Companies, regardless of size, must have business insurance to cover the costs of potential liability and property damage claims. Despite exercising care and due diligence in every business activity, accidents and issues may still crop up and expose your venture to potential claims and lawsuits. That’s why most states require entrepreneurs to purchase general and specific policies, depending on the industry.
A US-based financial services firm, which also operates an office in Canada, conducted a five-year claims analysis to determine the most common and costliest business insurance claims filed within five years. The study discovered that 40% of companies are at risk of losses from liabilities and property damage within a decade of operations.
Firms may get industry-specific liability coverage and general business insurance policies to safeguard their organizations. To determine which ones to get regardless of your firm, consider the following most common insurance claims:
1. Burglary And Theft
About 20% of the businesses involved in the survey were affected by losses from team members and outsider-initiated activities. A considerable number of organizations have reported losing inventories due to dishonest employees. Conversely, most external losses were attributed to break-ins.
To discourage internal staff from committing such crimes, it’s essential that they get paid and treated well. You may also opt for an insurance policy covering insider theft and forgery. More importantly, invest in high-quality security and surveillance systems to discourage would-be thieves from pushing through with their plans. Conducting thorough background checks on applicants may help deter robbery and other heinous crimes.
2. Water-Related Damages
Physical losses can be inflicted by severe weather conditions and natural disasters such as flooding, heavy snow, and problems in the plumbing system, such as frozen or burst pipes
Insurance providers often cover water-related damages from most common sources, except flooding. However, you may purchase business income protection to maintain your cash flow even if your physical store must close during restoration activities. To prevent snow and plumbing system issues from wreaking havoc on your organization, hire professionals to clean your roof regularly, especially after a heavy snowfall. Additionally, immediately call a plumber and turn off the main pipelines as the leaking starts. It also helps maintain proper indoor temperatures to prevent pipes from freezing during the winter.
3. Damages From Wind And Hail
Strong winds can also topple trees and damage your roof, while flying debris may destroy your brick-and-mortar shop’s walls and other sections. Individuals, including customers and your staff, may also be vulnerable to injuries from wind and hail.
While there’s no foolproof guarantee to prevent such accidents, taking a proactive approach is necessary. Besides getting business liability coverage for third parties, owners must have their staff covered by workers’ compensation insurance. More importantly, a commercial property policy will prevent organizations from paying hefty out-of-pocket repair costs. In addition, it’s a wise idea to keep trees trimmed and have an anti-shatter film for glass installed on your windows and doors.
4. Fire Damages
There’s a fire happening in any of the locations in the United States every 23 seconds, according to the National Fire Protection Association (NFPA). Structural fire occurs every 64 seconds, while a residence may be partially or wholly gutted by flames every 89 seconds. In 2020, about 1.3 million fires were reported to local fire departments, resulting in 3,500 deaths, 15 200 civilian injuries, and almost USD$ 22 billion in property losses.
As a preventive measure, ensure that your electrical system works well and have your staff trained in proper fire response. More importantly, have your pieces of fire suppression equipment ready and have commercial property insurance coverage activated to safeguard your business against fire-induced losses.
5. Guest Slips And Falls
Customer slips and falls may be more common than you think. About five per cent of businesses have reportedly experienced the unfortunate incident of having guests and clients trip and slip on their premises.
Businesses must ensure their premises are organized and safe to reduce these risks. Wet and slippery floors, uneven surfaces, and improperly stacked goods must be avoided at all times. Additionally, general liability insurance coverage can save you from paying hefty medical bills or settlement costs.
Other Common Claims
Clients may be injured in other ways, not only inside business premises. For instance, they can file a complaint if your product was found defective and has caused some damage to them or their family members. Such is called product liability claims. Depending on the losses incurred, a complainant may ask for a costly settlement, mainly if the product caused the loss of lives, as is the case with defective vehicles.
Organizations may also be liable for accidents where a customer or third party gets injured from their company vehicles. The commercial auto insurance must be in place to help cover medical and repair costs.
Businesses need stable revenues to develop and thrive. Unfortunately, they might have to pay thousands, if not millions, in settlement money if they get embroiled in a severe accident. Moreover, these firms may lose more potential income while recovering from such incidents.
In these instances, business liability and income insurance, alongside other specific coverages, can help companies tackle the problem without hurting their bottom line.
Is global inflation nearing a peak? – Al Jazeera English
Calling the top of the current wave of inflation has been a painful exercise for economists and central bankers, who have been proven wrong time and again during the past year.
