Spring 2011
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Bret Dixon Insurance News
Our newsletters are intended to keep you up to date on pertinent industry news and offer more in-depth insight into various types of coverage and endorsements.  We publish our newsletters at least once each quarter.  We hope you enjoy it.
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2011 Construction Season Jeopardized

The entire 2011 construction season is in jeopardy due to what is referred to as the "Wirtz decision" that was handed down by the Illinois Appellate Court for the First District earlier this year.


At issue are a collection of four laws enacted by the state in 2009 to fund the $31 billion "Illinois Jobs Now!" capital development program.  These laws amended the Video Gaming Act and the Capital Spending Accountability Law, as well as amendments to the Illinois Lottery Law, the State Finance Act, the Use Tax Act, the Service Use Tax Act, the Retailers' Occupation Tax Act, the Motor Fuel Tax Law, the University of Illinois Act, the Riverboat Gambling Act, the Liquor Control Act, the Environmental Protection Act, the Vehicle Code and the Criminal Code.


In short, they did things ranging from raising taxes on alcohol and candy to authorizing video poker games in bars and other private establishments.  One Rockwell "Rocky" Wirtz, owner of the Chicago Blackhawks and Wirtz Beverage Illinois, took offense and filed suit, alleging that the legislation violated the "single subject rule" of the Illinois Constitution which requires that legislative bills be confined to a single subject.


On Jan. 26, the appellate court handed down its ruling, agreeing with Wirtz.  In doing so, the court invalidated the increased taxes on wine, beer, alcohol and spirits.  In addition, the court invalidated the higher tax rates imposed on certain candy.  The court also invalidated the legislation that provided the Illinois Department of Revenue with the authority to conduct the lottery through a management agreement with a private manager, and to run a pilot program of lottery ticket sales over the Internet.  Certain fees and fines imposed under the Vehicle Code were also invalidated, as was the grant of jurisdiction to the Illinois Gaming Board to administer and enforce video gaming laws.


Illinois Attorney General Lisa Madigan has appealed the decision to the Illinois Supreme Court.  The court has agreed to hear the case on an expedited timetable and granted a stay in the interim, requiring retailers to continue to collect the questioned taxes.


The problem now is that no one seems to know what the term "expedited" means to the Supreme Court, when a decision might be rendered and what to do legislatively in the meantime.


Pursuant to the expedited schedule, the state submitted its brief outlining it's appeal before the court-imposed March 25 deadline.  Wirtz has until April 25 to respond.  Then the state has until May 2 to respond to Wirtz's brief.  At some point after that, the court will render its verdict.  This process commonly takes many months to play out but, as was seen in the recent case to decide whether or not Rahm Emanuel was qualified to run for mayor of Chicago, it can happen very quickly.


Resolving this matter is a priority agenda item for the Illinois State Chamber of Commerce.  Todd Maisch is the chamber's vice president of government affairs.


"No one knows for certain when the Supreme Court will make a decision," Maisch said.  "The situation is very muddled, very serious, but it's been impossible to get a consensus on the way forward at this point."


Tim Garvey, executive director of the Southern Illinois Builders Association, agrees. He says that the simplest solution is for the Supreme Court to overturn the appellate court ruling, but if and when that might happen is anyone's guess.


"Even if - after the oral arguments are made in May - they were to determine that the law did not violate the single subject rule, it's already put a real crimp in the 2011 construction season," Garvey said.  "And, if the legislative session is scheduled to conclude on May 31, there is no guarantee that the Supreme Court will rule before then, allowing time for the General Assembly to correct the situation if necessary.  So that means that we'll probably lose the current construction season if the subject is not addressed by the end of the session.  Then we're back to the new General Assembly session next winter.  So right now, this whole thing has just got everything hung up in the works," he added. 


Senate President John Cullerton has introduced legislation that would repeal the video poker authorization and add a $1 tax to the pack of cigarettes in an attempt to at least partially stabilize the funding base for "Illinois Jobs Now!."  Under the 2009 law, counties and home rule cities could opt not to allow video poker within their boundaries and some did.  The Illinois Chamber opposes Cullerton's bill, however.


"We'd be very concerned about that," Maisch said.  "We're hearing from a lot of different businesses that have made substantial investments in trying to bring video poker around and essentially being good partners with the state in making video poker work for the capital program.  If video poker is rejected, there'd be an awful lot of businesses that made investments on good faith, and they're going to be out of an awful lot of money.  We think that's a huge fairness issue," added Maisch.


Aside from that proposal, there doesn't seem to be much of a consensus on what to do, according to Maisch.  Some in the legislature want to wait for the Supreme Court's decision and then respond to that.  Others, he says, want to be more proactive and try to save the construction season through legislative action.


