At Scott, our clients often ask us for predictions on how their insurance costs will change year-over-year. While every company has unique characteristics that impact pricing, we can make some general observations and recommendations based on past and current market conditions that can help when preparing for the future.
When it comes to determining which businesses need pollution coverage, most businesses think they know the answer. The manufacturing plant with its tall smoke stacks, the local gas station or the rock quarry down the road. In short: anyone but me.
The misconception around pollution exposure and the need for coverage is based on the fact that most businesses believe that pollution claims arise from traditional environmental claims like oil spills or water contamination. The reality is that pollution claims can come in many unexpected ways. For example, a faulty HVAC unit in a commercial building that starts to release carbon monoxide fumes that can lead to injury to the tenants. Another example is a contractor excavating for the foundation of a building that hits a sewer pipe. Each of these situations arises from the normal operations of the business, but each results in a pollution claim.
At the end of 2017, the U.S Senate and House of Representatives passed the Tax Cuts and Jobs Act, which reduced the corporate tax rate from 35% to 21%. The new tax rate, the lowest since 1938, went into effect on January 1, 2018.
While the full impact of the new plan is yet to be determined, it is expected that the changes will have a significant impact on the affordable housing industry and many of the clients we serve in that sector. The Low Income Housing Tax Credit (LIHTC) helps finance 90% of affordable rental units built across the country. Since these credits are tied to the corporate tax rate, the credits are worth less to investors when the expected tax burden decreases.
Most businesses or firms involved in a merger or acquisition understand and value the traditional/financial due diligence process; however, many remain unaware of other types of risks that could impact the profitability of the deal.
At Scott, we offer a unique perspective through our analysis and assessment of M&A-related risk. With a focus on operations, human resources and culture, we can help uncover blind spots in a company’s risk management, insurance and/or employee benefits programs.
According to an update to Tennessee workers’ compensation law effective earlier this year, any company engaged in the construction industry in the state must be prepared to provide proof of workers’ compensation insurance coverage to officials or face immediate fines.
Tennessee is not alone in requiring this type of documentation. Other states have enacted similar rules with varying degrees of impact and severity over recent years. While it may cause some headaches, ultimately this law serves to help contractors have confidence that subcontracted companies are carrying their own workers’ compensation coverage. This should serve to reduce the risk for the general contractor on the job.