2009 Risk Management Conference

1. 2009 Risk Management Conference Risk Management… Protecting Your Bottom Line

2. Discussion Points • H1N1-Pandemic • Industry Loss Trends • Copper Theft • Equipment Theft • Lightening Loss

3. H1N1 Are you really prepared?

4. Novel H1N1 Influenza Novel H1N1 (referred to a swine flu early on) is a new influenza virus that is spreading from person-to-person. The United States government has declared a public health emergency in the U.S. in response to the H1N1 outbreak. CDC’s response goals are to: • reduce transmission and illness severity • provide information to help health care providers, public health officials, and the public address the challenges posed by this emergency

5. Novel H1N1 Influenza • The first cases of human infection with Novel H1N1 influenza virus were detected in April 2009 in San Diego and Imperial County, California and in Guadalupe County, Texas. • The virus has spread rapidly. • The virus is widespread in the United States at this time and has been detected internationally as well.

6. Novel H1N1 Influenza • Influenza is always serious – each year in the United States, seasonal influenza results, on average, in an estimated 36,000 deaths and more than 200,000 hospitalizations from flu-related causes. • Because this is a new virus, most people will not have immunity to it and illness may be more severe and widespread as a result.

7. Signs and symptoms • Symptoms of Novel H1N1 flu in people are similar to those associated with seasonal flu • Fever • Cough • Sore throat • Runny or stuffy nose • Body aches • Headache • Chills • Fatigue • In addition, vomiting (25%) and diarrhea (25%) have been reported. (Higher rate than for seasonal flu)

8. How does Novel H1N1 Influenza spread? • This virus is thought to spread the same way seasonal flu spreads • Primarily through respiratory droplets • Coughing • Sneezing • Touching respiratory droplets on yourself, another person, or an object, then touching mucus membranes (e.g., mouth, nose, eyes) without washing hands

9. Can you get Novel H1N1 Influenza from eating pork? No. The Novel H1N1 influenza virus (formerly referred to as swine flu virus) is not spread by food. You cannot get Novel H1N1 flu from eating pork or pork products. Eating properly handled and cooked pork products are safe.

10. What can you do to protect yourself from getting sick? There is no proven vaccine right now to protect against this new H1N1 virus. However, everyday actions can help prevent the spread of germs that cause respiratory illnesses like influenza.

11. Take these everyday steps to protect your health • Wash your hands often with soap and warm water, especially after you cough or sneeze. Wash for 15 – 20 seconds. • Alcohol-based hand wipes or gel sanitizers are also effective.

12. Take these everyday steps to protect your health • Cover your nose and mouth with a tissue when you cough or sneeze. Throw the tissue in the trash after you use it. • Avoid touching your eyes, nose or mouth. Germs spread this way. • Avoid contact with sick people.

13. If you get sick… • Stay home if you’re sick for 7 days after your symptoms begin or until you’ve been symptom-free for 24 hours, whichever is longer. • If you are sick, limit your contact with other people as much as possible.

14. Watch for emergency warning signs Most people should be able to recover at home, but watch for emergency warning signs that mean you should seek immediate medical care. • In adults: • Difficulty breathing or shortness of breath • Pain or pressure in the chest or abdomen • Sudden dizziness • Confusion • Severe or persistent vomiting • Flu-like symptoms improve but then return with fever and worse cough

15. Emergency warning signs in children If a child gets sick and experiences any of these warning signs, seek emergency medical care. In children: • Fast breathing or trouble breathing • Bluish or gray skin color • Not drinking enough fluids • Severe or persistent vomiting • Not waking up or not interacting • Irritable, the child does not want to be held • Flu-like symptoms improve but then return with fever and worse cough

16. Put a plan in place! • How can you cope with the temporary loss of 30-50% of your workforce? • What positions can telecommute temporarily? • What essential positions must be in the office? • Limit public contact during periods of heavy outbreaks.

