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Employee Benefits

October 27, 2026

Before You Raise Employee Premiums in 2027: Health Plan Design Levers That Lower Cost First

Health plan design is about to carry more weight than it has in two decades. PwC’s Health Research Institute projects group medical cost trend of 9% for 2027, the highest in 17 years, and the Business Group on Health found large employers expecting a median 9.2% increase before plan changes. The fastest response is raising what employees pay. Before you do, work through four levers that lower spending without moving it onto paychecks.

Why Raising Contributions Makes a Weak First Move

Cost shifting is already underway. The KFF 2026 Employer Health Benefits Survey found 44% of large firms raised the share of premium workers pay in response to projected increases, and covered workers now contribute $7,471 a year toward family coverage, up 9% from 2025. At smaller firms the burden is heavier: workers pay 37% of the family premium on average, compared with 25% at larger firms. Employers in the Northeast start from a higher base, with average family premiums of $31,378.

Every dollar shifted to employees saves the plan a dollar today. It also pushes some employees to waive coverage, delay care, or take calls from recruiters. Shifting cost leaves the underlying trend untouched, so next year’s renewal starts from the same problem.

A Four-Lever Health Plan Design Framework

Rank each lever by savings potential and employee disruption, then pull the low-disruption levers first.

Lever 1: Pharmacy, Where a Quarter of the Spend Sits

Pharmacy accounts for about 25% of large employers’ health spending, according to the Business Group on Health, and more than 85% of the health plan actuaries PwC surveyed expect pharmacy trend to outpace overall medical trend in 2027. Review your pharmacy benefit manager contract for rebate pass-through, spread pricing, and audit rights. Look at lower-cost generic sourcing as well. KFF found 33% of employers with 50 or more workers already offer access to third-party mail-order generic programs. Our pharmacy management specialists can benchmark your contract terms.

Lever 2: Steer Care to High-Value Providers

Hospital price increases rank among the leading cost drivers employers named in the Business Group on Health survey. Plan design can respond by rewarding employees who choose efficient options. Lower copays for high-performing providers, centers of excellence for joint replacement and spine surgery, and low-cost virtual primary care reduce total spend while making the plan feel more generous to the employee who uses them.

Lever 3: Get Ahead of High-Cost Claims

Cancer was named the top cost driver by 70% of employers in the Business Group on Health survey, up from 58% a year earlier. In most plans a small number of large claims drives a large share of spend. Early identification through claims data, nurse case management, and second-opinion programs can change the course of a costly episode. Self-funded employers should also confirm that stop-loss terms still fit the current claims profile.

Lever 4: Hold Vendors Accountable With Data

Many plans carry point solutions that nobody has measured. Ask each vendor for engagement and outcome data, and cut the ones that cannot show results. KFF found that 60% of large employers agree they can obtain enough information to understand the prices their plan pays providers, which leaves a sizable minority deciding without it. Our data analytics and benchmarking team helps employers get the claims reporting they need to make these calls.

If You Do Shift Cost, Shift It Carefully

Some cost sharing may still be necessary. Tie contribution increases to salary bands so lower-wage employees absorb less, seed HSAs to soften higher deductibles, and explain the change alongside the levers you have already pulled. Employees accept a modest increase more readily when they can see the employer worked to hold it down.

What to Watch Next

Watch three signals between now and your next renewal. First, pharmacy trend, especially how carriers price GLP-1 coverage; KFF found 12% of large employers that do not cover these drugs for weight loss had dropped that coverage within the past year. Second, early 2027 claims experience, since KFF notes forecasts again point to premium increases approaching double digits. Third, your own high-cost claimant report, the clearest signal of where the next renewal is headed. Tooher-Ferraris can model each lever against your claims data before your renewal decision is due.

Construction

October 17, 2026

Wrap-Up Insurance: When OCIP and CCIP Make Sense and When They Don’t

Wrap-up insurance is a single program, bought by the project owner (an OCIP) or the general contractor (a CCIP), that covers most project participants under one set of policies. Sales pitches promise lower costs and fewer gaps. Neither promise holds on every job, and small and mid-sized contractors often carry the hidden costs. Here are four myths worth testing before you bid on a wrapped project.

Myth 1: A Wrap-Up Always Lowers Total Insurance Cost

Owners adopt wraps to gain control over purchasing, and savings are possible on large, long projects. Law firm Davis Wright Tremaine notes that owners typically consider an OCIP on projects above $50 million, and it offers no savings figure, only the expectation that tighter purchasing “should lead to cost savings.” The same analysis points to higher deductibles and more administrative work for the sponsor. A program that trims premium but raises deductibles and staffing needs can leave total cost flat or higher. Wrap-up insurance rewards the party that models the full picture, including deductibles, administration, and the credit demanded from every trade.

Myth 2: A Wrap-Up Covers Everyone on the Project

Coverage gaps shrink inside a wrap. They do not disappear. Architects, engineers, and off-site suppliers or fabricators may fall outside the program, and contractors still need separate policies for off-site work and auto liability. Read the enrollment rules and exclusions before you assume the certificate of insurance is no longer your problem. Bonded contractors should also confirm how the wrap interacts with their surety relationship, since owners sometimes tie bonding requirements to the program. Our commercial insurance team will review a wrap manual with you before you commit.

Myth 3: Subcontractors Always Benefit From the Higher Limits

Under a typical OCIP, subcontractors can access limits of $25 million, compared with the $1 million or $2 million many carry on their own policies, according to Davis Wright Tremaine. That upside has a price. Deductibles generally run higher, and owners or contractors may pay part of a deductible regardless of fault, which sparks disputes over who funds it. Most bid documents also require you to deduct your own insurance costs from the price. Make sure that credit matches the premium you would actually save, and that the deductible exposure is priced in.

Myth 4: Once a Wrap Is Bound, Your Own Policies Matter Less

Contractors still need their own general liability, auto, and professional coverage, plus protection for work performed away from the wrapped site. Some contractors also resist uncapped indemnity beyond the wrap’s limits when their own limits run higher. Keep your program in place and ask your broker to coordinate the two so exclusions line up rather than overlap. Gaps tend to appear at the seams, where your policy defers to the wrap and the wrap defers back. Law firm commentary, including this Jones Day overview, is a useful starting point for the vocabulary.

When Wrap-Up Insurance Does Make Sense

Wraps earn their place on large, multi-year projects with many trades, where consistent limits and fewer finger-pointing disputes outweigh the administrative load. Owners gain predictability, and a well-run program can shorten the argument over whose policy responds after a loss. Wrap-up insurance is a tool, and like any tool it works when the project suits it. For most small and mid-sized contractors, the practical task is pricing the wrap correctly. Ask four questions before you sign: Who pays the deductible? What does the program exclude? How long does completed operations coverage last? What credit does the owner expect?

Frequently Asked Questions

What is the difference between an OCIP and a CCIP?

An OCIP is purchased by the project owner. A CCIP is purchased by the general contractor. Both pool coverage for participants on a single project.

Which lines of insurance sit inside a wrap?

General liability, workers’ compensation, and excess liability often sit inside a wrap, and builder’s risk is sometimes included. Confirm the exact lines in the wrap manual.

Can a small subcontractor decline to enroll?

Enrollment is usually required by the subcontract. Review the terms before you bid.

Employee Benefits

October 16, 2026

Caregiver Benefits That Work: What Employers Can Offer 63 Million Family Caregivers Without Building a New Program

November is National Family Caregivers Month, and the numbers behind it have changed quickly. AARP and the National Alliance for Caregiving count 63 million Americans now caring for a family member, roughly 45% more than a decade ago. Seven in 10 working-age caregivers also hold a job. For employers, caregiver benefits have moved from a niche perk to a workforce issue, and most of the tools needed to address it already sit inside a typical benefits package.

