EMPLOYEE BENEFITS

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Hotline informational paragraphs for January 1990.
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Look for many property and casualty insurance rates to start rising again, probably as early as this month, and perhaps by as much as 20%. That's the conclusion of the newspaper Business Insurance, which surveyed insurers, insurance brokers, and industry analysts in early November. Many of those interviewed said the San Francisco earthquake and Hurricane Hugo would start to turn the market, which is known for soft periods of intense competition followed by hard cycles of price hikes. But it appears that no one expects a repeat of the insurance crisis of the mid-1980s.

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The repeal of Section 89 may not have laid to rest the issue of discriminatory benefits. Section 89 was formally eighty-sixed last November 8, when President Bush signed a bill containing a repeal provision. But Rep. John J. LaFalce (D-N.Y.), who introduced the repeal measure in the House, predicts Congress will take up the issue of taxation of excessive benefits for the highly compensated at a later date. Still, Dave Rehr of the NFIB calls the repeal the greatest small-business lobbying victory of the '80s. He estimates that it has saved from $2,000 to $20,000 for even a $500,000 company.

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A few software companies have begun experimenting with a new way to deal with software piracy: limited-time amnesty programs. XTree Co. held what was apparently the first such program from August through October 1989. More than 5,000 illegal users paid $20 each to register their copies and receive a legitimate updated copy and manual, without fear of penalties. In effect, the pirates got a 70% discount. What XTree got was more than $100,000. Two other software companies, XYQUEST and Kyocera Unison World, have since announced similar programs.

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A new association hopes to make it easier for small companies to get information about global trade. The Association of Small Business in International Trade, in Washington, D.C., bills itself as a clearinghouse where small companies can find out about trade developments and federal trade programs. Founder Dave Buffam says he saw the need while volunteering as international trade director of the SBA's Service Corps of Retired Executives. As of mid-November, however, his start-up had yet to sign up any members. The fee: $175 per year.

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It may get harder to keep good clerical workers if Faxifieds' business concept catches on. The Brooklyn, N.Y., start-up recently began sending out "junk fax" to 5,000 businesses, featuring classified ads for clerical help. The theory is that secretaries and mailroom people handle the fax machines, and so fax is a perfect way to reach them. But employers can protect themselves: New York State law requires Faxifieds to remove complaining companies from its database, and six other states have in the past year passed laws banning or restricting "junk fax."

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New studies confirm that an employee stock owner-ship plan generally won't improve company performance unless accompanied by a substantial amount of employee participation in decisions affecting their jobs. According to Corey Rosen of the National Center for Employee Ownership, six recent studies have independently reached this conclusion. His theory: an ESOP gives employees the incentive to improve the business, but not the means. As a result, performance has only improved significantly in the approximately one-third of ESOP companies with participative management.

-- Martha E. Mangelsdorf

Last updated: Jan 1, 1990




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