17. Industry Loss Trends • Theft is on the rise • Auto Accidents with Injuries are increasing • Lightening strikes are more frequent and severe • Slip and Fall Losses are still driving workers compensation losses

18. Copper Theft

22. Introduction • Scrap copper prices have consistently been at or above $2/lb for about the last 2 years. • As these prices stay at or above even the $1.00 mark the incidence of theft and vandalism will continue to rise. • Economic issues have also played a role in the increase of copper theft. • Materials stolen are only about 5% of the total repair cost. It’s not what they steal but what they destroy.

23. Site Access • Sites should be gated and fenced whenever possible. • The gate should be at the entrance to the road.

24. Lighting • Building, storage and tower areas should be dusk to dawn, lit on all sides. • Lighting circuits should be monitored. If extinguished, an alarm should sound. • Vandalism to lighting typically precedes theft attempts.

25. Presence • Non-office sites should be visited several times per week. • Reel storage should be walked daily.

26. Concealment • Out of site, out of mind • When possible, all copper should be covered or buried. • Any exposed copper should be covered or hidden with paint.

27. Security Systems • All buildings should have monitored systems in place with tabs, motion and other reliable sensors. • Video cameras should be considered.

31. Pre-Vandalism Preparations • Take Photos of your Sites • Visit Remote Site Regularly • Security Procedures as previously outlined

32. Post Incident • Call Law Enforcement • Photograph Everything • Contact the Insurance Carrier • Monitor the site as they frequently come back for more • Review site security procedures

33. Equipment Theft

34. Thefts and Vandalism:Tips from the Thieves • Thieves fear getting caught when stealing, storing, or moving the equipment. The risk of getting caught when selling the equipment is considered low because owners tend not to record serial numbers, buyers of used equipment tend not to check titles, and even with leads, it is difficult for police to identify equipment and link serial numbers to owners. • Sites tend to either be well secured or not—either because the worksite is impossible to secure or due to the attitude of the contractor. There are enough sites with poor security to keep thieves in business for years. It is not necessary to be 100 percent secure, but to be at least better than average, so thieves opt for the less secure sites.

35. Tips from the Thieves • There is no point in setting up security procedures that are either too complex or not regularly checked, as thieves will just watch and wait until security starts to decline. • Employees of your firm and other local firms are both your best allies and biggest risks. They are the ones who will usually be responsible for the implementation of security and may even know something about a theft. They may even be the ones that let the thieves know about poor security. The key is to give then incentives to help rather than hinder. • If you don't record your serial numbers, you can forget about getting your equipment back. Even if recovered, you still have to prove that it is yours. Better still is to find a way of making this information readily available to law enforcement and use signs and decals to let the thief know this has been done.

36. Why are there increases in thefts? • Gun laws--Tougher penalties • Construction equipment=High value • Lighter penalties if caught • Increased security in other business segments (fast food, mini-markets, etc.) • In other words: A soft target

37. Top 10 states for equipment thefts Top 5 = 33% of total (NER, Jan. 2004) • Texas • North Carolina • Florida • California • Georgia • Illinois • Tennessee • Ohio • South Carolina • Indiana Theft rates closely follow equipment volume – where there is more equipment there is more theft. Apart from some “hotspots” the risk of theft is no greater in one state than any other* *NER 2003 Heavy Equipment Theft Statistics report

38. What is stolen? Information taken from police reports • Unpublished Construction equipment • Skid Steers • Compressors • Generators • Pumps • Loaders • Backhoes • And anything else found at a job site

39. What else is stolen (ISO claims information)? • Utility trailers • Lumber • Hand & power tools

40. Construction Site Thefts and Vandalism:What’s the Problem? • According to Insurance Service Office (ISO) there is an increase of 20% per year since 1996 • National Surveys suggest $1 Billon+ in annual losses and associated costs like rental, downtime, management time, and project overrun • Nationally 10%-15% is recovered. CPP=359/922=39%. Autos =62% • Major problem in most areas. Urban, rural and suburban areas. Most thefts from someone’s else’s property not the yard • Security issues may not be a high priority for contractors compared to other exposures (WC, Auto/Fleet, GL) • Insurance Costs for contractors equipment rising due to thefts / VMM • Larger deductibles — Risk Sharing • Prevention Efforts—will help to control insurance costs, keep project on schedule and within budget • Recovery Efforts—will help to control insurance costs and future pemiums

