The History of Father’s Day

I am fortunate enough to have 3 men I call dad. I won’t go into why but my love for the dads in my life prompted me to dig into the history of Father’s Day. Ironically, Fathers’ Day was started by a woman, Sonora Smart Dodd, who was perplexed as to why fathers weren’t celebrated to the same extent as mothers on an annual basis. In her opinion, her father who was a widower and raised 6 children on his own definitely deserved acknowledgement. And, so it began…this wonderful day that praises the many biological dads, step-dads, men (and women) who are raising their children to be, at the most basic of levels, good people.

From all of us at Libertate, here’s to you Dad!

Click here for more information on this wonderful day.

History Repeats Itself, Are You Prepared?

The organization of exposure performance for a PEO is found in its ability to predict and benchmark against the historic results of peers and the industry as a whole. Historical performance is a metric a lot of people lose sight of. We tend to look at current, or maybe past year performance most often, but come time to forecast losses, promulgate a mod or re-price our business 3, 5, 7, or even 10-year performance comes into play.

We’ve seen time and time again from PEO’s that come time for actuarial review, they are misunderstand or are even surprised with the numbers they are presented. RiskMD bridges the understanding of potential issues within a given portfolio of business entirely. On the fly, you are able to create an accurate Loss Development Triangle with corresponding link ratios for multiple measures. From total incurred, to ‘Loss Time Only’ incurred claims, you can create an accurate triangulation based off your data, for any development interval you would like!

A loss triangle and its corresponding link ratio are the primary methods in which actuaries organize claim data that will be used in an actuarial study. The reason it is called a loss triangle is that a typical submission of claim data from a client company shows numeric values forming a triangle when viewed. The triangle allows you to track loss data at set valuations (development periods) so you can see development from valuation to valuation. The difference between each valuation is known as the link ratio. True development is represented typically in a pure dollar figure, where as a link ratio is represented as the growth between periods.

Within RiskMD you can view a plethora of Loss Triangles. The first selection you need to make is whether you want to organize your triangulation based on accident or policy year. We have taken into account that not all our clients have the same effective dates, so we give you the option to select your program effective date. The next thing you need to think about is what type of triangulation you would like to look at? Below is what’s available in RiskMD:

Total Incurred – A pretty standard triangulation, a measure of development for total incurred (total paid + total reserved)

Total Paid – Measure of development for total paid

Total Reserve – Measure of development for total reserves

Med Only – Measure of development for total incurred if the claim is marked ‘Medical Only’

Lost Time Only – Measure of development for total incurred if the claim is marked ‘Indemnity’

Medical Paid – Measure of development for all medical paid

Medical Incurred – Measure of development for all medical incurred (medical paid + medical reserved)

Indemnity Paid – Measure of development for all indemnity paid

Indemnity Incurred – Measure of development for all indemnity incurred (indemnity paid + indemnity reserved)

Number of Claims – Measure of development for claim count. Will show outliers for claims reported late

% Closed Claims – Measure of development to show your claims closure rate and number of claims still open in correspondence to the accident or policy year it occurred in

Example dynamic Loss Development Triangle

RiskMD worked with a pricing actuary who has been in the field for the past 20+ years to create this dynamic model. Powering the visualization is YOUR data. No matter if you want to see the development on a month-to-month basis, or on an annual development, as long as RiskMD has the data, the visualization can be rendered.

Knowing that, if you are having issues producing year end reports, or if you want to stay ahead of the game and know where you sit prior to your next actuarial study, contact us today! We will get you squared, or need I say triangled away!!

Axios: Latest and Greatest Healthcare Updates

Pretty unreal the concentration of just a few firms that support certain sectors within the healthcare insurance system and how that artificially increases pricing due to lack of competition.

1 big thing: Our health care system is full of monopolies

Even the behind-the-scenes parts of the health care industry are dominated by a small handful of companies — and critics say that drives up prices for everyone, Axios health care editor Sam Baker reports.