Why Caregiver Benefits Have Become a Retention Issue

Caregiving rarely announces itself at work. Half of working caregivers report disruptions such as arriving late, leaving early, or cutting hours, according to the same research. Nearly half report at least one negative financial impact, like draining savings, and 23% say caregiving has put them in debt. Many are raising children at the same time: 29% of caregivers belong to the sandwich generation, a share that climbs to 47% among caregivers under 50. Roughly one in four adults is now a caregiver, so a 150-person company may have three dozen employees managing care for a parent, spouse, or child while trying to keep up at work.

Those pressures show up as absenteeism, distraction, and quiet resignations. Employees rarely mention a parent’s dementia diagnosis in an exit interview, so the cost often goes unrecorded. Employers who wait for a formal request usually hear about the problem after a valued employee has started looking elsewhere.

Start With the Tools You Already Pay For

Most mid-sized employers can assemble a meaningful caregiving package from four existing pieces.

Employee assistance program: Many EAPs include eldercare referrals, legal and financial consultations, and counseling for caregiver stress. Few employees know it. A SHRM benefits survey found only 13% of companies offer a dedicated eldercare referral service, so the EAP may be the only version your team has.
Dependent care FSA: The federal exclusion rose to $7,500 per household in 2026, the first increase since 1986. Eligible expenses include adult day care for a spouse or relative who cannot care for themselves, a use many employees never consider. Confirm your plan document reflects the higher limit and run nondiscrimination testing early.
Flexible scheduling: Caregiving emergencies follow no calendar. Predictable flexibility, such as core hours or compressed weeks, costs little and targets the disruptions caregivers report most often. Document the options so they apply consistently across departments and shifts.
Leave policies: Review how your policy handles intermittent leave and how it coordinates with any state paid family leave program available to your employees. Written guidance keeps managers from making inconsistent calls.

Add Navigation Before Adding Programs

The hardest part of caregiving is often logistics: finding a home health aide, comparing memory care facilities, sorting out Medicare questions. Caregiver navigation services assign a care coordinator to handle that research, which can save an employee dozens of hours of phone calls during a crisis. Many come bundled with vendors employers already use. Before buying a stand-alone app, ask your EAP, disability carrier, and voluntary benefits partners what navigation support they include today. Our benefits strategy and consulting team can audit what your current vendors offer.

Train Managers to Recognize the Pattern

Managers decide whether an employee feels safe asking for help. A short session on available resources, plus a simple script for routing questions to HR, turns a pattern of late arrivals into a referral. Our human capital management consultants help employers fold that guidance into existing manager training.

Tell Employees in November, Then Tell Them Again

Awareness is the least expensive caregiver support an employer can offer. Use National Family Caregivers Month as the reason to send one clear message listing every caregiving resource, where to find it, and who to call. Repeat it in spring, once open enrollment noise has faded. Connect it to your broader wellness and population health strategy so caregiver stress gets attention alongside other health priorities.

Your Caregiver Benefits Checklist

Ask your EAP vendor for a written list of its eldercare and caregiving services.
Confirm your dependent care FSA allows the $7,500 limit, and tell employees that adult day care can qualify.
Put your flexible scheduling and intermittent leave guidance in writing.
Ask current vendors whether care navigation is already included before buying a new program.
Give managers a one-page resource guide and a script for referring employees to HR.
Send a caregiving resources message this month and schedule a reminder for spring.

Construction

October 15, 2026

Integrated Project Delivery: Who Owns the Risk When the Owner, Designer, and Builder Share It?

Here is the question that stalls most integrated project delivery agreements: if something goes wrong, who pays? Integrated project delivery (IPD) is a contract approach that brings the owner, designer, and builder onto one team with shared risk and shared reward. The honest answer depends on how the contract and the insurance fit together, and many teams sign before checking. Let’s walk through the four questions we hear most.

What does integrated project delivery change about risk?

On a traditional project, each party owns a lane. The owner pays, the designer designs, the contractor builds, and contracts push risk downhill. IPD structures, such as the single purpose entity model in the American Institute of Architects C195 agreement and the ConsensusDocs 300 tri-party agreement, give the core parties shared outcomes. Shared outcomes mean shared exposure, and insurance programs built for separate lanes do not always follow along. Underwriters price each policy against one insured and one scope of work. A team that behaves like a single enterprise can leave them guessing where one party’s responsibility ends.

Does a waiver of claims mean nobody can sue anybody?

Many IPD agreements include a waiver of claims among the core parties. Attorneys quoted in Architectural Record point out two limits. The waiver can weaken when the entity’s indemnification is limited, and a project LLC that exists only for the life of the project may hold no assets to stand behind its promises once the job closes. Injured workers and neighbors never signed the waiver, so it does not stop them from filing claims.

Will our existing policies respond to a shared-risk project?

Often only in part. The same trade-press analysis reported early in IPD’s adoption that how traditional policies handle these situations “is not clear,” and it warned that a design professional serving on a project executive team may face liability for site injuries that a traditional professional liability policy might not cover. That concern carries weight because OSHA identifies falls as the leading cause of fatal injuries in construction. Site safety exposure now reaches people who never carried it before. Review three policies side by side: professional liability for the designer, general liability for the builder, and any project-specific coverage the team buys. Look for contractual liability exclusions, entity or joint venture exclusions, and gaps where shared decision-making blurs responsibility.

What should we do before signing?

Treat the insurance review as part of contract negotiation, because the cheapest time to fix a gap is before the signature page. Bring the carriers into the conversation early. Our Specialty Programs and commercial insurance teams work through this checklist with design-build firms and their partners:

Have your broker and attorney review the draft contract together, not one after the other.
Put the question to each carrier in writing how it treats shared-risk and single-entity structures.
Raise the topic of project-specific policies. AIA attorneys quoted in Architectural Record suggested IPD teams would benefit from broader first-party coverage, such as property policies.
Confirm who counts as an insured, who pays each deductible, and what coverage remains after the project entity dissolves.
Document how decisions are made so responsibility stays traceable.

Teams that complete this review tend to enter the project with fewer surprises. Everyone knows which policy answers which loss, and the owner knows what the shared structure does and does not protect.

Quick Answers

What is integrated project delivery?

It is a collaborative contracting approach in which the owner, designer, and builder work as one team and share risk and reward under a single agreement or a linked set of agreements.

Who carries the risk in IPD?

The core parties share it as the contract defines. Insurance should be reviewed alongside the contract terms so coverage follows the same structure.

Business Insurance

October 5, 2026

The Persistent Coverage Gap: Why Cyber and Flood Still Leave Mid-Market Firms Exposed

The problem is not a lack of awareness. Mid-market business owners understand that cyber incidents happen, and they know that inland flooding is the most common and most costly natural disaster in the United States. However, there is often a significant gap between that awareness and having the insurance coverage that actually responds when a loss occurs. That gap is persistent and expensive. Understanding why it exists is more useful than simply acknowledging that it does.

The Cyber Coverage Gap: What the Numbers Show

Only 38% of small and mid-sized businesses currently carry cyber insurance, according to 2026 industry data. Among those that do, a significant portion carry limits that were set before the current cost environment for cyber incidents. Today, the average cost of a ransomware incident for a mid-market company exceeds $1.2 million in total incident costs, including downtime, remediation, ransom payments, and regulatory response, according to the Ransomware Task Force’s 2026 annual report.

Three specific coverage gaps characterize the mid-market cyber exposure in 2026.

