NCCI Reveals Its Focus on 5: Insurance Executives’ Top Concerns for Workers Compensation in 2019

Published by Reni Snider on January 17, 2019

https://www.ncci.com/Articles/Pages/Insights-Focus-on-5.aspx

Focus on 5: Top Challenges for the Workers Compensation Industry

Every year for the past decade, the National Council on Compensation Insurance (NCCI) has surveyed carrier executive leaders* in the workers compensation industry to better understand their market perspectives, needs, and challenges.

Key findings from NCCI’s survey of 109 insurance company leaders are included in our Focus on 5—a list of top carrier concerns viewed as impactful to our industry.

2019 Focus on 5 Topics

This year’s Focus on 5 is made up of familiar, interrelated topics from years past:

Adapting to the Changing Workforce and Workplace

What they said: More than half of insurer executives interviewed saw adapting to the changing workforce and workplace as a challenge for 2019. They expressed concern not only over new and changing risks associated with an aging workforce, unskilled workers, independent contractors, and new technology, but with assessing these and other unknown risks.

What they’re doing: Insurers spoke of addressing these changes through underwriting and analytics, by developing new products, and by adapting pricing and underwriting. Some mentioned reaching out with public campaigns and employer education programs to promote a safer workplace.

Maintaining Profitability and Premium

What they said: Insurers are concerned about their ability to maintain profitability and premium levels that may be affected by changes in loss cost trends, legislation, and the economy.

What they’re doing: Many insurers are taking a hard look at premium levels and underwriting to remain competitive. Some are seeking opportunities to develop new products and new markets. Others are putting tighter controls on expenses and looking for greater efficiencies through technology.

Medical Costs, Advances, and Determining Appropriate Care

What they said: Medical costs, advances, and determining appropriate medical care are mentioned as major concerns and challenges by more than a quarter of the leaders interviewed. While rising costs remain a concern, insurers have somewhat “baked them in” to their expectations.

What they’re doing: Industry stakeholders closely monitor medical advancements to help maintain appropriate care for injured workers and improve return-to-work outcomes. Some insurers are introducing a variety of programs that go well beyond just paying for injuries, with an enhanced focus on workers’ overall health.

Political, Regulatory, Legislative, and Legal Environment

What they said: Insurers continue to be concerned about political volatility and the impact of new legislation. Compared to years past, however, there were fewer mentions of concern over federal involvement in the industry.

What they’re doing: The executives and their organizations stay close to the issues by monitoring legislative activity and working closely with trade groups.

The Future of the Workers Compensation Industry

What they said: Most of the challenges and concerns expressed going into 2018 remain relevant in 2019. The future of the workers compensation industry, opioid abuse and medical marijuana, and advancements in technology are all top of mind. New concerns for worker safety are tied to the hiring of more unskilled workers, distracted drivers, and the challenge of “under the influence” workers.

NCCI Insights—Exploring Our Focus on 5

NCCI prides itself on fostering a healthy workers compensation system. NCCI’s research, publications, and events offer content that anticipates and responds to the needs of insurers, regulators, and other key industry stakeholders.

Throughout 2018, NCCI addressed many of the challenges and concerns that make up this year’s Focus on 5:

Changing Workforce/Workplace

Maintaining Profitability and Premium

Medical Costs and Advances

Political, Legislative, Regulatory, and Legal Environment

The Future of Workers Compensation and Related Topics

NCCI plans to expand on its Focus on 5 topics and more at its Annual Issues Symposium 2019—Powered by Insight, May 13–15, in Orlando. We hope to see you there!

Visit NCCI’s recently enhanced INSIGHTS portal at ncci.com/INSIGHTS for additional information and to access the full inventory of the organization’s research.

*NCCI’s Annual Carrier Executive Study is conducted by an independent survey provider. Interviews are conducted with Workers Compensation Insurance Carrier or State Fund executives and senior managers. The 2018 interviews that contributed to these 2019 results reflect responses from 109 such leaders.This article is provided solely as a reference tool to be used for informational purposes only. The information in this article shall not be construed or interpreted as providing legal or any other advice. Use of this article for any purpose other than as set forth herein is strictly prohibited.

Premium renewal rates rise in all sectors but comp: Ivans

Published by Sharlie Reynolds on January 16, 2019

See below from Business Insurance. Once again, comp was the only major commercial sector to see premium price relief in 2018.