"I think that those of us who are interested in infrastructure investment would wish that the four leaders and the governor would spend a little more time together, reach consensus on a course of action and then go," Maisch said.


This article, by Alan J. Ortbals, originally appeared in the April 2011 edition of the Illinois Business Journal.


How to Identify Workers Compensation Fraud

As an employer, you're required by law to carry workers compensation insurance to protect the workers you employ.  If a worker is injured you have to turn the claim in.  But there are some traits that could signal a fraudulent claim to an experienced claims adjuster.

1.  Monday morning reports
The alleged injury occurs first thing on Monday morning, or the injury occurs late on Friday afternoon, but is not reported until Monday.

2.  Employment change
The reported accident occurs immediately before or after a strike, job termination, layoff, end of a big project or at the conclusion of seasonal work.

3.  Suspicious providers
An employee's medical providers or legal consultants have a history of handling suspicious claims, or the same doctors and lawyers are used by groups of claimants.

4.  No witnesses
There are no witnesses to the accident and the employee's own description does not logically support the cause of the injury.

5.  Conflicting descriptions
The employee's description of the accident conflicts with the medical history or First Report of Injury.

6.  History of claims
The claimant has a history of a number of suspicious or litigated claims.

7.  Treatment is refused
The claimant refuses a diagnostic procedure to confirm the nature or extent of an injury.

8.  Late reporting
The employee delays reporting the claim without a reasonable explanation.

9.  Claimant is hard to reach
The allegedly disabled claimant is hard to reach at home.

10.  Changes
The claimant has a history of frequently changing physicians, changing addresses and numerous past employment changes.