Business interruption sublimits: Standard cyber policies frequently include sublimits on business interruption coverage that are significantly lower than the total policy limit. A $2 million cyber policy with a $250,000 business interruption sublimit provides minimal protection against the income loss that typically represents the largest financial component of a ransomware incident. The sublimit is established when the policy is issued based on the underwriter’s assumptions about the average duration of a business interruption. Those assumptions often do not reflect the actual recovery timelines that mid-market companies experience when their operational systems are encrypted.

Social engineering and funds transfer fraud:Business email compromise, which involves fraudulent wire transfers initiated through impersonated executive or vendor email, generated $2.9 billion in reported losses in 2023, according to the FBI’s IC3. Standard cyber policies vary significantly in whether and how they cover funds transfer fraud. Coverage is typically written as a sublimit within the cyber policy and may require specific security controls to have been in place at the time of the loss. Businesses that have not verified how their cyber policy responds to a BEC loss, which involves a fraudulent wire transfer rather than a network intrusion, may be relying on an assumption that is not supported by their policy language.

Supply chain cyber incidents: A cyber attack that originates with a vendor, supplier, or software provider and then spreads to the insured’s systems presents a different coverage question from a direct attack. Contingent cyber coverage, which is the cyber equivalent of contingent business interruption coverage, addresses losses resulting from a cyber event at a third party whose systems the insured relies on. Very few mid-market cyber policies include meaningful contingent cyber coverage. The SolarWinds and MOVEit incidents demonstrated how extensively supply chain cyber events can affect organizations that were not the direct target.

The Inland Flood Gap: Persistent and Predictable

Standard commercial property policies exclude flood coverage. This is not a surprising provision buried in the policy’s exclusion language. It is a fundamental characteristic of commercial property insurance that has been in place for decades. Flood coverage requires either a separate flood insurance policy or a specific flood endorsement to the commercial property policy. Despite this being widely understood, the commercial flood insurance take-up rate among mid-market businesses in high-risk flood zones remains below 40%, and among businesses outside designated FEMA flood zones, it falls to approximately 10 to 15%.

The designated flood zone framework is itself a coverage gap driver. FEMA’s flood maps are updated infrequently and frequently understate risk, particularly for inland flooding driven by intense rainfall events rather than coastal storm surge. A business located outside a FEMA Special Flood Hazard Area has no mandatory insurance requirement and often concludes that its flood risk is low enough to self-retain. The data does not support that conclusion. In recent major inland flood events, the majority of damaged properties were outside designated high-risk zones.

Two additional inland flood coverage questions deserve specific attention at renewal. The first is the difference between NFIP commercial coverage and private flood insurance: NFIP commercial policies cap building coverage at $500,000 and contents coverage at $500,000, with no business interruption component. Private flood markets offer higher limits, broader coverage triggers, and business income coverage that the NFIP program does not provide. The second is the waiting period: NFIP policies have a 30-day waiting period before coverage takes effect. Private market policies vary. Both waiting periods mean that flood coverage purchased after a storm is forecast provides no protection against that storm.

Why Coverage Gaps Persist Despite Awareness

Many business owners know that cyber incidents and floods can disrupt operations. Yet that awareness does not always lead to a review of their insurance coverage. Three common factors help explain why.

Optimism bias. An owner may recognize a risk in general but believe their own business is unlikely to experience it. That can make cyber or flood coverage seem less urgent than other priorities.

Renewal habits. It is easy to renew a familiar insurance program without revisiting how the business has changed. If a gap existed when the coverage was first purchased, it may carry forward year after year.

Coverage complexity. Policy terms, exclusions and limits can be difficult to assess without a careful review. Business owners may assume their property or cyber coverage addresses an exposure that the policy actually limits or excludes.

Tooher-Ferraris reviews commercial insurance programs to identify potential cyber and flood coverage gaps, compare available options and help businesses align coverage with their actual exposures. Learn more about our commercial insurance services and specialty programs.

For more information on these risks, explore the FBI’s Internet Crime Complaint Center, FEMA’s flood resources and the Insurance Information Institute.

Frequently Asked Questions

Does my commercial property policy cover flood damage?

Standard commercial property policies exclude flood coverage. A separate flood insurance policy, either through the National Flood Insurance Program or the private flood insurance market, is generally required to cover flood losses. This applies regardless of whether the property is located in a FEMA-designated flood zone.

What is the difference between NFIP commercial coverage and private flood insurance?

NFIP commercial coverage caps building coverage at $500,000 and contents at $500,000, with no business interruption coverage and a 30-day waiting period. Private flood insurance offers higher limits, broader coverage triggers, business income coverage, and in some cases shorter or no waiting periods. For businesses with property values or business interruption exposure that exceeds NFIP limits, private flood insurance provides more comprehensive protection.

What cyber coverage gaps are most commonly missed by mid-market businesses?

The three most commonly missed gaps are: business interruption sublimits that are significantly lower than the total policy limit; limited or absent social engineering and funds transfer fraud coverage; and the absence of contingent cyber coverage for losses caused by incidents at vendors or suppliers. Each of these should be specifically confirmed with the broker rather than assumed to be included.

Ready to review your cyber and flood coverage gaps? The team at Tooher-Ferraris has been helping businesses identify and close coverage gaps since 1932. Contact us today to schedule a no-obligation consultation — https://toofer.com/contact-us/

Employee Benefits

October 4, 2026

The ACA Compliance Checklist Every Mid-Sized Employer Needs Before Year End

Q4 is when ACA compliance failures become expensive. The fourth quarter is the deadline window for year-end compliance actions, and it is also when HR teams are most stretched, managing open enrollment, processing plan changes, and supporting employees through benefits decisions while closing out the plan year’s administrative obligations. Compliance items that get deferred in September and October have a habit of becoming enforcement problems in January. Here are seven ACA compliance items every mid-sized employer should complete before December 31, 2026.

1. Verify Your Plan Meets the 2026 ACA Affordability Threshold

The ACA requires applicable large employers (those with 50 or more full-time equivalent employees) to offer coverage that is affordable to full-time employees. For plan years beginning January 1, 2026, the affordability threshold is 9.02% of household income. Coverage is affordable if the employee’s required contribution for the lowest-cost, minimum-value plan option does not exceed 9.02% of the federal poverty level for a single individual.

Employers who have adjusted plan contributions since their last affordability analysis, or who have not recalculated since the threshold changed, should verify that their current contribution structure satisfies the 2026 threshold. An employer whose plan fails the affordability test and who has full-time employees who purchase subsidized coverage through the ACA marketplace may be subject to the employer shared responsibility payment, which for 2026 is $4,020 per full-time employee who receives a subsidy (excluding the first 30 employees).

2. Update HSA Contribution Limits in Payroll and Plan Communications

The IRS increased HSA contribution limits for 2026 to $4,400 for individual coverage and $8,750 for family coverage, with a $1,000 catch-up contribution available for participants age 55 and older. Employers who administer HSA programs through payroll deduction must update their payroll systems to reflect the new limits. More commonly missed: employee communications, enrollment materials, and benefits administration platforms that still display 2025 limits need to be updated before open enrollment closes.

High-deductible health plan (HDHP) minimum deductible and out-of-pocket maximum limits have also been adjusted for 2026. HDHP minimum deductibles are $1,650 for self-only coverage and $3,300 for family coverage. Out-of-pocket maximums are $8,300 for self-only and $16,600 for family. Plans that do not meet these thresholds cannot be paired with an HSA, which means employees enrolled in what they believe to be an HSA-compatible plan may be ineligible to contribute to their HSA if the plan design has not been updated.

3. Confirm Electronic Filing Requirements Are Met

The IRS now requires electronic filing for employers submitting 10 or more information returns, including Forms 1094-C and 1095-C. Employers who previously filed on paper because they were below the old 250-return threshold should confirm their 2026 filing approach and ensure they have access to an IRS-approved electronic filing system or are working with an ACA reporting vendor who files electronically on their behalf. Paper filings from employers required to file electronically are treated as late filings.