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Insurance premium renewal rates in the fourth quarter rose across nearly all major commercial lines compared with the previous quarter, except in workers compensation, according to the 2018 Ivans Index.

Premium renewal rate changes in commercial auto averaged 4.66% in the fourth quarter, which was higher than any quarter in the previous year, which saw its high in September 2017 with an average premium renewal rate change of 4.5%.

In the business owner policy sector, the fourth-quarter premium renewal rate change averaged 4.23%, which was 0.8% greater than in the third quarter. According to Ivans, BOP experienced the most variability in average premium renewal rates between 2017 and 2018.

Although general liability began 2018 with lower average premium renewal rates, the rate change rose 0.44% in March 2018 compared with the same quarter in 2017. That trend continued with the premium renewal rate change averaging 2.54% in the fourth quarter, an increase of 0.19% compared with the third quarter.

Commercial property experienced quarter over quarter increases in 2018, ending with an average rate change of 3.74% in the fourth quarter, which was 0.4% higher than the third quarter. Umbrella also experienced higher premium renewal rate changes in 2018, finishing the fourth quarter with an average renewal rate change of 2.42%, an increase of 0.7% over 2017.

Workers comp average premium renewal rates, however, dropped to -3.04% from the third-quarter average of -2.76%. The average premium renewal rate change in workers comp also consistently fell compared with 2017, except for during December.

Libertate/RiskMD Merge with Ballator Group

Published by Sharlie Reynolds on December 18, 2018

ORLANDO, December 18, 2018 / PRNewswire / —

IMMEDIATE RELEASE: RiskMD and Libertate Insurance merge with Ballator Insurance Group

Ballator Insurance Group (“BIG”) and Libertate Insurance/RiskMD have merged to combine forces in support of insurance placements and data management for Professional Employer Organizations (“PEO’s”). BIG and its senior management team have created multiple risk-bearing entities with specialization in “governmental entities”, “not for profits” and “automotive dealers”. Libertate is a general agency focused on the property and casualty insurance needs of the PEO industry and RiskMD manages data based on a recently patented process.

“The combination of these entities is truly accretive” according to the head of Libertate, Paul Hughes. “I have known the management team of Ballator for many years and we share common values, beliefs and vision. They are going to be a tremendous influence in the next chapter of supplying best of class capacity, data management and professional consultation to our PEO clientele. Our combined capabilities allow us to go very deep in what we are able to offer whether as an insurance agent, a due diligence/data consultant or overall trusted advisor. Our resources are now greater than ever before.”

According to Ballator CEO Shane Caldwell, “We are very excited about the the addition of Libertate to the Ballator group of companies. Libertate’s specialty focus and RiskMd’s innovative technology will prove to be a great enhancement for our team members and clients.”

The combination of Libertate’s premiums with that of B.I.G. brings overall property and casualty premiums under management to close to $200m.

Congratulations to Amtrust!

Published by Paul Hughes on November 30, 2018

We are excited to report that Mr. Zyskind and company have successfully executed their effort to privatize Amtrust. We appreciate their ongoing support of the PEO industry and wish them the very best of luck in this new chapter of their history….

AmTrust completes transaction to become a private company

Dear Agent Partner,

We are pleased to announce the completion today of AmTrust Financial’s go private transaction as anticipated following all necessary regulatory approvals. The transaction, approved by a majority of AmTrust’s shareholders in June 2018, values the fully diluted equity of the Company at approximately $2.95 billion, excluding the Company’s outstanding preferred stock.*

Thanks to the initiatives we undertook over the last two years, AmTrust has established the strongest capital base in our 20-year history, with total assets of $25.76 billion and $3.6 billion in equity. Our A.M. Best “A-” (Excellent) rating with a Stable outlook and strong capital base have AmTrust well positioned to provide you and your policyholders support now, and in the future. AmTrust as a private company will continue to focus on the principles that have guided our growth over the past 20 years – servicing and supporting our agent partners and providing optimal value to our insureds.

AmTrust is here to service your clients and help you grow your business for the long term.

We greatly value your partnership and we look forward to continuing to provide outstanding service to you and your clients moving forward as a private company.

Sincerely,

Barry D. Zyskind
Chairman, President and CEO
AmTrust Financial Services, Inc.

