick up the phone and speak with a specialist… Please call and ask me how I can help you protect your company.

Sincerely, Carol Corporales

Your Company’s ‘Go-To’ Insurance Broker




Why Companies Need Commercial Insurance

Business and insurance can both be complicated and though all companies must carry some form of insurance, the more, and who, you know the better your organization will be for it…

The list below is provided so you can view a snapshot of the most prevalent company exposures these days, assess which might apply to your specific business and to also help you with your future coverage planning.

Insurable Risk Management Exposures

• Auto Accidents, Thefts and Damages

• Burglary, Theft and Fraud

• Business Interruption/Loss of Revenue

• Business Malpractice• Contract Breaches• Customer Injury• Cyber Data Breaches -

Digital Crimes• Directors and Officers

Liabilities (“D&O”)• Earthquake Damage• Employee Fraud, Theft,

Forgery• Employer Practices

Liabilities

• Errors and Omissions Liabilities

• Excess Liabilities• Fiduciary Liabilities• Fire Damage• Flood Damage• Freight Loss and

Damage• General Liabilities• Hazardous Waste

Claims• International Operations• Inventory Loss• Legal Malpractice• Machinery/Equipment

Breakdown• Medical Malpractice• Movable Property

• Other Medical Liabilities• Product Liabilities• Property Damage• Public Liabilities• Ransom Payments• Reputational Harm• Shipping Losses and

Damages• Struck By Object• Terminated Operations• Vehicular Accident

Legal Fees• Vehicular Accident

Medical Costs• Water Damage• Weather Damage• Worker Compensation• Wrongful Acts

I’m happy to answer questions for you and help custom-fit the perfect coverage for your company’s exact business requirements.

Best regards, Carol Corporales




Stories Of Workplace Matters That Didn’t Go Well

Even Good Employers Get Sued Sometimes

if you run a business of any size there is more than a fair chance someone or group will eventually sue or steal from your company. Lawsuits can be more than just an inconvenience as can employee theft.

There’s no shortage of cautionary workplace stories and the disruptions that comes with them…

Former L.A. Times Sports Writer T.J. Simers Awarded $7.13 Million

T.J. Simers was a sports reporter and columnist for the Los Angeles Times from 1990 to 2013, when he resigned due to an “intolerable work environment created by the employer.”

Though over the years he wrote about many home runs and touchdowns, in a Los Angeles courtroom it was Simers who hit a grand slam this time.

The jury in his age and disability discrimination case found in his favor and awarded him $7.13 million in damages.




Gender Discrimination at Southeastern Oklahoma State University

Dr. Robert Tudor was hired by Southeastern Oklahoma State University (“SOSU”) in 2004 as a professor. At that time, Dr. Tudor identified as a male. Starting with the 2007 school year, Dr. Tudor began presenting as the female gender, wearing women’s clothing, and using the name Rachel.

Many of Dr. Tudor’s colleagues at SOSU did not respond well to her transgender identification. Every day, Dr. Tudor was on the receiving end of numerous forms of harassment.

On November 20, 2017, the jury found in favor of Dr. Tudor on her retaliation and gender discrimination claims, dismissing her hostile work environment claim.

The professor won two of her three causes of action and the jury awarded Dr. Tudor $1,165,000.




Age Discrimination at Lockheed Martin

Robert Braden first started working in 1984 for RCA. After a series of mergers and acquisitions, Braden became a Lockheed Martin employee in 1995.

Over the next 17 years, Braden rose to the senior staff level as a project specialist.

During a round of layoffs, Braden was fired at the age of 66 though was given no specific reason for his firing. Of the 110 employees who shared Braden’s job title, only five were fired.

All five were over the age of 50. And of the seven employees in Braden’s work group, Braden was the only one who was fired. He was also the oldest.

After a four-day trial, the jury found in favor of Braden and awarded him over $51 million for age discrimination.




Sex and Whistleblower Discrimination Claim Upheld Against Walmart

A former Walmart pharmacist was awarded $31.2 million dollars by a jury in federal court after a trial for her whistleblower and sex discrimination claims.

Maureen McPadden asserted that constant employee turnover in her pharmacy and hiring of inexperienced workers put the public at risk.

After her internal complaint about the issue and a complaint to a state official, she was fired and subsequently sued.