The word from our insurance companies is that their experience shows that when two or more of these factors are present in a workers' compensation claim, there is a chance the claim may be fraudulent.  Remember though, these are simply indicators.  Warning signs.  Possible red flags.  Many perfectly legitimate claims are filed on Mondays - and some accidents honestly have no witnesses. 
Reports about insurance fraud statistics each year are staggering.  If you suspect one of your workers trying to "beat the system", discuss your suspicions with the adjuster assigned to the claim and let them dig into the matter.
Be Prepared for Tornado Season
It's been a devastating April across the United States for severe weather.  Thunderstorms and tornadoes are doing hundreds of millions in property damage and over 200 people have lost their lives.  From here in the St. Louis-Metro East area, St. Louis Lambert International Airport was even shut down for a couple of days as the result of a tornadoes (video).  Plenty of states are affected, Alabama, Georgia, Illinois, Indiana, Kentucky, Mississippi, Missouri, New YorkSouth CarolinaTexas, Virginia.  Rising river levels from all the rain that tagged along with these storms is causing residual damage.  The Army Corps of Engineers is debating whether or not to blow up a couple of levees in southern Illinois to initiate a small flood in the hopes of preventing a larger one.
We've seen only a handful of claims filed from our policy holders for fairly moderate damage - no losses of life, no catastrophic damage.  Just some hail or wind damaged roofs, blown down signs and fences.
The scary part is this: April isn't even the worst month for severe storms and tornadoes.  That distinction, historically, belongs to the month of May. So now is probably as good a time as any to review your family or businesses' emergency plan.
First off, it's important to understand the difference in terminology.  A Tornado Watch means tornadoes are possible in and near the watch area.  A Tornado Warning means a tornado has actually been sighted by someone on the ground or indicated by weather radar.  A warning indicates imminent danger to life and property.  Go immediately under ground to a basement storm cellar or an interior room such as a closet, hallway or bathroom - somewhere with quite a bit of framing in a small area.
Some facts about tornadoes:
  • they may strike quickly, with little or no warning.
  • they may appear nearly transparent until dust and debris are picked up or a cloud forms in the funnel.
  • the average tornado moves Southwest to Northeast, but tornadoes have been known to move in any direction.
  • the average forward speed of a tornado is 30 MPH, but may vary from stationary to 70 MPH.
  • tornadoes can accompany tropical storms and hurricanes as they move onto land.
  • tornadoes are most frequently reported east of the Rocky Mountains during spring and summer months.
  • peak tornado season in the southern states is March through May; in the northern states, it's late spring through early summer.
  • tornadoes can occur at any time, but are most likely to occur between 3 p.m. and 9 p.m.
What to Do During a Tornado
If you are in a structure:  go to a pre-designated shelter area such as a safe room, basement, storm cellar, or the lowest building level.  If there is no basement, go to the center of an interior room on the lowest level (closet, interior hallway) away from corners, windows, doors and outside walls. Put as many walls as possible between you and the outside. Get under a sturdy table and use your arms to protect your head and neck. Do not open windows.
If you are in a vehicle, trailer or mobile home:  get out immediately and go to the lowest floor of a sturdy, nearby building or a storm shelter.  Mobile homes, even if tied down, offer little protection from tornadoes.
If you are outside with no shelter: lie flat in a nearby ditch or depression and cover your head with your hands. Be aware of the potential for flooding.  Do NOT get under an overpass or bridge. You are safer in a low, flat location.  Never try to outrun a tornado in urban or congested areas in a car or truck. Instead, leave the vehicle immediately for safe shelter. Watch out for flying debris, debris from tornadoes causes most fatalities and injuries.  
Exempt Casinos from Smoking Ban, Bring State Sorely Needed Revenue
No buts - or butts - about it: since the state of Illinois enacted a public smoking ban three years ago, casinos in the Land of Lincoln have experienced noticeable decline in revenues.
Not that the industry-reported 42 percent drop in casino profits can be attributed solely to the Smoke Free Illinois Act, which became law on Jan. 1, 2008.  Certainly the Great Recession has played a major role in casinos' revenue shortfalls as well.
But nevertheless, on March 29 the Illinois House approved a measure to exempt the state's casinos from the smoking ban.  House Bill 1965 allows smoking in casinos if the state located nearest to the casino allows smoking in its casinos.  Wisconsin allows smoking in its casinos that are owned by American Indians, and Iowa allows smoking on casino floors.
Indiana legislators, like Illinois, are considering an exemption for their casinos from the state's existing smoking ban.
At press time, HB 1965 had passed 62-52 and was headed to the Illinois Senate.  If this exemption does become law, casinos in Illinois will still have nonsmoking sections and will need to go smoke-free if neighboring states ban smoking in their casinos.
Those against the proposed exemption include Senate President John Cullerton, who says the financial gain doesn't outweigh the health risks casino employees would face.  Those in favor include Rep. Daniel Burke, a Chicago Democrat and sponsor of HB 1965.  Burke says it's "irresponsible" for the state to ignore a possibly higher take in gambling taxes when it is in a dire financial crisis.  The state of Illinois gets 50 cents on the dollar from casino revenues.
Short of the occasional Bingo night and Monopoly money, casino-style, fundraiser, I am not a gambler.  The constant din of the slot machines, the crowds and the odds don't do much to tempt me.
That being said, as a business person I find myself reversing my earlier position on the smoking ban in Illinois casinos.  When we first reported on the soon-to-be-enacted Smoke Free Illinois Act on our December 2007 front cover (January 1 'no smoking' law to hurt casinos, cost state millions in revenues"), my opinion on the editorial page was that those who were dedicated patrons of casinos, bars, night clubs and the like would continue to frequent them whether they could smoke in them or not.  As a non-smoker, I rationalized that the smokers would simply take a "smoke break" outside of the venue - in a specially created smokers' area that the new law required to be created for them - and then reenter the establishment to continue their evening. 
But too many of us non-smokers, I think, were focused on the very real health consequences of smoking that maybe we didn't foresee how naive we were about Illinois' smoking and gambling population - and its smoking tourist population as well.  Since the smoking ban came into being, droves of casino patrons took their collective $800 million in slots and table money out of state, and Illinois really lost out.  Were they all smokers?  No, probably not, but maybe their spouse or someone in their group of friends was.  The casino industry attributes this $800 million figure - 42 percent of all its revenues the past three years - to the ban.
If HB 1965, its Senate companion bill and ultimately a law this session to exempt casinos from any more losses due to the smoking ban can help stop the bleeding of one of the state of Illinois' few remaining cash cows, let's put it into action, roll the dice and see.  It seems like less of a gamble than not doing anything.
This opinion piece by Kerry L. Beiser originally appeared in the April 2011 edition of the Illinois Business Journal.  
Indiana Liquor Training Course Completed 
On Monday, April 25th, Bret Dixon Insurance, in conjunction with Illinois Casualty Company put on another Liquor Training class, this time in Indianapolis.  We were able to get about 30 owners and servers trained. 
Getting your employees liquor trained offers many benefits.  Your front-line servers will come away better educated on their responsibilities and duties working with liquor.  This will make them more valuable to your business, as they will have the knowledge to prevent your business from assuming more liability.  Many insurers also offer insurance discounts if your employees have liquor training.   
Thanks to those who turned out for the classes.  We hope you've been able to apply a few things you learned in your businesses.  Stay tuned for future liquor training sessions.  
Understanding Insurance Audits  

Let's just say it: no one likes audits.  When you bought or renewed your policy a little over a year ago, you figured, "that's it, that's the premium, and I'm okay with that price for that coverage."