*The merger transaction involved Evergreen Parent, L.P., an entity formed by private equity funds managed by Stone Point Capital LLC (“Stone Point”), together with Barry Zyskind, Chairman and CEO of AmTrust, George Karfunkel and Leah Karfunkel (collectively, the “Karfunkel-Zyskind Family”), has acquired the approximately 45% of the Company’s issued and outstanding common shares that the Karfunkel-Zyskind Family and certain of its affiliates and related parties did not already own or control.

Subsidiary or Affiliate? Don’t Wait For a D&O Claim to Find Out.

Published by Reni Snider on November 28, 2018

From contributor Lisa Burbage, director and professional broker with CRC’s Seattle, WA office.

http://crcgroupins.com/Tools-Intel/post/subsidiary-or-affiliate

When insureds own multiple companies, they may assume that all the entities in their portfolio are covered by their corporate management liability policy. That can be an expensive mistake. The reality is that it comes down to the actual wording on their policy.

UNDERSTANDING THE DIFFERENCE

Confusion often arises over whether a company is a covered subsidiary or a potentially non-covered affiliate. This is particularly true for industries such as real estate, restaurants and healthcare that frequently create single-purpose entities to manage the liability risks of separate ventures. Newly created corporations or limited liability companies (LLCs) may be owned in whole or in part by the same owners of the first Named Insured whose name is on the insurance policy, but not by the named insured itself. That distinction is crucial.

STAYING ON TOP OF CHANGES

Because companies are not static, gaps in coverage may arise when an Insured assumes their newly created affiliates are covered under their policies. Over the course of a year, it’s quite possible that insureds have created or invested in new LLCs or corporations. Further heightening the risk, more and more carriers send out automatic renewal quotes, putting the burden on the insured to update their organizational structure with the underwriter.

To avoid finding out that the policy doesn’t provide coverage after a claim is made, it’s important to explain the difference and the potential consequences to clients. This can help clients understand the distinction and to provide more detailed information. Clients should be asked to list every company they want covered along with its ownership structure at every renewal. Uncovered affiliates can usually be added to the policy by endorsement for no charge as long as the rating exposures are included on the application. Not knowing when an entity is an affiliate means that affirmative coverage can’t be granted by endorsement.

BOTTOM LINE

It pays to know your clients’ businesses. Don’t wait for a claim to be denied to discover that a client’s affiliate company isn’t covered by the corporate D&O or EPL policy. Brokers should educate clients on the difference, make sure they properly identify all of the subsidiaries and affiliates they want covered at every renewal, and add them to the policy. Taking a proactive approach now can prevent an expensive claim denial later.

New Jersey Workers’ Compensation Rates to Go Down 5.3% on 1/1

Published by Paul Hughes on November 16, 2018

From our friends at the workcompcentral.com…

Friday, November 16, 2018

Insurance Commission Approves Rate Decrease of 5.3%

The New Jersey commissioner of banking and insurance has approved an overall 5.3% decrease in workers’ compensation rates, effective Jan. 1.

The reduction is the third straight annual decrease, and will likely be seen as good news by employers. New Jersey has consistently ranked as one of the most expensive for workers’ compensation insurance, according to the 2018 Oregon Department of Consumer and Business Services’ premium ranking report, which came out in October.

The New Jersey Compensation Rating and Inspection Bureau said in a circular this week that the 2019 decrease is based on experience and the trend toward fewer claims, although an increase in maximum weekly benefits will increase costs slightly.

The manufacturing sector will see the biggest decline, with an average rate decrease of 8%, the bureau said. Office and clerical will see a 7.5% drop, followed by maritime and rail workers, at 5.5%

There will be no change to catastrophe provisions, but the minimum premium multiplier will increase, from 170 to 180.

“The change to premium resulting from the new minimum premium multiplier is minimal and does not impact the overall rate level,” the circular noted.

ACORD Form 130- Ceasing Disability and Age Questions

Published by Felicia Vestal on November 15, 2018

Should Disability and Age Questions be removed from the Acord-130 forms? That is the question California has. Is it violating discrimination laws? What are you thoughts?