The jury found that McPadden had been discriminated against because of her sex and for reporting violations of privacy and pharmacy safety laws.

Employment Practices Liability Insurance (EPLI):

Unlike larger companies that have resources, small and mid size companies are more at risk for such claims due to more limited assets and the overwhelming task of staying up to date on compliance regulations.

The list of claims EPLI covers can be long. One of the key benefits of EPLI is how it responds to actual and alleged acts. In the examples above, defense costs coverage may have been included, which (if so) would have protected the organization and its Directors and Officers’ personal assets.




http://spigglelaw.wpengine.com/virginia-whistleblower-lawyer/

http://www.scribd.com/doc/297107728/Jury-Hits-Wal-Mart-with-31-Million-Discrimination-Verdict

Cyber Breach Liabilities For A Clothing Manufacturer

An under-insured clothing and accessories manufacturer which receives 50% of its revenue from online ordering recently suffered a severe cvber-data breach.

They only became aware of the breach when the FBI alerted them that a hacker they’d arrested had the credit card numbers of 500,000 of the company’s customers in his possession.

After hiring a forensic investigator, it was found that the cyber-criminal had been hacking into their online shopping carts for over six months and had all of their records. Along with the credit card numbers, he also had the names, addresses, expiration dates, card security codes and email addresses of every one of their customers.

Before being allowed to process credit cards again, the Payment Card Industry Agreement required the company to contract with a second certified forensic investigator to have their systems and other related infrastructure thoroughly examined and software security upgraded.

More costs were incurred as they had to notify each of their affected customers as required by state law. They also needed to offer to pay for one year of free credit monitoring for all of their customers… (continue)




Additionally, to assist with recovery, the company had to hire a public relations firm to help them rebuild customer confidence and attempt to limit as much damage to their reputation as possible.

The cyber breach fallout also brought regulatory fines, penalties, costly legal challenges and disruptions of all types for the company and its employees to live through.

Estimated insurable total expenditures (forensic investigations, legal fees, customer notifications, settlements, crisis management costs, fines, penalties, software, etc.): $11 million

…

Cyber Data Breach Class Action Settlement

A $3.1 million settlement has been reached in a class action lawsuit filed over a Community Health Systems Professional Services Corporation (CHSPSC) cyber-data breach.

Patients filed several lawsuits shortly after being notified of the breach which were later consolidated into a single case by a federal court.

The lead plaintiffs accused CHSPSC of failing to properly protect the personal information of patients in their computer system.

Corporation officials confirmed to the SEC that the data of 4.5 million patients was compromised due to a malware attack.

The company said Chinese hackers used "sophisticated malware and technology" to snare HIPAA-protected information, including patient names, addresses, birthdates, Social Security numbers, telephone phone numbers and possibly even employers, according to the lawsuit.

Fortunately, credit card details and medical data were not compromised though it’s still one of the largest healthcare data breaches to date.

The lawsuit counsel was awarded attorney’s fees of $900,000 by the court for this case.




For Private Company Directors and Officers (D&O’s)

D&O liability insurance exists to protect corporate directors and officers in the event they are personally sued (often in addition to litigation against the company) by investors, employees, vendors, competitors, customers and other potentially involved parties, including government regulators.

The D&O policies typically protect directors and officers by covering legal fees, settlements and other costs related to litigations.

In many cases, when a company appoints or hires new directors and officers, requests for D&O coverage as a condition to protect their personal assets and estates are made by the appointees and new officers to be.

Outside investors such as venture capitalists or other financiers also see this coverage as a way to protect their investment and often require D&O policies be in place before providing funding to a company.

Directors and officers can be sued for a number of real or alleged reasons connected with their corporate positions, including misuse of company funds, misrepresentation of assets, fraud, various forms of discrimination,




failure to comply with workplace laws and lack of corporate governance in other areas.

Simple hiring employees can expose directors and officers to employment practices litigation (EPL), which is usually covered by D&O insurance.

According to a Chubb survey of decision-makers of 451 U.S. companies, one in six company executives (17%) anticipate their business will experience a D&O related loss in coming years; over 90 percent of which with annual corporate revenues of less than $25 million.

The same survey found that one in eight survey respondents had experienced a D&O lawsuit in the past five years. The reported costs to settle and/or litigate those cases averaged $225,682, with some expenditures approaching $5 million.