4. Audit Machine-Readable Files for Transparency in Coverage

The Transparency in Coverage rules require most non-grandfathered group health plans to make machine-readable files containing in-network rates and out-of-network allowed amounts publicly available. The files must be updated monthly and accessible without registration or login. Employers should confirm that their carrier or third-party administrator is maintaining the files and that the public link works.

5. Complete Nondiscrimination Testing for 401(k) and Cafeteria Plans

Section 125 cafeteria plans and 401(k) plans have nondiscrimination requirements designed to prevent benefits from disproportionately favoring certain employees. The tests and definitions differ by plan type, so employers should review each plan separately. For 2026 retirement plan testing, the highly compensated employee compensation threshold remains $160,000. Employers whose workforce or benefit elections have changed should arrange testing in time to evaluate any needed corrections.

The appropriate correction depends on the plan and the test that failed. Reviewing results before year end may give employers more options to address a potential failure.

6. Prepare COBRA Administration Records for Year-End Review

Year end is a useful time to audit COBRA records. Confirm that qualifying events were reported, election notices were sent, elections were administered and premium payment records are current. Generally, an employer has 30 days to notify the plan administrator of certain qualifying events, and the plan administrator has 14 days after receiving that notice to send an election notice. Different timing can apply when the employer is also the plan administrator. The Department of Labor’s COBRA guide for employers explains these responsibilities.

7. Update Plan Documents and Summary Plan Descriptions

Review plan documents and summary plan descriptions (SPDs) against the changes planned for January 1, 2027. Under ERISA, an updated SPD or summary of material modifications (SMM) generally must be furnished within 210 days after the end of the plan year in which a material change was adopted. Shorter notice rules can apply to certain reductions in health benefits or changes affecting a summary of benefits and coverage. Employers should coordinate the required notices with their open enrollment materials and plan documents.

Tooher-Ferraris helps employers navigate ACA compliance obligations, review benefit plan design and coordinate with ERISA counsel on documentation requirements. Learn more about our HR compliance and legal resources and employee benefits strategy and consulting services.

For additional guidance, visit the IRS retirement plans resources and the Department of Labor’s Employee Benefits Security Administration.

Ready to complete your year-end ACA compliance checklist? The team at Tooher-Ferraris has been helping employers navigate benefits compliance since 1932. Contact us today to schedule a no-obligation consultation — https://toofer.com/contact-us/

Frequently Asked Questions

What is the ACA affordability threshold for 2026?

The ACA affordability threshold for plan years beginning January 1, 2026 is 9.02% of household income. Coverage is considered affordable if the employee’s required contribution for the lowest-cost, minimum-value single plan option does not exceed 9.02% of the applicable federal poverty level for a single individual. Applicable large employers whose plans fail this threshold and who have full-time employees purchasing subsidized marketplace coverage may be subject to employer shared responsibility payments.

What are the 2026 HSA contribution limits?

The IRS increased HSA contribution limits for 2026 to $4,400 for self-only coverage and $8,750 for family coverage. The catch-up contribution limit for participants age 55 and older remains $1,000. HSA-compatible HDHP minimum deductibles are $1,650 for self-only and $3,300 for family, with out-of-pocket maximums of $8,300 and $16,600 respectively.

Which employers are required to file ACA information returns electronically?

Employers filing 10 or more information returns, including Forms 1094-C and 1095-C, are required to file electronically with the IRS. This threshold was reduced from 250 returns in prior years. Employers who previously filed on paper should confirm whether they now exceed the 10-return threshold and arrange electronic filing through an IRS-approved system or ACA reporting vendor.

Construction

October 4, 2026

How to Tell Whether Your Inland Marine Schedule Still Uses Old Cost Numbers

Construction equipment prices have climbed about 30% since February 2020, according to Associated Builders and Contractors analysis of Bureau of Labor Statistics producer price data. That gap matters because an inland marine schedule pays against the values written on it, not against what a replacement costs today. If your schedule still carries pre-2021 numbers, a theft or total loss can leave you funding the difference yourself.

Why an Outdated Inland Marine Schedule Creates a Hidden Shortfall

Inland marine coverage, often written as a contractor’s equipment floater, protects excavators, skid steers, lifts, trailers, and tools while they move between job sites and storage. Each scheduled item carries a stated value, and the policy’s valuation clause decides whether a claim pays actual cash value or replacement cost. A machine that cost $80,000 in 2020 may cost close to $104,000 to replace today. Any schedule frozen at the old figure puts the entire difference on your balance sheet.

Trap One: Scheduled Values That Never Moved

Many contractors add equipment when they buy it and leave the number alone for years. Pull your current schedule and compare each value to a current dealer quote for a comparable new or late-model unit. Any item that sits more than 15% off deserves an update. Confirm with your broker whether the policy pays replacement cost or actual cash value, because depreciation applied to an old purchase price compounds the shortfall.

Trap Two: Blanket Limits That No Longer Fit the Fleet

A blanket limit covers all equipment under one total, which simplifies administration. Check the policy for a per-item cap and for any reporting or coinsurance requirement tied to the total value of your equipment. When the fleet’s real replacement value exceeds the blanket limit, a coinsurance clause may reduce even a small claim. Add up current replacement values once a year and compare the total to the limit. Our commercial insurance team can run that comparison with you.

Trap Three: Rented and Leased Equipment With No Coverage Home

Rental agreements often make you responsible for loss or damage from the moment the equipment leaves the yard. A standard equipment floater may exclude rented units or cap them at a small sublimit. Review how each rental or lease assigns risk, then confirm your policy includes rented or leased equipment coverage at a limit that matches your most expensive rental. If a lessor requires loss payee status, ask your broker to issue the proper documentation before delivery.

A Year-End Equipment Purchase Checklist

Year-end is when many contractors buy equipment, often to line up with tax planning. Confirm the timing with your tax advisor, then handle the insurance side the same week.

Report every new purchase to your broker before the unit leaves the dealer lot.
Check how many days your policy covers newly acquired equipment automatically, and the dollar cap on that provision.
Remove traded-in or sold units so you stop paying premium on equipment you no longer own.
Record serial numbers and photos for every unit and store them somewhere other than the truck.
Review theft prevention practices such as GPS tracking and locked storage. Our safety and loss control resources cover the basics.

Ready to confirm your equipment is insured for what it costs to replace? The team at Tooher-Ferraris has been helping contractors protect their equipment and their balance sheets since 1932. Contact us today to schedule a no-obligation consultation.

Frequently Asked Questions

What is an inland marine schedule?

It is a list of specific equipment items and the values at which a policy insures them against physical loss, including theft, while the equipment is away from your premises or in transit.

How often should I update equipment values?

Update them at least once a year and whenever you buy, sell, or upgrade a unit.

Does a higher scheduled value raise my premium?

Usually yes, because premium follows insured value. The added cost is typically far smaller than the gap you would absorb after a total loss.

Employee Benefits

October 2, 2026

Mental Health Parity Compliance in 2026: What Employers Must Document Before the DOL Asks

Mental health parity compliance is the employee benefits compliance issue most likely to generate enforcement action against a mid-sized employer in the fourth quarter of 2026 and most employers are not prepared for it. The Mental Health Parity and Addiction Equity Act requires that the limitations placed on mental health and substance use disorder benefits be no more restrictive than those placed on medical and surgical benefits. The 2026 plan year brings full documentation requirements into force, and the Department of Labor has elevated scrutiny of employer compliance as a specific enforcement priority.