But data on Wednesday, which showed that some measures of inflation had cooled in the world’s two largest economies, was likely to rekindle a debate about whether the worst might be over after a year of torrid price growth.
United States consumer prices did not rise in July compared with June due to a sharp drop in the cost of petrol, delivering much-needed relief to American consumers on edge after steady prices climbs during the past two years.
And China’s factory-gate inflation slowed to a 17-month low on an annual basis while consumer prices rose less than expected.
After wrongly predicting last year that high inflation would be transitory, most central bankers, including the US Federal Reserve, have stopped trying to put an exact date on when they expect current price growth to peak.
US central bank officials see inflation decelerating through the second half of the year, the European Central Bank puts the peak in the third quarter and the Bank of England sees it in October.
Here are some of the key data shaping the inflation debate:
Raw materials are getting cheaper…
The main culprit for the surge in consumer prices last winter – energy and other raw materials – may be the harbinger of lower inflation this time around.
Prices of critical commodities such as oil, wheat and copper have fallen in recent months after spiking earlier this year. Oil and food items soared after Russia invaded Ukraine.
The fall in prices came amid weaker global demand and economic slowdowns in China, the US and Europe, where consumers are dealing with high prices.
Some indices of inflation are already being affected: fewer firms are reporting increased input costs, and wholesale price rise is decreasing in many parts of the world
…But European energy bills won’t
With winter approaching on the continent, European households are unlikely to see their energy bills come down anytime soon. Recently, there have been talks of rationing in eurozone countries, including in Germany.
This is because gas prices in Europe – which, for years, has relied on Russia for a large portion of its imports – are still four times higher now than a year ago and close to record highs. There has been much uncertainty surrounding gas flow via the Nord Stream pipeline.
Even in the United Kingdom, which has its own gas but very little storage capacity, consumers are set to see their power bills jump in October when the current price cap expires.
There is bad news for German drivers, too, who will see a subsidy at the petrol pump expire at the end of August.
Expectations are (mostly) under control
Some central bankers can take comfort in the fact that investors have not lost faith in them.
Market-based measures of inflation expectations in the US and the eurozone are only just above the central banks’ 2 percent target, while they remain uncomfortably high in the UK.
After the Federal Reserve’s meeting last month, the central bank’s Chair Jerome Powell stressed that the Fed is ready to use all of its tools “to bring demand into better balance with supply in order to bring inflation back down to our 2 percent goal”.
Consumers in the US, eurozone and UK, expect to see inflation stay above the 2 percent target for years to come.
According to a survey conducted by the Reuters news agency, a vast majority of the economists polled said that inflation would stay elevated for at least another year before receding significantly. About 39 percent of economists asked said that they expect inflation to stay high past 2023.
Core prices may be trending down…
Core inflation, the number that measures inflation while excluding the price of volatile components like food and fuel, has started to cool in the US and UK. Some economists predict Japan and the eurozone will follow suit.
Nevertheless, core inflation remains higher than most central banks’ comfort zone both in developed and developing economies. That means that central banks will continue to increase borrowing costs. The US Federal Reserve last month raised rates by 75 basis points for the second consecutive time. The bank meets again in September to consider further tightening.
And an artificial intelligence model used by Oxford Economics suggests core inflation will also peak in Japan and the eurozone in the second half of the year.
The Long Short-Term Memory network, originally developed to help machines learn human languages, parses detailed inflation data to spot patterns that helps it predict the Consumer Price Index in the future.
…But wages are pointing up
Workers’ wages have increased in the last year due to a tight labour market but not as fast as inflation.
The US Employment Cost Index also recently revealed that higher wages also resulted in a significant increase in US labour expenses in the second quarter of 2022.
According to figures released earlier this week, the cost of labour per unit of production increased by about 10 percent for non-farm firms in the US in the second quarter of this year.
One of the main factors influencing pricing over the long term is wages, and if they climb too quickly, a spiral of price rises may start.
“If that happens, we end up with an almost self-fulfilling type prophecy, where firms will start to push price increases onto their customers,” Brent Meyer, policy adviser and economist at Atlanta’s Federal Reserve, recently told Al Jazeera.
Outside of the US, the economic recovery has been more muted, and the impending recession may make it harder for labour to negotiate lower wages.