NOTICE
To: ALL WORKERS’ COMPENSATION INSURERS, INSURANCE AGENTS AND BROKERS, AND OTHER INTERESTED PARTIES
Date: November 14, 2018
Subject: Request to Cease Collecting Responses to Questions Regarding Disability and Age on ACORD Form 130

The Association for Cooperative Operations Research and Development (ACORD) promulgated Form 130 (2013/09) (Form 130) for use by insurers and producers as an application for workers’ compensation insurance coverage. Form 130 requests employer applicants to respond to several questions including the following:
10. ANY EMPLOYEES UNDER 16 OR OVER 60 YEARS OF AGE?
13. ANY EMPLOYEES WITH PHYSICAL HANDICAPS?

If used for rating purposes, the information elicited by questions 10 and 13 on Form 130 would violate Insurance Code section 11735, subdivision (d) that provides:
Notwithstanding Section 679.70, no rating organization may issue, nor may any insurer use, any classification system or rate, as applied or used, that violates Section 679.71 or 679.72 or that violates the Unruh Civil Rights Act.

Insurance Code section 679.72 provides that no application for insurance used by an insurer to determine the insurability of an applicant shall carry any identification, or any requirement therefor, of any characteristic listed or defined in subdivision (b) of Section 51 of the Civil Code with respect to the applicant. The characteristics listed or defined in Civil Code section 51 (b) include, but are not limited to, ‘disability,’ and ‘medical condition.’ Even though the Unruh Act (Cal Civil Code §51 et seq.) does not delineate ‘age’ as a prohibited characteristic, the Unruh Act may be applicable in situations in which business establishments make classifications based on age. Moreover, employers may violate California’s anti-discrimination laws if they ask their employees to provide the information sought by questions 10 and 13 on Form 130.

The information collected on Form 130 is shared with the National Council on Compensation Insurance (NCCI) for the purpose of its research on statistics relating to workers’ compensation policies from states that participate in its data collection program. California is not, however, a NCCI participating state and the NCCI does not use data collected from California for its research. Additionally, the Workers’ Compensation Insurance Rating Bureau of California (WCIRB) does not use the data collected in response to questions 10 and 13 on Form 130, and since 1994 the State Compensation Insurance Fund (SCIF) has instructed interested parties not to collect responses to questions 10 and 13 on Form 130. As a result, the information requested by questions 10 and 13 on Form 130 is not used by the various rating agencies that generally analyze country-wide workers’ compensation data or that specifically analyze California workers’ compensation data.

Although the continued use of Form 130 in California generally is not objectionable, because the information requested by questions 10 and 13 on Form 130 is not utilized by the NCCI, the WCIRB or SCIF and California employers may violate the State’s anti-discrimination laws by requesting such information from their employees, insurers, agents and brokers are encouraged not to collect answers to questions 10 and 13 on Form 130 and for California employers to refrain from seeking such information from their employees.

Questions regarding this Notice should be directed to workcompquestions@insurance.ca.gov.

Recent Fraud Scheme Targeting PEOs

Published by Felicia Vestal on November 14, 2018

Alert for all members in the PEO industry.

A company purporting to be Teak Transport out of Ohio has recently scammed or attempted to scam multiple PEOs across the United States. Please be vigilant in your prospect review process.

Here are a few basic suggestions to help you protect against fraud.

Beware of prospects who are pressing you to provide your services (especially payroll only) ASAP.
Take time to research the prospective client, the company, and the employees. Make sure to research the business entity with the Secretary of State where the business is located. Google is your friend.
Require secured funds for payroll payments from new clients. Wire transfers are a commonly used method in the industry.
Set up a call with the bank and the client (and get the contact information for the bank from a source other than the client).
Consider requiring an up-front deposit or onboarding fee.
Beware of prospects who are unwilling to participate in a face-to-face meeting.
Pay card requests for an entire workforce are suspicious, too.
Educate your employees on the process within your PEO on vetting prospects. Make sure to have a gatekeeper who monitors the prospects/new “clients” and understands the warning signs of suspicious behavior.

If you are a target of a scam, please consider making a complaint to the FBI’s Internet Crimes Complaint Center (IC3). IC3 ensures access to the complaints by all of the FBI’s field offices, which is important when victims are across the U.S. The website is www.ic3.gov.

Be on the lookout for further best practices from NAPEO. If you would like to discuss this or any fraud perpetrated against your PEO, please contact ffielder@napeo.org.