Why it matters: The U.S. spends more than any other industrialized country on health care, largely because our prices are higher. And the monopolies that support those high prices could undermine both liberal and conservative dreams of a more efficient system.

The big picture: This is a trend that’s happening at every level.

  • Hospital systems continue to merge with each other and gobble up doctors’ practices, which lets them charge more for the care they provide.
  • Insurers and pharmacy benefit managers are also merging, and are now on track to bring in more revenue than the tech industry’s biggest powerhouses.

Yes, and: That trend toward concentration extends throughout the system, even into sectors that most patients never directly interact with, according to new data from the Open Markets Institute, shared first with Axios.

  • As long as we’re talking about hospitals, for example, let’s look at their suppliers: One company controls 64% of the market for syringes, according to OMI’s data. Just 3 companies control 86% of the market for IV solution. Two companies make 47% of hospital beds.
  • None of those sectors is particularly huge — syringes are the biggest, with $3.8 billion in annual revenue. But in a system that’s already not very competitive, each step without competition feeds into the next one.

“America’s health care crisis is brought you by monopoly,” Open Markets policy director Phil Longman said.

Go deeper.

2. California’s new health care milestones

California Gov. Gavin Newsom
California Gov. Gavin Newsom. Photo: Kevork Djansezian/Getty Images

California will become the first state in the nation to pay for the health benefits of some unauthorized immigrants, after state lawmakers struck a deal yesterday, the AP reports.

  • California will also be the first state to extend the Affordable Care Act’s premium subsidies up the income scale. The deal includes a proposal to provide subsidies to middle-income people making up to 6 times the federal poverty level.

Details: Low-income adults between ages 19 and 25 living in the state illegally will qualify, based on their income, for the state Medicaid program.

  • Officials estimate that this will be about 90,000 people costing $98 million a year.
  • To help pay for the deal, the state will tax the uninsured — a revival of the ACA’s individual mandate.

The bottom line: One of the bluest states in the nation’s measured steps toward universal health coverage show the uphill battle liberals face in their push for Medicare for All.

  • But even these more incremental steps demonstrate how far left Democrats have moved in the decade since the ACA’s passage.
  • “California has taken the lead to blunt Republican efforts nationally on a whole range of health care issues, moving very much in the opposite direction,” emailed the Kaiser Family Foundation’s Larry Levitt.

Go deeper: In California’s blue utopia, liberal health care dreams stagnate

3. Not all CEOs hate Medicare for All

Although most large business groups strongly oppose Medicare for All, the opinions of some members of the business community — especially small employers — may be changing, Kaiser Health News reports.

  • The Business Alliance for a Healthy California, which has tried to garner business support for a universal health care program in the state, has attracted almost 300 mostly small employers.
  • One of the co-founders of the group, Dan Geiger, said large companies don’t want to get involved because of their ability to use health benefits to attract talent.
  • It’s also difficult to sign onto the general concept before details are fleshed out, like how much taxes would go up, KHN reports.

The big picture: Most Americans under 65 get their health insurance from their job, meaning that employers have a ton of political sway as the debate over Medicare for All heats up.

  • Employer coverage has become more of a financial strain, and in some cases unaffordable, as deductibles have gone up in tandem with the cost of medical care.
  • And as more Americans age into Medicare, the situation looks increasingly bleak for employers and workers, as providers are expected raise private insurance rates to recoup for Medicare’s lower reimbursements.

Go deeper:

4. ALS patients push for approval of new therapies

A group of ALS patients is planning to protest outside of the FDA this week, hoping in some ways to replicate the protests of AIDS activists in the 1980s who were also upset with the pace of the search for treatment, Stat News reports.

  • The patients had hoped to see quicker results from the $115 million raised by the ALS ice bucket challenge. They also advocated for the “right to try” legislation passed last year, and are similarly disappointed with the lack of results from that.
  • They’re also frustrated by the news that other breakthrough new therapies have been approved for other diseases.