The enforcement mechanism that makes this particularly urgent is the DOL’s authority to request a plan’s comparative analysis at any time, without advance notice and without a specific complaint triggering the request. An employer that cannot produce a compliant comparative analysis within 45 days of a DOL request is subject to enforcement action. According to compliance guidance published in 2026, the majority of employer-sponsored plans that have been reviewed by the DOL have required remediation. Here are five things every employer must know and act on before December 31.

1. Understand What the Comparative Analysis Actually Requires

The non-quantitative treatment limitation (NQTL) comparative analysis is a detailed, written document that compares the factors, evidentiary standards, and processes used to determine mental health and substance use disorder benefit limitations against those used for medical and surgical benefits. It is not a summary. It is not a checkbox. It requires a specific, reasoned explanation of each NQTL applied to mental health benefits, the comparable limitation applied to medical/surgical benefits, and the basis for concluding that the limitations are equivalent.

NQTLs include prior authorization requirements, step therapy protocols, network admission standards, reimbursement rate methodologies, and fail-first requirements. Each of these must be evaluated and documented on both the mental health and medical/surgical side of the plan. The analysis must be plan-specific. A generic template from a carrier or TPA does not satisfy the requirement unless it is customized to the specific plan’s design and the specific limitations in place.

2. Know Who Is Responsible for Producing It

For fully insured plans, the insurance carrier is required to conduct and provide the comparative analysis to the plan sponsor upon request. The employer’s obligation is to request it from the carrier, review it for completeness, and retain it. “My carrier handles compliance” is not a valid response to a DOL request. The plan sponsor remains responsible for ensuring that a compliant analysis exists and can be produced.

For self-funded plans, the employer or the third-party administrator is responsible for producing the analysis. TPAs vary significantly in the quality and completeness of the comparative analysis documentation they provide. An employer whose TPA has provided a generic template rather than a plan-specific analysis may believe they are compliant when they are not. Reviewing the analysis with qualified ERISA counsel before a DOL request arrives is the only way to know whether the documentation would survive scrutiny.

3. Understand What Non-Compliance Actually Costs

An employer that receives a DOL request for a comparative analysis and cannot produce one within 45 days must notify plan participants that the plan is not in compliance with MHPAEA. This is more than a theoretical consequence. It can create reputational risk, potential litigation from plan participants who were denied mental health benefits that would have been available under a compliant plan, and continued DOL enforcement activity until compliance is achieved.

Litigation risk from plan participants is a less-publicized but potentially more financially significant consequence of MHPAEA non-compliance. Employees who were denied mental health benefits, or who were required to pay higher out-of-pocket costs than they would have for comparable medical benefits, may have a private right of action under ERISA. Courts have permitted retrospective benefit claims in some cases, meaning non-compliance identified in 2026 could result in liability for benefits that were improperly denied in prior plan years.

4. Complete These Three Actions Before Year End

Request the comparative analyses in writing. Ask your carrier or third-party administrator (TPA) for the plan’s documented analyses of its nonquantitative treatment limitations, such as prior authorization and provider network standards. Keep the request, the response and any follow-up questions. If the materials do not address your plan’s practices, identify what is missing and ask how it will be supplied. Federal law continues to require these analyses even though the Departments have paused enforcement of the new provisions in the 2024 MHPAEA final rule. U.S. Department of Labor

Have qualified ERISA counsel review the materials. Counsel can assess whether the analyses address the plan’s actual limitations, identify missing information and advise on the requirements that currently apply. This is particularly useful while the Departments reconsider the 2024 final rule. U.S. Department of Labor

Examine access to mental health providers. Ask for evidence about the plan’s network standards and members’ ability to obtain care, including whether listed providers accept new patients and how long members wait for appointments. Compare relevant mental health and substance use disorder access measures with medical and surgical access, and have counsel advise how the findings should be addressed in the applicable comparative analyses. The DOL’s MHPAEA self-compliance tool provides a starting point for this review. dol.gov

5. Prepare for the 2027 Plan Year Now

MHPAEA compliance is an ongoing responsibility. Use the fourth quarter of 2026 to obtain the analyses, resolve missing information and set a process for reviewing plan changes and network practices in 2027. The Departments’ current enforcement statement makes an important distinction: the pause applies to new provisions of the 2024 final rule, while MHPAEA’s statutory obligations, including the comparative analysis requirement, remain in effect. U.S. Department of Labor

Tooher-Ferraris can help employers organize a benefits compliance review and coordinate with the appropriate advisers. Explore our HR compliance and legal support and employee benefits strategy and consulting services.

Ready to review your plan’s MHPAEA documentation? Contact Tooher-Ferraris to schedule a consultation.

Frequently Asked Questions

What is an NQTL comparative analysis and who is required to have one?

A non-quantitative treatment limitation comparative analysis is a written document required under MHPAEA that compares the limitations placed on mental health and substance use disorder benefits against comparable limitations on medical and surgical benefits. All employer-sponsored group health plans that offer both medical and mental health benefits are required to have a current, plan-specific comparative analysis available for DOL review.

How quickly must an employer respond to a DOL request for an MHPAEA comparative analysis?

Employers have 45 business days to respond to a DOL request with a compliant comparative analysis. If the plan cannot produce one within that period, the employer must notify plan participants of the non-compliance. The DOL may then require corrective action and continue enforcement until a compliant analysis is in place.

What happens if our plan is found non-compliant with MHPAEA?

Consequences include mandatory participant notification, DOL-required corrective action, potential plan disqualification, and private litigation from plan participants who were denied benefits under non-compliant plan terms. Courts have allowed retrospective benefit claims, creating liability for prior-year benefit denials that resulted from non-compliant NQTL applications.

Personal Lines

October 1, 2026

Cyber Awareness Month: The Personal Cyber Threats High-Income Families Face in 2026

October is Cyber Awareness Month, and personal cyber threats have changed significantly over the past eighteen months. The biggest shift is not necessarily the sophistication of the tools attackers use, but how accessible those tools have become. AI-powered capabilities that required significant technical expertise to deploy just a few years ago are now available to less sophisticated actors through criminal service platforms. The result is a meaningful increase in both the volume and precision of cyber attacks targeting high-income individuals and families.

Personal lines cyber insurance premiums are projected to grow from approximately $14 billion globally in 2023 to $23 billion by 2026, according to S&P Global Ratings. This growth reflects both expanding cyber risk and greater recognition that standard homeowners policies may not adequately address digital threats. Many standard homeowners policies exclude cyber events or provide only limited identity theft coverage that may not reflect the costs associated with a significant cyber incident. October is an appropriate time to assess where the greatest exposures exist and determine whether current coverage adequately addresses them.

Deepfake Voice Cloning and Wire Transfer Fraud

AI-powered voice cloning has moved from a theoretical threat to an active fraud risk in 2026. Attackers can use short audio samples from social media videos, voicemail greetings, or recorded calls to create synthetic voice replicas that can sound convincing to listeners and may bypass some verification systems. A common fraud scenario involves a call to a family member, household employee, or financial advisor that appears to come from the homeowner and requests an urgent wire transfer, authorizes a transaction, or directs a change to account information.

High-income households may face greater exposure because the potential financial payoff of a successful attack is higher and because their household structure can create more opportunities for social engineering. Personal assistants, property managers, household employees, and family office relationships can each create additional points of contact that attackers may attempt to exploit. The FBI’s Internet Crime Complaint Center reported more than $2.9 billion in losses from business email compromise and related wire transfer fraud in 2023, highlighting the significant financial impact of these types of attacks.

Smart Home and Connected Device Vulnerabilities

The connected home ecosystem, including security cameras, smart locks, HVAC controls, lighting systems, and home automation platforms, creates a growing attack surface that most personal insurance programs have not yet addressed. Ransomware targeting smart home systems has emerged as a distinct threat category in 2026, with attackers encrypting home automation systems, disabling security infrastructure, or threatening to release security camera footage in exchange for payment.