But then, a few weeks after that policy has expired or renewed, you get these forms.  They want to confirm your type of business, your payroll, your corporate officers, annual sales.  It's time for the audit - a review (and possible change) to a policy after it's already expired.  It seems like hogwash, right?  Unfortunately, it is the only way an insurer can be certain that the premium they charge is commensurate with the risk they take on in writing that policy.  The policy is written based on estimated sales or payroll for the upcoming year, and during an audit they're looking to verify the actual sales or payroll for that time period.  If that risk is more than originally estimated, they want, and are entitled to, additional premium.  If it's less than anticipated because business is down, you want, and are entitled to, return premium.


The right to audit is a condition of nearly every insurance policy, and the companies writing those policies are fully prepared to exercise their rights.


You don't like completing all the paperwork and gathering documents.  You definitely don't like it when you owe additional premium (although getting a return takes the sting out of the additional paperwork).  We insurance agents would prefer not to have to deal with sorting through your payroll information and sending information back and forth between you and your insurance carrier for a policy that's already expired.  And not even the brainiest number cruncher at an insurance company really likes performing audits.  But for the sake of accuracy, they are a necessity.  


Let's talk about the billing processes of insurance companies on audits.  Most companies send a couple of requests for information to perform the audit.  Usually, this is a form a couple of pages long asking about your payroll and sales during the policy term, who is an officer, etc...  If they don't get the information they've asked for after a couple of requests, many companies will estimate the audit; that is, they'll recalculate your payroll for the purposes of the audit by an arbitrary percentage.  They will then begin billing for any amount due based on this estimated audit.  If you do provide the audit information, they will revise the audit per your actual payroll.


You should not procrastinate when you have an audit.  Due to guidelines on insurance carriers, they are under strict timelines to collect (or return) audit premiums.  Most carriers will give you 30-60 days to pay an audit.  If it has not been paid during that time, they have to turn your account over to a collections agency.  They also may issue cancellation on your current policies.  If you've ever had the displeasure of dealing with a collections firm, you know what a headache all the phone calls and letters can be.  Depending on the amount due, the company and the aggressiveness of the collection firm, if you ignore their requests, they could wind up taking legal action.


If it gets to that point, you're probably going to spend more on arguing your case than you would have if you had just complied with the audit, not to mention the stress you might've endured. 


If you have an open or unpaid audit on a Workers Compensation policy, there's more bad news awaiting you.  By law, your insurance carrier has to report you to your state's Industrial Commission, the governing body for Workers Compensation insurance.  If that happens, the next time you go to apply for Workers Comp coverage, you will be unable to get a policy - with any insurer - until the prior audit is resolved.  Unless you've shut your business down, operating without Workers Compensation coverage in effect is a violation of Work Comp statutes in most states.


If you stay open during that period and operate without coverage, you are guilty of a Class 4 felony in most states.  If convicted of that, you would then be a convicted felon and, again, in most states, unable to lawfully hold a liquor license.  Depending on the type of establishment you operate, this could cripple your ability to do business.


There are many different ways a scenario could turn if an unpaid audit is ignored, but the message is simple: Deal with an audit immediately when they happen.  If you believe the payroll information used in the audit is wrong, look into it, right away.  Notify us.  Talk to your accountant to get your last four quarterly 941 forms (also known as the Employer's Quarterly Tax Return) for the insurer to review your payroll. 


If the audit is correct, you need to pay it.  Insurance companies are not likely to forget about the money they're owed, not with stockholders to placate and quarterly earnings reports to file.  Ignoring something won't make it go away.  Often times, it will only balloon into a bigger issue.

Be sure to add our email address to your contact book to ensure that you continue receiving industry updates, informative articles and tasty tidbits.

Bret Dixon Insurance
In This Email
Construction Season Jeopardized
Identify Work Comp Fraud
Preparing for a Tornado
Casinos, Smoking & Needed Revenue
Liquor Training Recap
Understanding Audits
What happens 473 times every hour? 
According to the Department of Transportation, traffic accidents happened at that rate in 2008 (the most recent stats we could find).  Are your personal auto limits up to par, or are you carrying low-limit, cut-rate coverage?

We offer a full-line of personal lines coverages for your home, auto, boats, motorcycles, RVs, and more.  Give us a shot at your next renewal to see how we compete. 
Click here for more information.

Carrier Corner 
We represent over 15 insurance carriers and have access to many more via brokers, but you may only know one or two that we deal with.  Each issue, we'll highlight one of our valued partners in this space. 

Capitol Indemnity Companies
Capitol is an "A" rated company based in Wisconsin that writes business in all 50 states. In business since 1959, we use them to for their wide appetite for commercial risks, such as contractors, restaurants, golf courses and a slew of "main street" businesses.