A Deserved Boycott Against MGM

Pretty sad.  The accountants and lawyers are typically not the curators of brand and reputation management, but seem to be here —

MGM Facing Boycott for Suing Las Vegas Shooting Victims

It took just minutes for the hashtag #BoycottMGMResorts to appear on Twitter, and for people to declare they would no longer patronize the largest casino owner on the Las Vegas Strip.

“Was going to stay in November already changed my reservations,” a man named Brandon Tur wrote on Twitter. “One of the things you have to see multiple sources to believe it is real,” a woman named Susanne Abrams said.

The reaction to MGM Resorts International’s lawsuits against victims of the worst mass shooting in U.S. history was harsh, and probably not surprising.

“It’s rare to see a major brand blisteringly bury itself alive,” said Eric Schiffer, chairman of Los Angeles-based Reputation Management Consultants. “They were trying to create a chilling effect. Instead, it’s their brand that got chilled.”

MGM — whose Vegas resorts include the MGM Grand, Bellagio and Mandalay Bay, where the Oct. 1 shooting occurred — is seeking a court declaration that it can’t be held liable for deaths, injuries or other damages.

“We are not asking for money or attorney’s fees. We only want to resolve these cases quickly, fairly and efficiently,” MGM said in a statement. Company officials declined to comment for this story.

The Facts

The facts aren’t in dispute: Frequent gambler Stephen Paddock opened fire at festival goers from a 32nd-floor suite at Mandalay Bay, killing 58 and wounding about 500 before he committed suicide. More than 2,500 people have filed or threatened to file lawsuits against MGM, the company said in its complaints.

MGM argues that it hired a company, Contemporary Services Corp., that was certified by the U.S. Department of Homeland Security to provide security at the Route 91 Harvest Festival. As such, according to MGM, it complied with the Support Anti-Terrorism by Fostering Effective Technologies Act, a 2002 law that limits liability arising from mass attacks in the U.S.

In legal documents, MGM has said courts have repeatedly rejected claims of negligence filed after mass shootings, finding there is no “premises liability” where a third party “carried out a cold, calculated plan of extreme lethal violence.” To hold MGM responsible would “saddle businesses across the country with crippling liability for the evil acts of madmen — acts those businesses can, in the end, neither foresee nor prevent.”

MGM has filed at least nine nearly identical suits in federal courts against survivors and victims’ relatives who have sued the company.

A Stretch

Patrick McNicholas, a Los Angeles attorney who represents about 100 of the victims, called MGM’s attempt to use an anti-terrorism law to protect itself from liability “a stretch.” Instead of going after the injured and bereaved, he said, “they could have done it a more humane way.” For example, the company could have filed motions only in cases already in the courts.

In a hearing Tuesday in Los Angeles, attorneys for MGM said that they needed to specifically name the parties in order to establish a single legal ruling that applied to all of them.

The challenge for MGM, as one of its own lawyers acknowledged in a filing, is that the 2002 law “apparently has never been applied by a federal judge,” said Carl W. Tobias, a law professor at the University of Richmond’s School of Law in Virginia. There’s no history to suggest whether the approach will work.

MGM and other casinos stopped marketing their properties for several days in the wake of the shooting, and later with the city’s convention and visitors bureau created videos with local celebrities urging customers to return to America’s gambling capital.

MGM’s Chief Executive Officer James Murren said at a Bloomberg sponsored diversity summit in May that he has been trying to change the culture in Las Vegas.

Now, with the lawsuits making headlines, all that goodwill is at risk.

Oasis Acquires Aureon

It was announced on Tuesday that Aureon (fka Merit Resources) out of West Des Moines Iowa was acquired by industry stalwart Oasis Outsourcing.  What a class organization.  Congratulations to Joel, Melissa and the rest of the Aureon team!


Oasis Outsourcing Holdings, Inc.

Jul 17, 2018, 10:15 ET

WEST PALM BEACH, Fla., July 17, 2018  /PRNewswire/ — Oasis Outsourcing, the nation’s largest privately held Professional Employer Organization (PEO), has announced the acquisition of Aureon HR, a subsidiary of Aureon. Headquartered in West Des Moines, IA, Aureon HR has been a leading Midwest-based HR outsourcing company with a reputation for superior customer service for more than 30 years. The combined company will now serve more than 8,000 clients and 270,000 worksite employees nationwide. Terms of the deal were not disclosed.

“We are delighted to join forces with Aureon HR, an industry leader that has an outstanding track record in the Midwest and in all markets it serves,” said Mark Perlberg, President and CEO of Oasis Outsourcing. “In addition to significantly expanding our national client base, Aureon HR brings Oasis best-in-class HR expertise in the Senior Living industry, and yet another talented, experienced group of associates, who will make important contributions to our overall ongoing expansion and growth.”