The insurance implications extend beyond the cyber policy. A smart home intrusion that leads to physical property damage, such as an unlocked door exploited during a subsequent burglary or a disabled security system that allows an unauthorized entry, may result in claims that span cyber, homeowners, and personal liability coverage. Understanding how each policy responds and where gaps may exist between them requires a more deliberate approach to coverage than most standard personal lines programs provide.

AI-Powered Social Engineering Targeting Household Advisors

Some of the most financially consequential personal cyber attacks in 2026 are not aimed directly at individuals. Instead, attackers are targeting the professionals and advisors authorized to act on an individual’s behalf. AI-generated phishing emails that impersonate financial advisors, attorneys, accountants, or family office representatives can be used to initiate fraudulent transactions, redirect distributions, or obtain access to account credentials. These attacks can be difficult to detect because they may incorporate accurate details about professional relationships, account structures, and recent transactions gathered from public records and social media.

Personal cyber insurance policies that include social engineering fraud coverage address the financial loss component of these attacks. Coverage typically extends to losses resulting from a policyholder being deceived into voluntarily transferring funds based on a fraudulent communication. The coverage limit, the waiting period before coverage applies, and the specific definition of a covered social engineering event vary significantly across policies and deserve careful review.

What Personal Cyber Coverage Now Includes and What It Does Not

Personal cyber insurance can help families respond to risks that a homeowners policy may not address. Depending on the policy, coverage may include identity restoration, recovery of digital content, certain types of financial fraud and assistance after cyberbullying or online harassment. Limits, exclusions and required security practices vary by carrier, so it is important to review the terms before assuming a particular loss is covered. Chubb

A cyber incident can also lead to a physical loss. Suppose someone gains access to a smart home system and then burglarizes the home. The homeowners policy may respond to the theft, while a personal cyber policy may cover eligible costs associated with the digital breach. Whether either policy pays depends on the facts and its terms. Reviewing both policies together helps a household understand where coverage may overlap or leave a gap.

Insurance is only one part of that review. The FBI’s Internet Crime Complaint Center annual reports track reported cybercrime, while CISA’s Secure Our World guidance offers practical steps such as using strong passwords and multifactor authentication. Internet Crime Complaint Center (IC3)

Tooher-Ferraris helps individuals and families consider digital risks alongside their property and liability coverage. Explore our additional personal insurance coverages and Private Client Group to see how those protections can fit into a broader insurance program. Tooher-Ferraris

Want to review your household’s personal cyber exposure? Contact Tooher-Ferraris to schedule a no-obligation consultation.

Frequently Asked Questions

Does homeowners insurance cover personal cyber incidents?

Standard homeowners policies typically exclude cyber events or provide only limited identity theft coverage, often between $500 and $5,000. These limits may not reflect the actual costs associated with a significant cyber incident. A standalone personal cyber policy or a cyber endorsement to the homeowners policy with adequate limits may be necessary to address broader digital exposures.

What does personal cyber insurance cover in 2026?

Comprehensive personal cyber policies now commonly cover identity restoration costs, fraudulent wire transfer losses from social engineering, digital asset recovery, ransomware response, cyberbullying and online harassment support, data recovery costs, and crisis management services. Coverage limits, deductibles, and specific definitions vary significantly across carriers.

Why are high-income households more frequently targeted by personal cyber attacks?

High-income households present larger financial rewards per successful attack than median households, maintain more complex household structures with multiple advisors and staff who can be targeted through social engineering, and often have higher public profiles that provide attackers with more reference material for crafting credible impersonations. The household complexity that reflects financial success also creates more attack vectors.

Employee Benefits

September 30, 2026

The Case for a Unified Benefits Platform: Why Fragmented HR Technology Is Costing Employers More Than They Realize

An HR manager at a mid-sized manufacturing company spends the first two days of every month reconciling benefits enrollment data across three systems. The benefits administration platform does not automatically sync with payroll. The enrollment data in the carrier portal does not always match what is in the HRIS. The wellness program vendor has no visibility into which employees are enrolled in the high-deductible plan and therefore which employees would most benefit from the chronic condition management program. The compliance tracking system requires manual updates because it cannot read from the enrollment platform.

This is not a technology failure. It is the predictable result of a benefits technology architecture that was built by adding point solutions to solve specific problems as they arose. Each platform was selected individually, each solved its immediate problem, and none were designed to work together. The accumulated cost of that architecture, measured in administrative hours, data errors, compliance gaps, and an employee experience so fragmented that most workers cannot navigate it effectively, is almost never calculated and almost always underestimated.

What Fragmented Benefits Technology Actually Costs

The direct administrative cost of maintaining disconnected systems is the most visible component. Benefits teams at mid-sized employers using four or more disconnected platforms consistently report spending 15 to 20 hours per month on manual data reconciliation that would be eliminated by a unified system. Multiply that by a blended HR labor cost and the annual administrative burden from fragmentation alone often exceeds the cost of a modern unified platform.

The compliance cost is less visible but potentially more significant. Disconnected systems create reconciliation gaps that generate compliance errors: an employee whose life event change was processed in the enrollment platform but not synced to payroll misses their pre-tax election window. An ACA affordability calculation uses enrollment data from a system that is two weeks behind the HRIS. A machine-readable file for transparency in coverage requirements pulls from a carrier portal that has not been updated since the last enrollment cycle. Each of these errors is individually manageable. Together, they represent a compliance posture that depends on manual oversight rather than systematic controls.

The employee experience cost may be the most strategically significant. Employees who must navigate multiple platforms to understand their benefits, using one system for health plan details, another to check their HSA balance, a third to access their wellness program, and a fourth to submit a life event change, often have lower benefits comprehension, reduced utilization of high-value benefits, and lower overall satisfaction with their benefits package, even when the underlying benefits are competitive. SHRM research consistently shows that employee perception of benefits value correlates more strongly with communication and accessibility than with actual benefit richness.

What Unified and Personalized Platforms Actually Provide

A unified benefits platform consolidates benefits administration, enrollment, HSA management, wellness program access, and compliance tracking into a single employee-facing experience and a single employer-facing administrative environment. The consolidation eliminates the reconciliation burden, creates a single source of truth for benefits data, and provides the data integration necessary for the personalization capabilities that modern platforms now offer.

Personalization is where the strategic value of platform unification is most clearly demonstrated. When a single platform knows that an employee is enrolled in a high-deductible health plan, has an HSA with a balance below the recommended emergency threshold, has a spouse with a chronic condition, and has not participated in the available disease management program, it can deliver a benefits experience that reflects those specific facts. The employee sees relevant program recommendations, targeted communications, and decision support that addresses their actual situation rather than generic plan information designed for the median employee.

AI-enabled recommendation engines built on unified data produce measurably better open enrollment outcomes than enrollment portals that present the same information to every employee. Employees who receive personalized plan recommendations based on their prior year utilization, their family situation, and their financial profile make plan selections that better match their actual needs, generate less adverse selection, and report higher post-enrollment satisfaction. The AI does not replace human judgment. It structures the enrollment decision in a way that helps employees apply their own judgment more effectively.

Practical Questions to Ask When Evaluating Benefits Technology Consolidation

Consolidating benefits technology can require a significant investment. Before replacing systems, employers should identify where their current tools create extra work, increase the risk of errors or make benefits harder for employees to use. Three questions can guide that review.

What does the current setup cost to administer? Track the time spent reconciling data, checking records and resolving issues between systems. Include software fees, outside support and the staff time required during enrollment and throughout the year. Compare those costs with the full cost of a proposed platform, including implementation, training, ongoing support and any contracts that cannot be ended immediately.