Steep price drops will bring ‘sanity’ back to housing market in 2023: Desjardins – Global News
Desjardins is forecasting the average home price in Canada will decline by nearly 25 per cent by the end of 2023 from the peak reached in February of this year.
In its latest residential real estate outlook published on Thursday, Desjardins says it’s expecting a sharp correction in the housing market, adjusting its previous forecast that predicted a 15-per-cent drop in the average home price over that same period.
Desjardins says the worsened outlook stems from both weaker housing data and more aggressive monetary policy than previously anticipated.
The Bank of Canada raised its key interest rate by a full percentage point in July, pushing up the borrowing rates linked to mortgages, and further increases are expected this year.
The report also notes housing prices have dropped by more than four per cent in each of the three months that followed February, when the national average home price hit a record $816,720.
Despite the adjustment in the forecast, prices are still expected to be above the pre-pandemic level at the end of 2023.
Regionally, the report says the largest price corrections are most likely to occur in New Brunswick, Nova Scotia and Prince Edward Island, where prices skyrocketed during the pandemic.
“While we don’t want to diminish the difficulties some Canadians are facing, this adjustment is helping to bring some sanity back to Canadian real estate,” the report said.
The authors also note that the upcoming economic slowdown will ease inflationary pressures enough for the Bank of Canada to begin reversing interest rate hikes. Desjardins expects the Canadian housing market to stabilize late next year.
Bidding wars a thing of the past in Calgary’s once hot housing market
© 2022 The Canadian Press
Canada Pension Plan reports $23-billion loss in June quarter as markets churn – The Globe and Mail
The Canada Pension Plan Investment Board said it lost 4.2 per cent in its most recent quarter, subtracting $23-billion from the fund’s assets.
It could have been worse: The three months ended June 30 were awful for most investors. According to Royal Bank of Canada’s RBC I&TS All Plan Universe, defined benefit pension plan assets decreased by 8.6 per cent, tied with the third quarter of 2008 for the biggest decline in the 28 years RBC has been began tracking Canadian plan performance.
The S&P Global LargeMidCap Index, a measure of stocks CPPIB uses as 85 per cent of its benchmark reference portfolio, fell nearly 13.5 per cent in the quarter. The FTSE Canada Universe All Government Bond Index, the remaining 15 per cent of the benchmark, fell nearly 6 per cent. Blended, that means CPPIB beat a benchmark of negative 12.4 per cent by more than eight percentage points.
CPPIB closed the quarter with assets of $523-billion, compared to $539-billion at the end of the previous quarter. The investment losses were offset by $7-billion in contributions from the Canada pension Plan.
In the early days of the COVID-19 pandemic, when global markets tumbled, the CPPIB asset mix blunted the pain, and the pension fund manager lost much less money than an ordinary investor in the stock market. However, CPPIB often trails when public stock markets rise rapidly, as they did in several recent quarters when investors shook off their pandemic fears.
Now, we have returned to falling markets, and CPPIB is outperforming them.
“Financial markets experienced the most challenging first six months of the year in the last half century, and the fund’s first fiscal quarter was not immune to such widespread decline,” John Graham, CPPIB chief executive officer, said in a statement accompanying the returns. “The uncertain business and investment conditions we noted in the previous quarter continue, and we expect to see this turbulence persist throughout the fiscal year.”
CPPIB said its loss was driven by declines in public stock markets, but investments in private equity, credit and real estate also contributed “modestly.” CPPIB also lost money in fixed income investments, such as bonds, due to higher interest rates imposed by central banks to fight inflation.
Gains by external portfolio managers, quantitative trading strategies and investments in energy and infrastructure contributed positively. CPPIB also recorded foreign exchange gains of $3.1-billion as the Canadian dollar weakened against the U.S. dollar. (Most of CPPIB’s investments are held outside Canada, but it reports results in Loonies.)
The Canada Pension Plan, founded in 1966, is the primary national retirement program for working Canadians. The government created CPPIB in 1999 to professionally manage the plan’s money. Over time, CPPIB has embraced active management and its blend of stocks, bonds, real estate, infrastructure, private equity and other specialized investments has outperformed public markets and its reference portfolio.
While CPPIB reports quarterly, it points to its multigenerational mandate and likes to emphasize its long-term returns. The plan’s five-year net return, net of investment costs, was 8.7 per cent through June 30; the 10-year net return was 10.3 per cent.
CPPIB’s annualized return for the 10 years ended last Sept. 30 was, at 11.6 per cent, the highest 10-year performance figure in its history.
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