Like the AIDS activists in the 1980s, the patients have a list of specific therapies they want approved.

  • The 3 on the list are in different stages of development, but the ALS patients want them to be fast-tracked through the approval process.
  • Top officials with the FDA have invited the protesters to meet with them, as long as the drug makers also attend.

The other side: “These people are desperate, I can see that. I see them every day, it’s a horrible disease,” Jonathan Glass, the director of Emory University’s ALS Center, told Stat.

  • “But fast-tracking things that don’t work, or may not work, or might even be harmful is not the way to go.”

5. While you were weekending

  • The FDA sent warning letters to vaping companies for inappropriately promoting flavored products through social media influencers, AP reports.
  • The New York Times dove into one group’s efforts to raise the standards around geriatric surgery, which has higher complication rates than procedures undergone by younger patients.
  • Solving the HIV crisis will require more than just medicine — “It would ideally involve a full-scale attack on poverty, racial, economic and educational inequalities and long-held stigmas,”  Politico reports.

AM Best to Add “Innovation Scores” to Carrier Rating Models

In a very intriguing announcement, the “gold standard” of insurance company credit rating organizations, AM Best, has decided that how a carrier does or does not invest in areas of technological innovation will impact their long term financial viability and thus potentially their rating.

“AM Best defines innovation as a multistage process whereby an organization transforms ideas into new or significantly improved products, processes, services or business models that have a measurable positive impact over time and enable the organization to remain relevant and successful. These products, processes, services or business models can be created organically or adopted from external sources.”

While I think this is a fantastic move, other agent peers not so much. My favorite quote of the article is:

“The Council of Insurance Agents and Brokers took a more dubious view of the innovation scoring proposal, in a blog post titled “AM Best Aims to Quantify the Unquantifiable: Innovation.”

What companies spend on innovation as a percentage of surplus/premiums is a pretty black and white measurement and I would think the ability to make innovation actionable and meaningful can also be quantified. Why would agents not want the carriers to be more advanced?

I have a quote of my own to reference on that front…

“If you want something new, you have to stop doing something old.”

 -Peter F. Drucker

The insurance industry is arguably the most behind on innovation than any other financial sector – let’s hope this change helps to jump-start a movement of investment in the improvement of the client and agent experience through technological innovation!

  • By Elaine Goodman and from our friends at

Rating agency AM Best has proposed a new scoring system for assessing carriers’ innovation efforts, an idea that is sparking mixed reactions from the insurance industry.

Mike Fitzgerald

Mike Fitzgerald
(Celent photo)

AM Best announced its draft proposal, “Scoring and Assessing Innovation,” in March. A public comment period ran through mid-May. The agency continues to meet with different groups to discuss the proposal, including a presentation this week at the Farm Bureau Insurance Managers Conference in Jackson Hole, Wyoming.

AM Best said it has been capturing innovation indirectly through the “various building blocks” of its rating process. But now, a more direct focus on innovation may be needed.

“Innovation always has been important for the success of an insurance company, but with the increased pace of change in society, climate and technology, it is becoming increasingly critical to the long-term success of all insurers,” AM Best said in announcing the initiative.

Under the proposal, all companies rated by AM Best would be scored and their innovation assessment would be published. In addition, AM Best would “explicitly consider” whether a company’s innovation efforts are impacting its financial strength.

A proposed scoring system would rate companies on their innovation “inputs” — factors such as whether the company has an innovation strategy, and management’s attitudes toward innovation. AM Best would also assess measurable results, or “outputs,” a company is seeing from innovation.

Although some failure is expected when a company is trying new things, AM Best said the lack of productive results may indicate that innovation has become a financial drain on a company.

AM Best noted that not all innovation involves fancy technology such as blockchain or the “Internet of Things.” Innovation can come from outside sources and doesn’t have to be developed within the company, AM Best said.

Mike Fitzgerald, a senior analyst with information technology consulting firm Celent, called the AM Best proposal a positive step that will help ensure that the insurance industry moves forward.