Which systems need to share data? A single platform may be useful, but it is not the only way to improve operations. Map how employee information moves between enrollment, payroll, benefits administration and other systems. That can reveal whether a targeted integration would solve the most pressing problems or whether broader consolidation makes sense.

How would the change affect employees? Walk through common tasks, such as enrolling in benefits, reporting a life event, checking an HSA balance and finding an in-network mental health provider. Note how many systems and steps each task requires today, then test how the proposed solution would work. A simpler process is valuable only if employees can reliably find information and complete what they need to do.

Tooher-Ferraris helps employers assess their benefits technology, identify opportunities to improve administration and connect technology decisions to their broader benefits strategy. Learn more about our HR technology consulting and human capital management and HR consulting services.

Frequently Asked Questions

What is a unified benefits platform?

A unified benefits platform consolidates multiple HR and benefits functions, benefits administration, enrollment, HSA management, wellness programs, and compliance tracking, into a single integrated system with one employee-facing interface and one employer-facing administrative environment. The consolidation eliminates data reconciliation between systems, creates a single source of truth for benefits data, and enables the personalization capabilities that require integrated data across benefit types.

How do personalized benefits platforms improve employee utilization?

Personalized platforms use integrated data about an employee’s plan enrollment, prior year utilization, family situation, and health risk factors to deliver relevant recommendations, targeted communications, and decision support tailored to the individual. Employees who receive personalized guidance make better plan selections, access high-value benefits at higher rates, and report stronger overall satisfaction with their benefits package compared to those navigating generic enrollment experiences.

What is the typical ROI timeline for benefits technology consolidation?

Most mid-sized employers see payback periods of 18 to 30 months on administrative savings alone when consolidating from four or more disconnected systems to a unified platform. When compliance cost reduction and utilization improvement are included in the analysis, ROI timelines typically shorten. The most favorable cases involve organizations with significant manual reconciliation burden, recent compliance issues attributable to data gaps, and measurably low benefits utilization relative to the employer’s investment.

Ready to evaluate whether a unified benefits platform makes sense for your organization? The team at Tooher-Ferraris has been helping employers optimize their benefits technology and strategy since 1932. Contact us today to schedule a no-obligation consultation — https://toofer.com/contact-us/

Business Insurance

September 28, 2026

Legal System Abuse and Litigation: What Mid-Market Companies Need to Know

Call it what it is. It is not “social inflation” or “elevated loss trends.” A more accurate description is legal system abuse, which involves a coordinated pattern of litigation strategies, financing structures, and jury manipulation tactics. These practices are costing American businesses tens of billions of dollars annually and reshaping the commercial insurance market in ways that are unlikely to reverse quickly.

In 2024, nuclear verdicts, defined as jury awards exceeding $10 million, appeared in 135 cases. That represented a 52% increase over the prior year, and the total awards from those cases exceeded $31 billion. Annual liability claim costs rose by approximately 7%, representing the highest annual increase in two decades, according to the Swiss Re Institute. Three specific mechanisms help explain these trends. Every mid-market business owner should understand them because understanding how they work is the first step toward taking action.

Mechanism One: Third-Party Litigation Funding

An outside investor, typically a hedge fund or specialized litigation finance firm, provides capital to fund a lawsuit in exchange for a percentage of any settlement or verdict. The plaintiff gains the financial resources to pursue a case that might otherwise be settled quickly or abandoned. The investor receives a financial return if the case succeeds. The defendant, meanwhile, faces a well-funded adversary whose financial interests are tied to securing the largest possible settlement or verdict.

This is not a fringe practice. The litigation finance market exceeded $15 billion in commitments in 2025. Funders evaluate cases the way private equity evaluates investments: expected return, risk-adjusted probability of success, portfolio diversification across case types. They prefer cases against corporations because corporations have assets, insurance coverage, and reputational concerns that make them more likely to settle at elevated amounts. Mid-market companies are not too small to be targets. They are small enough to have less sophisticated legal defense infrastructure than Fortune 500 defendants, and large enough to carry meaningful insurance limits.

The practical consequence for your business: the claim you think you can defend may be financed to run for years. The settlement number that seems reasonable to you is the floor, not the ceiling, for a plaintiff backed by institutional capital.

Mechanism Two: Nuclear Verdict Psychology

Jury awards have increasingly diverged from documented economic damages. A plaintiff with $300,000 in documented economic losses may receive a verdict in the millions or, in some cases, tens of millions of dollars. Plaintiff attorneys can influence how juries perceive corporate defendants by framing them as institutions whose conduct warrants punishment rather than as parties to a commercial dispute whose losses should be compensated.

The use of anchoring is one example of this approach. Plaintiff attorneys may introduce an exceptionally large figure early in closing arguments, such as $50 million or $100 million, with the expectation that the figure will influence the jury’s assessment of damages even if the final award is substantially lower. Broader public attitudes about corporate accountability can also influence how juries respond to arguments that emphasize punitive considerations. The result can be verdicts that exceed the underlying economic losses by a significant margin. Such awards may nevertheless withstand appellate review because appellate courts generally give substantial deference to jury determinations of damages.

For general liability, commercial auto, and umbrella coverage, these verdict trends are the primary driver of rate increases. Carriers are not speculating about future nuclear verdicts. They are paying claims on cases filed several years ago that are now resolving at amounts their original reserves did not anticipate.

Mechanism Three: Privacy Tort Claims

This form of litigation is newer and growing rapidly. Businesses that collect consumer data, including companies that operate websites, run loyalty programs, use session recording software, or deploy targeted advertising, face an expanding body of privacy litigation under state consumer privacy laws, the Illinois Biometric Information Privacy Act, and related statutes. These cases are frequently filed as class actions. In some states, statutory damages allow plaintiffs to pursue per-violation awards that can quickly reach eight or nine figures, regardless of whether individual class members experienced actual harm.

The specific exposure that surprises most mid-market business owners is that general liability policies were not designed to cover privacy tort claims, and many carriers have added explicit exclusions for data-related claims. A business facing a class action alleging that its website cookies violated consumer privacy laws may find that neither its GL policy nor its cyber policy responds cleanly to that claim, depending on how each policy defines the covered event and how recently the policy language was updated.

What Businesses Can Do About It

Businesses can take practical steps to reduce liability exposure. The key is to review contracts, coverage limits and operating records as the business changes, rather than relying on the same approach at every renewal.

Review contractual risk transfer. Work with legal counsel to review indemnification provisions, insurance requirements and other risk allocation terms in vendor contracts, service agreements and client engagements. Confirm that the language reflects each party’s responsibilities and that required insurance can be verified.

Reassess liability limits. Review umbrella and excess liability limits in light of the business’s current operations, contracts and potential claim scenarios. Changes in claim costs and verdicts may also affect whether limits selected several years ago remain appropriate.

Document risk management practices. Keep clear records of safety procedures, employee training, compliance activities and incident response. If a claim arises, those records can help establish what the business did, when it acted and how it followed its procedures.

Tooher-Ferraris helps businesses evaluate liability limits and insurance requirements and build commercial programs around their current exposures. Learn more about our commercial insurance services and Risk Synergy® Portal.

For additional research on liability claim trends, visit the Swiss Re Institute and the U.S. Chamber Institute for Legal Reform.

Frequently Asked Questions

What is third-party litigation funding and why does it affect my insurance?

Third-party litigation funding is the practice of outside investors financing lawsuits in exchange for a share of any settlement or verdict. It affects commercial insurance because it gives plaintiffs resources and incentives to pursue larger awards and longer litigation timelines, increasing both the severity of claims and the cost of defense. Carriers must price this into their liability underwriting.

What is a nuclear verdict and how common are they?