41. Construction Site Thefts and Vandalism: The theft problem Equipment recovery is hindered by: • Time lapse from theft to theft discovery. An equipment theft on a Friday night might not be discovered until Monday morning. With larger fleets or multi-site operations theft may not be discovered for days, weeks, or months. • Data. If an officer stops someone in suspicious circumstances he cannot identify heavy equipment as stolen, as there is no mandated registration system for off-road equipment. • Problems when theft is discovered: • Without registration or title documents the owner may not have a Product Identification Number (PIN) or serial number. • There is no standard format for the numbering of heavy equipment. • It is difficult for the officer or adjuster to even confirm that the equipment ever existed! No PIN or an incorrect PIN renders the loss report almost useless.

42. Not all goes overseas or to Mexico • 90% of recovered items are found within 65 miles of theft site

43. Theft Prevention Efforts Personnel • Your workforce can be either a risk or an ally. Well defined management procedures plus employee incentives can make a difference. Include a confidential reward system for information leading to recovery of equipment and/or arrest of the thief. • Effective identification verification and background checks should be performed whenever you hire people. Check references. • Let employees know that theft impacts the bottom line and therefore, has an effect on their compensation. Consider incentives that are tied to cost reductions related to theft and safety risks. This policy should be in writing. • Conduct safety meetings regularly and discuss loss prevention programs.

44. Theft Prevention Efforts SiteSecurity Fencing • Chainlink (i.e. See through) 8’+ high with razor wire on top, if allowed, and kept clear of brush and debris. • Limit keys, inspect, and repair fencing frequently Lighting - Fenced areas need to be well lighted • Good quality • Placed at the perimeter of the property directed at the worksite • Power sources must be well protected • Consider motion detectors to activate

45. Theft Prevention Efforts SiteSecurity Barriers around equipment - What you use is determined by what you are protecting • “Jersey Barriers” • Low walls or dirt berms • Trenches or ditches – 3 to 4 feet deep sloped so most vehicles can’t be driven across • Posts – 2 to 4 feet tall/less than 2 ft apart/ sunk 4 to 6 feet underground in concrete

46. Theft Prevention Efforts SiteSecurity Locks • If padlocks are used, they should be “high security,” i.e., casehardened or laminated steel and preferably with tamper proof guards. • Combination locks lower security due to the potential for the sharing of combinations with thieves. • When possible, ensure that key-in cylinder locks are protected by a guard to prevent removal. • Case hardened chains used with padlocks should be thick enough to resist torch, saws, or bolt cutters. • Consider cable or wire rope instead of chain as it is harder to cut and requires special tools. Consider “blind” or enclosed locking devices on equipment doors and perimeter gates. • Don’t leave open locks on gates etc. during the day.

47. Theft Prevention Efforts SiteSecurity Signage & message boards • No Trespassing / Private Property / Keep Out • Must be posted for law enforcement to issue citations • Helps in court cases & insurance matters • Sends a clear message that the site is monitored

48. Theft Prevention Efforts SiteSecurity • Neighbor watch program • Law enforcement notified • Private security utilized • Reward Bulletins/ Member of local CPP • Anchoring and Immobilizing Equipment • Security Cameras • Company policy discussing thefts, pilfering, and reward system

49. Theft Prevention Techniques MakeYour Equipment more difficult to steal • Night switch/ Kill switch • Mechanics & others w/ keys • How many keys/ where are they? • Lockable fuel covers • Steering wheel locks • Remove battery • Consider using gauge protectors/Dash board covers and panel locks on your equipment • Leave parked at 24/7 gas station. Buy all fuel there for reciprocal agreement

50. Theft Prevention Techniques Inventory Control Die Stamps • Die stamp your ID number underneath the serial number • Then add one or two more in hidden areas • Duplicate the units PIN / serial number in at least two additional places – one obvious and one hidden