“It’s a fantastic idea,” Fitzgerald said. “I think they’re right on target.”

One of the first results of the innovation assessment will be that insurance executives are more involved in innovation initiatives at their companies, he predicted.

“Senior leaders at all insurance companies are going to have to be a lot more engaged and conversant than they have been in the past,” Fitzgerald said.

One part of the AM Best proposal that could use more fleshing out, Fitzgerald said, is the definition of innovation.

In its proposal, AM Best defined innovation as “a multistage process whereby an organization transforms ideas into new or significantly improved products, processes, services or business models that have a measurable positive impact over time, and enable the organization to remain relevant and successful.”

Although Fitzgerald said innovation is likely to involve technology, he said there could be some cases where it doesn’t.

The Council of Insurance Agents and Brokers took a more dubious view of the innovation scoring proposal, in a blog post titled “AM Best Aims to Quantify the Unquantifiable: Innovation.”

“Market incentives already exist to push companies to innovate — will establishing an innovation rating system encourage companies to invest in new technologies for the right reasons?” CIAB said.

In addition, CIAB said, the scoring could push companies toward investing in risky companies to show their interest in innovation.

“Investing in immature or unnecessary startups presents an opportunity cost that in turn may harm a company’s overall rating if those investments do not result in any created value,” CIAB said.

Paul Carroll, editor-in-chief of the Insurance Thought Leadership website, called the AM Best announcement great news for the insurance industry.

“With this new focus on innovation, AM Best has done the insurance industry a big favor by not only sounding a warning but also offering the industry focus, structure and direction to avoid the danger of inaction,” Carroll wrote in a blog post.

The assessment will force insurance companies to move beyond merely “checking the boxes” when it comes to innovation, Carroll said. He cited as an example companies that go on innovation tours and then claim to be on top of the latest technology.

Shortly after the AM Best announcement, the strategic consulting arm of Insurance Thought Leadership, ITL Advisory, announced it was offering insurance companies a new innovation assessment service. ITL Advisory said its assessment can help insurers determine whether their innovation programs align with best practices and are likely to produce a return on investment, as well as whether the company is prepared for the AM Best review.

“The release of (the AM Best) draft criteria and procedures will create some urgency among insurers to understand the innovation process, and start or accelerate efforts to implement innovation programs,” Wayne Allen, chief executive officer of Insurance Thought Leadership, said in a statement.

Extensis Named Company of the Year by CIO Applications Magazine

See the below/attached article circulated by NAPEO regarding Extensis’ most recent award. Congrats!

NAPEO member Extensis Group LLC has been named a company of the year by CIO Applications magazine. The publication noted how HR departs have evolved, and the immense value proposition that PEOs hold. Extensis was recognized for its technology offerings. CIO Applicationswrites, “Extensis caters to its clients through a fully cloud based human resource information system (HRIS) platform: HRCloud. The service suite comprises HR administration and consulting, workers’ compensation, and risk management, along with Fortune 500-level employee benefits.  Managers can oversee their employee workforce through the Manager Self-Service portal and worksite employees can view their PTO, personal deductions, and 401(k) contributions in Employee Self-Service.”

Workers’ Compensation Industry Profits Continue to Rise, NCCI Reports

Wednesday, May 15, 2019

The National Council of Compensation Insurance (“NCCI”) just concluded their Annual Issues Symposium (“AIS”) in Orlando today. As always they did a fabulous job in reporting gobs of valuable data to help understand the cost and profit drivers of the workers’ compensation on a countrywide basis. “One of the most closely watched indicators — the combined ratio for comp carriers in the 38 states — declined, to 83% in 2018 from 89% in 2017, the report showed. The ratio, which has dropped steadily, from 110% in 2011, reflects the combination of loss and expense ratios, and is considered a key measure of financial health for insurers.” This is an unheard of profit margins for workers’ compensation insurers and will trigger even more softening in an already soft market —

Like a sports team on a years-long winning streak, the workers’ compensation insurance industry continues to put up record-breaking numbers, the top actuary for the National Council on Compensation Insurance said Tuesday at the council’s annual symposium.