A nuclear verdict is a jury award exceeding $10 million. In 2024, 135 nuclear verdicts were recorded, a 52% increase over the prior year, with total awards exceeding $31 billion. They are concentrated in auto liability, general liability, and premises liability cases. They also disproportionately affect defendants perceived as large corporations, a category that often includes mid-market businesses in plaintiff attorneys’ strategies.

Does my current general liability policy cover privacy tort claims?

It depends on your specific policy language. Many GL policies have been updated with explicit data-related exclusions that may bar coverage for privacy tort class actions. Whether your policy covers a specific privacy tort claim requires a careful reading of the coverage grant, the exclusions, and how recent your policy language is. This is a question worth asking your broker at your next renewal, not after a claim is filed.

Ready to review your liability program against the current litigation environment? The team at Tooher-Ferraris has been helping businesses build defensible commercial programs since 1932. Contact us today to schedule a no-obligation consultation — https://toofer.com/contact-us/

Business Insurance

September 28, 2026

Supply Chain and Macro Volatility: What It Means for Your Business Interruption Coverage

A distributor of industrial components has one primary supplier — a manufacturer in Southeast Asia. In March, new tariffs take effect that raise the cost of the supplier’s components by 28% overnight. The distributor cannot pass the full increase to customers without losing its largest contract. In April, a typhoon causes a three-week production shutdown at the supplier’s facility. The distributor’s domestic inventory runs out in week two. Orders go unfulfilled. Revenue stops. In May, a new geopolitical development triggers port delays that extend the production shutdown’s ripple effect by another two weeks.

The distributor’s business interruption coverage does not respond to any of this. Standard BI requires direct physical damage to the insured’s own property as a prerequisite for coverage. No damage occurred at the distributor’s location. The supply chain disruption — the tariff increase, the supplier’s production shutdown, the port delay — falls entirely outside the coverage grant. Five weeks of lost revenue, accumulated inventory write-downs, and a damaged customer relationship: none of it insured.

This is not an edge case. It is the normal operating environment for mid-market companies in 2026, and the gap between what standard business interruption covers and what supply chain disruption actually costs is one of the most significant uninsured exposures in commercial insurance.

What Standard Business Interruption Was Designed For

Business interruption insurance was designed for a specific scenario: a covered peril — fire, windstorm, explosion — damages the insured’s property and prevents operations. The BI coverage replaces lost income and covers ongoing fixed expenses during the period of restoration. It is essentially a loss-of-revenue coverage attached to a property claim, which is why it requires direct physical damage as a trigger.

That design made sense when supply chains were local, when most businesses depended on their own facilities for their productive capacity, and when the primary business interruption risk was a fire at the factory rather than a disruption at a facility twelve time zones away. The world changed. The coverage structure did not.

The Three Macro Forces Creating Uninsured Supply Chain Exposure

Geopolitical conflict and trade policy volatility are the first force. The combination of active conflicts affecting shipping lanes, shifting tariff regimes, and export control restrictions has made supply chain disruption an expected operating condition rather than an exceptional event for many mid-market manufacturers, distributors, and importers. A business whose supply chain runs through Eastern Europe, the Taiwan Strait, or key chokepoints in global shipping routes is exposed to interruption from causes that standard commercial property and BI policies were never designed to address.

The tariff environment specifically creates a cost-volatility exposure that overlaps awkwardly with business interruption. When a tariff spike makes a previously viable supply chain economically non-viable, the business faces an interruption of its cost model without any interruption of its physical operations. That exposure does not fit cleanly into any standard commercial insurance product.

Secondary weather perils are the second force. Inland flooding, severe convective storms, and extreme heat events are disrupting supply chains at locations that are not the insured’s own facilities. A cold storage facility loses inventory because a power grid serving the region fails during an extreme heat event. A distribution center cannot receive inbound shipments because a secondary road network was damaged by flooding that did not touch the distribution center itself. These are supply chain interruption losses with weather origins — but because they do not involve physical damage to the insured’s own property, standard BI does not respond.

Concentration risk is the third force. Mid-market companies that have optimized their supply chains for cost efficiency have frequently concentrated sourcing in single suppliers or single geographic regions. That concentration delivers cost savings in stable conditions and catastrophic vulnerability in disrupted ones. The pandemic demonstrated this at scale. The current geopolitical and weather environment is demonstrating it again, in slower motion, across a wider range of industries.

The Coverage Structures That Address Supply Chain Risk

Businesses with material supply chain exposure should consider three different coverage structures. Each responds to a different kind of loss, and the policy wording determines what is covered.

Contingent business interruption (CBI) may protect lost income when physical damage at a covered supplier’s or customer’s location interrupts your operations. A typhoon that damages a supplier’s factory is the type of event to examine under CBI. A tariff increase, on its own, generally is not. The supplier or customer, covered cause of loss, waiting period and applicable limit all matter.

Supply chain insurance may address selected interruptions that do not involve physical damage. Depending on the policy, these could include logistics disruption, supplier insolvency or certain political events. Coverage is less standardized than CBI, so businesses should compare the named triggers, exclusions, method of calculating losses and sublimits against their actual suppliers and shipping routes.

Trade credit insurance addresses receivables risk. If a customer cannot pay because of insolvency or prolonged default, a trade credit policy may protect the seller’s unpaid invoices, subject to its terms. It serves a different purpose from coverage for the seller’s own interruption. Allianz Trade

The Business Continuity Institute’s supply chain resilience research offers context for identifying disruption risks. For a broader view of geopolitical and economic threats, see the World Economic Forum’s Global Risks Report 2026. The World Economic Forum publishes that report. BCI

Tooher-Ferraris helps businesses assess these exposures and evaluate coverage as part of a commercial insurance program. Businesses with more specialized needs can also explore our specialty programs.

Frequently Asked Questions

What is contingent business interruption coverage and how does it differ from standard BI?

Standard business interruption requires physical damage to the insured’s own property as a trigger. Contingent business interruption extends coverage to income losses caused by physical damage at a supplier’s or customer’s location — a covered loss at a vendor facility that prevents the insured from operating. CBI does not cover non-physical interruptions such as tariff changes, geopolitical disruption, or supplier insolvency.

Does business interruption insurance cover supply chain disruption caused by tariffs?

Standard business interruption and contingent business interruption policies do not cover supply chain disruption caused by tariff changes, trade policy volatility, or geopolitical events because these are not physical loss triggers. Supply chain insurance, a distinct product class, can be structured to cover non-physical interruption triggers, but coverage terms, triggers, and availability vary significantly by carrier.

What is trade credit insurance and when does a business need it?

Trade credit insurance protects a business against non-payment by customers — specifically, losses arising from customer insolvency, protracted default, or in some policies, political risk affecting the customer’s ability to pay. It is relevant for businesses that extend meaningful credit terms to customers, particularly in industries or geographies where customer financial distress or supply chain disruption could impair payment capacity.

Ready to evaluate whether your business interruption coverage reflects your actual supply chain exposure? The team at Tooher-Ferraris has been helping businesses build complete commercial programs since 1932. Contact us today to schedule a no-obligation consultation.

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Does homeowners insurance cover personal cyber incidents?

What does personal cyber insurance cover in 2026?

Why are high-income households more frequently targeted by personal cyber attacks?

What Fragmented Benefits Technology Actually Costs

What Unified and Personalized Platforms Actually Provide

Practical Questions to Ask When Evaluating Benefits Technology Consolidation

Frequently Asked Questions

What is a unified benefits platform?

How do personalized benefits platforms improve employee utilization?

What is the typical ROI timeline for benefits technology consolidation?

Mechanism One: Third-Party Litigation Funding

Mechanism Two: Nuclear Verdict Psychology

Mechanism Three: Privacy Tort Claims

What Businesses Can Do About It