Creditor Sues For Breach of Fiduciary Duty

A creditor of a private company sued the company, their board of directors and the controlling private equity group alleging breach of fiduciary duty by the board. The creditor further asserted that the private equity group over-leveraged the company in an attempt to compete against more savvy, well-funded competitors. The result was the company filing for Chapter 11 under a mountain of debt and having to lay off hundreds of employees.

The case settled for $18 million. Defense costs were $2.3 million.

Shareholder Seeks Restitution

A minority shareholder of a closely–held corporation alleges that the board of directors and certain officers conspired to assist the majority shareholder in maintaining majority control of the company when the minority shareholder attempted to purchase a greater controlling interest.

At trial, a jury awarded the minority shareholder $4.2 million in compensatory damages and $445,000 in plaintiff’s attorney fees.

Source: Willis




Employee Theft: When Greed, Need and Opportunity Meet

30% Of All Business Failures Are Due To Employee Theft

Linda Clark, a 68-year-old bookkeeper who worked for a credit union in Iowa, recently plead guilty to embezzling almost $2.5 million from her employer between 1978 until she resigned in 2015.

The Credit Union had to liquidate due to Clark's 37-year-long swindle during which she routinely diverted small sums of money into her and her children’s bank accounts.

Clark fits the profile of a small company fraudster well, according to a Hiscox study that reviewed over 400 federal court embezzlement cases.

Their report found the average embezzler to be a small-business, middle-aged employee who works in the accounting and finance department.

Clark's scheme went longer than most though the typical plot extends for five years with a theft of $2.2 million. For schemes that last 10 years, the average loss reaches $5.4 million.

Smaller businesses seem to be more at risk for employee theft. The same study found that 55 percent of embezzlement cases occurred at companies with 100 employees or less. The average loss?….$1.3 million.

Most schemes are not elaborate master plans constructed by financial wizards. The majority divert small sums of money over time, which makes them difficult to detect.

The most common method was funds theft; employees, managers and executives transferring money from the company to their own accounts.

Cases of check fraud (altering checks to be paid to themselves), vendor fraud, false billing, credit card fraud, property theft, payroll fraud and loan fraud are more examples of exposures to be on the lookout for.




Why Worry?

Into every life and company, a little rain must fall.

It’s been said that worry is prayer for things we don’t want.

And knowing how business can be like an ocean; sometimes calm, other times rough and unpredictable, there are plenty of windows for worry and stress to work their way into executive’s minds.

So, how do we alleviate such unhealthy thoughts, anxiety, insomnia and distractions when so many things can happen?…

For starters, insurance companies and brokers can help because we continuously find new and innovative ways of helping companies face risks.

I can also say for certain that sound risk management principles and wise insurance decisions serve vital roles for business and give executive managers plenty of reasons to sleep well.

Corporate insurance is a lifeblood of commerce. A bedrock on which the world’s entire business and financial house is built…




Without insurance protection, there can be no manufacturing, distribution, technology companies, airlines or commercial property ownership…

Banks wouldn’t lend, builders couldn’t build and progress wouldn’t be possible…

We’d be living in mud huts that we had to build ourselves…

There would be no California.

Insurance spreads the risks all companies face. It encourages solvency and facilitates economies. It keeps businesses and families on stable financial footing and offers peace of mind. It protects enterprising companies that deliver innovation and invention.

Commercial insurance takes on the worst risks a company may face and effectively neutralizes them so its executives and fellow employees can go about their lives feeling a high degree of peace and security.

The future may produce surprises but risk management and insurance helps keep companies safe and relieves the worry when done right…




What Our Clients Say

“Carol’s personal service and knowledge always exceed our expectations. She makes sure we are covered but not over-covered.”

- Director of Finance, REMEC Broadband, LLC

“My experience with Carol is that she goes way beyond the basics. She is thorough, timely and keeps me up to date. Best of all, she has our best interests at heart.”

- CFO, Aethercomm, Inc.

“Thank you so much, Carol. We were ‘bragging’ about you earlier. We are so glad that if we had to have a flood, that it happened after partnering with you. Our Operations Manager described you as super sharp. We just feel like we’re in good hands, because we are. Thank you!!”