Bill Donnell

Bill Donnell

The numbers, including a continued drop in combined ratio, an increase in profitability and a sustained drop in claims frequency, are so good, in fact, that some stakeholders are wondering if they’re watching a bubble about to burst.

“We have never seen this level of financial performance, and it is clear insurers are still trying to figure out why this is happening, when it will end, what will cause a change and what the warning signs will be,” blogged longtime industry analyst Joe Paduda, principal of Health Strategy Associates.

Even NCCI CEO Bill Donnell gave a nod to the horizon.

“After seven straight years of strong performance, people frequently ask me, ‘Are we in for a big swing in the other direction?’” Donnell said in his opening remarks at the State of the Line symposium in Orlando, Florida, on Tuesday.

He said he couldn’t predict the future but noted that more timely data and advanced analytics are making underwriting more accurate, and are reducing peaks and valleys in comp rates, and that helps create a stable marketplace.

The NCCI acts as the rating bureau for 38 states and releases their data annually at the symposium. Some larger states, including California, New York and Pennsylvania, are not NCCI states and are not included in the report. But the data are considered a strong measure of the health of the workers’ compensation system in the United States.

One of the most closely watched indicators — the combined ratio for comp carriers in the 38 states — declined, to 83% in 2018 from 89% in 2017, the report showed. The ratio, which has dropped steadily, from 110% in 2011, reflects the combination of loss and expense ratios, and is considered a key measure of financial health for insurers.

Net written premium, another key indicator, also improved. The number rose, from $45 billion in 2017 to $48.6 million in 2018, an 8.5% increase, NCCI’s chief actuary, Kathy Antonello, told the crowd.

The number has climbed almost every year since 2010. In 2018, the number climbed in part because of a change in federal tax law that made it less attractive to cede business to offshore affiliates, said Dean Dimke, communications director for NCCI.

The report also indicated that the overall reserve position for private carriers at the end of 2018 was a $5 billion redundancy — the first redundancy in reserves in 25 years. Pre-tax operating gains also climbed, from 23.6% in 2017 to 26% in 2018, well above the average of 7.2% for the last 20 years, the report shows.

Every NCCI state reported a drop in claim frequency from 2013 to 2017. Overall, claim frequency dropped almost 5% in 2017, but just 1% in 2018.

That 2018 figure, the smallest improvement in claims frequency in seven years, could reflect a bustling economy, said Steve Nichols, workers’ compensation manager for the Insurance Council of Texas. With more companies hiring and some industries facing a shortage of workers, more neophyte workers are on the job and are more prone to accidents, he said.

Looked at another way, although a strong economy has led to higher wages and larger payrolls for many employers, total loss cost reductions more than made up for that. Payroll increased, by 5.3% overall in 2018, but loss costs dropped almost 9%.

Almost every NCCI state approved a decrease in average premium levels for 2019. Tennessee led the way with a 19% reduction. Hawaii was the only increase, at 4.7%.

All of the rosy figures should now give pause to state legislators who may be contemplating reductions in indemnity or medical coverage as a way to cut costs for insurers and employers, claimants’ attorneys said.

“With profits at a record high, there is no need for any benefits for injured workers to be reduced,” said Tom Holder, president of the Workers’ Injury Law and Advocacy Group.

The State of the Line didn’t offer many negatives but did report that claim severity continues to increase — but not by much. Average indemnity claim severity rose overall, by 4.4% in 2017 and 3% in 2018, the continuation of a gradual but steady increase since 1998, the report said. It noted that the cost of claims has outpaced wage inflation significantly but did not give a reason for the increase.

Average medical lost-time claim severity grew more slowly, about 4% in 2017 and 1% last year, but still faster than a standard measure of health care prices, Antonello reported.

