All CAL Departments Update – January 2022

Five HR Trends to Monitor in 2022

Many human resources (HR) functions were quickly reimagined in 2021 due to the COVID-19 pandemic, and HR professionals should continue to expect new challenges in 2022. Here are five HR trends to monitor this upcoming year:

1. Hybrid Workplace Sustainability
Most workplace leaders expect that at least some of their employees will work remotely after the pandemic. As such, many employers will factor in hybrid work when creating or updating workplace policies and processes.

2. Attraction and Retention Amid Labor Shortages
The current labor shortage has been an obstacle for most employers and is likely to continue into the new year. Generally, employees are seeking opportunities that offer better compensation, benefits and flexible work arrangements.

3. Investments in HR Technology
In 2022, many employers will integrate technology into more HR processes or build upon their existing practices. Technologies are being used to create efficiencies and improve processes, such as recruitment, onboarding, and learning and development.

4. Growing Demand for New Skillsets
Desired skillsets vary by organization and industry, but many employers are pursuing high-level digital and communications skills for potential and current employees.

5. Employee Health and Well-being
Employee health and well-being will remain a top concern and priority for both employers and employees. Caregiving, mental health and adjusting to remote work will likely remain top challenges.

Employer Takeaway
As the pandemic evolves, employers will need to innovate and stay on top of trends to meet the needs of employees. Reach out to us today for resources on these topics and other workplace trends.

Business/Commercial Lines
Beware Landlords…Never Let Your Tenants Purchase Insurance On Your Behalf!

In some triple net leases, or just commercial leases in general, we have seen language requiring that the tenant procure the property & general liability insurance on the building for the landlord. That is never a good idea and can often lead to disappointing and unexpected results. Most definitely the landlord should require each and every commercial tenant to carry their own business insurance and also to name the landlord as an “additional insured” on the tenant’s own insurance policy while also submitting, annually, a certificate of insurance as proof. But to ask the tenant to also procure the landlords insurance…No way! Any sensible insurance advisor will encourage all owners of commercial real estate assets to control their own insurance program. That does not mean the landlord cannot be reimbursed for their own insurance costs. Of course the landlord will want the tenant to pay for the property & liability insurance on the asset and that should be included within the lease.

So, why is it not a good idea to have the tenant procure the landlord’s insurance?  When a tenant is left in charge of procuring the insurance for the landlord it is hard to imagine a scenario where they will always have the landlord’s best interests in mind or even understand how best to have the program structured. Historically, why most insurance programs fail is that the policyholder believes that the value of their insurance program is based merely on its cost. The value of an insurance program isn’t based on cost, but how well it responds at the time of need. As a landlord your commercial asset needs to be properly protected and you want to control the following items:

  • The proper replacement cost to repair/rebuild after a fire, for example.
  • The elimination of a co-insurance clause, if possible.
  • At least 12 to 24 months of rental income coverage should a covered cause of loss require the tenant(s) to move out or find a new lease altogether.
  • Having a sufficient amount of ordinance & law coverage. This needs to be added onto a policy. It is typically not on the base coverage form and if it is it may be woefully insufficient.
  • Having a general liability limit including an umbrella for even higher liability limits that is satisfactory to the landlord.
  • Understanding what limitations and major exclusions the policy may have.

Insurance is a contract, not a commodity.

Private Client Services
It’s time to review your Dwelling Coverage!

By now, you may have heard rumblings of sharp increases in the cost to rebuild over the last couple of years. Maybe you’ve read the price of lumber has skyrocketed, or maybe you’re aware of the labor shortages plaguing the construction industry. But what does that mean for you if you’re not planning on a rebuild or a remodel? Well, if you have a claim, it could mean you find yourself dangerously underinsured.

To give some perspective on just how drastically the costs of materials have gone up in 2021, here are some startling numbers from a recent article from Milliman, an actuarial firm based in Seattle, WA:

  • In May of 2021 lumber hit an all-time high of $1,515 per 1,000 board feet, which is an increase of 323% from $358 per 1,000 board feet the year prior.
  • Habitat for Humanity reported that the framing job for one Habitat for Humanity house is typically $6,000. In 2021 the same framing job cost $12,000.
  • According to the U.S. Bureau of Labor Statistics, the price of steel has increased nearly 125% in 2020 and nearly 100% in 2021.

Even if your policy has Extended Replacement Cost, you may find yourself underinsured in the event of a claim. Talk to a contractor that you trust and ask them what prices they are seeing in your area and compare it to your current homeowner’s coverage; you may be surprised that what you thought was sufficient coverage, actually needs to be updated.

The full Milliman article can be found HERE!