- HR Manager, DEL REY Systems & Technology

“Carol is not only knowledgeable and accessible, she’s also personable and easy to work with. Her background in technology allows her to quickly understand what our company does, and to pro-actively solve problems that other brokers couldn’t. We view her as a valued member of our team.”

- Office Administrator, E-Band Communications

“I am always able to contact Carol directly and get a fast response, and she really knows commercial insurance. With Carol it’s all about customer service.”

- Controller, Westerly Mechanical Corporation

“You are so attentive to our account, we are truly grateful. Thank you for all you do.”

- Office Manager, Cask Technologies




Close

I’m a bit of a foodie and from time to time enjoy going to the kind of restaurant where the decor is fascinating, the menu options and cuisine is delicious and where the whole experience is unique and pretty much unbeatable every time.

That place where the motivation of the restaurant owner is easy to see; where he or she warmly greets customers and makes sure everything is being handled exactly to their satisfaction.

When you know you’re in the right spot because the whole encounter is a highlight; filled with goodwill, great food and true commitment.

Their example lights the way for others. Where you’re really not just a customer, but treated more like an honored guest.

And it’s never an act. Their purpose and source of joy is to share a genuine experience of excellence with all who come.

…

In very much the same way, what my clients get from me are positive and rock-solid business experiences, fully dedicated, stocked with excellence, from an established commercial insurance broker with nearly two decades of experience, every time…

With a knowing that I will always be a rewarding and highly effective asset for your business enterprise and your professional life too.

And never anything less… Kindest regards,Carol Corporales

CarolCorporales.com


https://clc-insure.com



Quick Reference Guide

Package Policy – combines property, general liability (GL) and auto coverages into one policy Property – carrier rate is applied to the total value of property insured GL – includes Product Liability unless specifically excluded. Rated on estimated annual sales. Sometimes auditable at expiration and rectified against actual policy period revenue Auto – can pay for physical damage repairs caused by theft, weather events or collision. Can also pay legal fees and medical costs associated with accidents

Work Comp – covers medical costs when employees get injured on the job. Based on total annual payroll for each class code assigned for operations by Work Comp Insurance Rating Bureau. Audited at expiration and rectified against actual payrolls

Directors & Officers, D&O - liability insurance protects the company and personal assets of Corporate directors and officers, in the event they are personally sued by stakeholders (shareholders, employees, vendors, competitors, investors, customers, or other parties) for actual or alleged wrongful acts in managing a company. Provides defense and settlement costs.

Employment Practices Liability Insurance, EPLI –provides defense and settlement costs to employers against claims from employees alleging harassment, wrongful termination, discrimination (age, race, gender), etc.

Fiduciary Liability – provides defense and settlement costs for claims against those who administer, manage and oversee employee benefit plans. Typically allege mismanagement.

Errors & Omissions, E&O (Professional Liability / Malpractice) – liability insurance that provides defense and settlement costs to companies found to be legally liable for financial damages to others as a result of negligence or inadequate work or faulty advice or negligence related to a professional service.

Cyber Liability / Privacy Liability – can cover financial losses, notification costs, legal expenses and penalties associated with a data breach or digital crime (ransom/extortion)

Cargo – provides coverage against physical loss or damage to freight during shipment

Crime / Fidelity – covers employer losses from employee theft, fraud or forgery.

Earthquake / Flood – can cover property damage, loss of use and extra expenses incurred as a result of an earthquake or flood. Typically placed separately.

Inland Marine – property coverage for movable items – i.e. equipment that is taken to various jobsites.

International – provides package policy and work comp coverage for operations outside of the US

Kidnap & Ransom – provides experts to manage crisis and monies to cover payments and medical expenses.

Pollution – covers cost of remediation efforts, defense and settlement for claims of bodily injury or property damage caused by release of hazardous waste materials

Umbrella / Excess liability – extends liability limits of underlying policies (Package GL and auto). Excess liability policies mirror underlying policies (coverages, terms, conditions, exclusions). Umbrella policies may offer broader coverage than underlying policies - terms, conditions, exclusions may be different than underlying policies.

Reps & Warranties policy – essentially breach of contract coverage to fortify indemnification given by seller to buyer in sale/merger of a company.

Tail Coverage – extends liability coverage on terminated operations for lingering claims on past work




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