Workers’ comp is doing well, but not necessarily better than other lines of property and casualty insurance, the data show. Net written premium grew 8.5% from 2017 to 2018, which was slightly better than personal auto and homeowners’ lines, but well behind the growth in commercial auto and other liability, including product liability.

Overall, the property and casualty industry enjoyed a 10.6% growth in net written premium in the 38 NCCI states, the report said.

“Life is pretty great right now,” Paduda said. “We do know it will end. We do not know what will cause that event.”

Lightyear Capital Enters Purchase Agreement with Engage PEO

It has been quite an experience to watch Engage start 7 years ago as a start-up, grow to over a billion in payroll and now join hands with Lightyear. What tells me the best is yet to come –

Congratulations to Jay, Midge and the rest of the team!

05.01.2019 New York, NY – Lightyear Capital LLC (“Lightyear”), a New York-based private equity firm focused on financial services investing, announced today that investment funds affiliated with Lightyear have agreed to terms for the acquisition of Engage PEO (“Engage”), a professional employer organization providing HR outsourcing solutions to small and mid-sized businesses across the U.S. The company will continue to operate as Engage PEO, and the current management team will remain part of the ownership structure and in place with no operational changes impacting clients and brokers. The transaction is expected to close in the second quarter of 2019, and financial terms were not disclosed. 

“The PEO industry represents an attractive growth sector for Lightyear, one that we have been tracking for years,” said Mark Vassallo, Managing Partner of Lightyear. “Engage focuses on delivering the highest levels of quality service to its growing client base. We look forward to working with Jay and his management team to add to an already successful effort to grow their portfolio of clients and services.” 

Based in Fort Lauderdale, Florida, Engage PEO was founded in 2011 by CEO Jay Starkman. Built on its “expect more” philosophy, Engage’s human resource delivery team is unique in the PEO industry, combining the people skills of HR professionals with the technical and strategic savvy of legal professionals. Engage also embraces brokers and agents creating a partnership that translates to added value for their mutual clients. This innovative business model fueled the company’s expansion, resulting in Engage being named one of the fastest-growing private companies on Inc. Magazine’s annual Inc. 5000 list for the past three years. 

“Engage is driven to deliver the best PEO experience to clients while simultaneously growing our company, and Lightyear gives us the opportunity to do both better and faster,” said Jay Starkman, CEO of Engage PEO. “A key factor in our decision was Lightyear’s track record of working with management teams to create stronger companies and add value to all stakeholders.” 

Piper Jaffray & Co. is acting as exclusive financial advisor and Jones Day is acting as legal counsel to Engage. 

About Engage PEO
Engage PEO delivers comprehensive HR solutions to small and mid-sized businesses nationwide, sharpening their competitive advantage. Comprised of the industry’s most respected veteran professional employer organization executives, certified HR professionals and attorneys, Engage PEO provides hands-on, expert HR services and counsel to help clients minimize cost and maximize efficiency for stronger business performance. The company’s superior service offering includes a full range of health and workers’ compensation insurance products, payroll technology and tax administration, risk management services and advanced technology as part of an extensive suite of HR services. Engage PEO was recently awarded the designation of Certified Professional Employer Organization (CPEO) by the Internal Revenue Service (IRS), ensuring greater benefits for small and mid-sized businesses such as tax advantages and financial protections. Engage PEO is also accredited by the Employer Services Assurance Corporation. For more information on Engage PEO visit

About Lightyear Capital LLC
Founded in 2000, Lightyear is a financial services-focused private equity firm based in New York. Through its affiliated private equity funds, Lightyear makes primarily control investments in North America-based, middle-market companies across the financial services spectrum, including financial technology, asset and wealth management, healthcare financial services, insurance and insurance services, payments and processing, and specialty finance. Lightyear brings focus and discipline to its investment process, as well as operating, transaction and strategic management experience, along with significant contacts and resources beyond capital. For more information, please visit