“Oasis has built a strong and reputable business with great talent and, like Aureon HR, has an unwavering commitment to great service and innovation,” said Ron Keller, CEO of Aureon. “Moving forward, Aureon HR clients will receive the benefits that an even larger industry leader can provide, while continuing to receive outstanding performance and support from the local Aureon HR team.”

The Aureon HR acquisition is Oasis’ sixth since joining forces with Stone Point Capital nearly four years ago. Aureon HR will continue to operate from its current locations in West Des Moines, IA and Denver, CO with the current team of associates.

About Oasis Outsourcing Holdings, Inc.

Oasis Outsourcing is a Florida-based Professional Employer Organization (PEO) serving more than 270,000 employees and 8,000 clients nationwide. Founded in 1996, it specializes in providing human resources services, employee benefits administration, payroll and tax administration, risk management services and staffing solutions to small- and medium-sized businesses throughout the United States. Oasis is accredited by the Employer Services Assurance Corporation (ESAC), ensuring the highest level of ethical, financial and operational standards in the PEO industry and has received SOC 1 Type II (formerly SAS 70) certification for its high level of accuracy and performance. Oasis, through its subsidiaries, is qualified to offer IRS-certified professional employer organization (CPEO) services.

Oasis is majority-owned by private equity firms Stone Point Capital and Kelso & Company, with the remainder owned by Oasis management. Offices are located in Atlanta, GA; Austin, TX; Boca Raton, FL; Boston, MA; Charlotte, NC; Dallas, TX; Denver, CO; Edison, NJ; Houston, TX; Jacksonville, FL; Los Angeles, CA; Manhattan, NY; Miami, FL; Minneapolis, MN; Nashville, TN; New Haven, CT; Orlando, FL; Phoenix, AZ; Provo, UT; San Diego, CA; Sarasota, FL; St. Louis MO; Tampa, FL; Tucson, AZ; West Des Moines, IA and West Palm Beach, FL. For more information about Oasis Outsourcing, visit www.oasisadvantage.com.

Media Contact: Laura Burns 954-370-8999 lburns@boardroompr.com

SOURCE Oasis Outsourcing Holdings, Inc.

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New York Workers’ Compensation Rates to Drop 11.7%

For the third year in a row, rtes will drop in New York this year.  This adjustment was recently approved and will take effect on 10.1.18.  More from our friends at the Insurance Journal…

Regulators Approve 11.7% Rate Reduction for Third Cut in Three Years

The New York Department of Financial Services has approved an overall loss-cost rate decrease of 11.7%, the third straight year that the department has fully endorsed a recommended rate cut.

The New York Compensation Insurance Rating Board recommended the latest reduction in May, and the DFS approved it last week. It takes effect Oct. 1.

The recommended change, following a 4.5% reduction a year ago, was based on the latest statistical data reported by the rating board’s member carriers and reflects the application of generally accepted actuarial principles and methodologies, the board said in May.

Insurance and employer groups have said the reductions are largely the result of legislation over the last two years that was designed to cut benefits expenses for employers. Workers’ advocates said the cuts are due more to the fact that the number of claims have dropped significantly nationwide, more workers are considered independent contractors, and workers may have difficulties navigating New York’s complex comp system.

The 11.7% reduction also comes a month after the state Board of Workers’ Compensation announced a plan to raise medical fees for the first time in years — as much as 23% for physicians. Without that, the recommended rate reduction would have been even greater, the rate filing memorandum suggested.

Loss-of-use impairment guidelines, passed by the 2017 Legislature, accounted for almost a third of the proposed rate reduction, the filing said. Under previous guidelines, some injuries could be “stacked” to provide higher impairment ratings.

AmTrust Seals Negotiation to Go Private and More – Timeline of How We Got Here

Quarter 1 2018

Since the 2018 tax breaks took effect, the controlling family of AmTrust Financial Services (NASDAQ:AFSI) has made moves to buy back shares and to eventually become no longer a publicly traded company.  This factor played along with the decreased value in shares from the 2015 high of $33.54 to the end of 2017 low of below $10.

On March 1st, AmTrust announced that they would be offering $13.50 in cash for each share of AmTrust common to the shareholders who are not affiliated with the Karfunkel-Zyskind Family.

This was rejected by shareholders and AmTrust Financial Services shareholder Arca Capital commends shareholders for rejecting Zyskind/Karfunkel family’s “absurdly low” $13.50 per share offer for taking AFSI private and suggest that $22 is “fair value.”  The second rejection after January’s initial proposal of $12.25 per share.

Billionaire investor Carl Icahn, who owns a 9.4% stake in the company, had strongly opposed the go-private deal and sued AmTrust and the controlling family, accusing them of trying to take the insurer private at the wrong time and the wrong price.

Quarter 2 2018

Earlier this month, though, the Zyskind/Karfunkel family agreed to raise their price to $14.75 per share, a deal that Carl Icahn supports. AFSI was up to $14.50 in premarket trading that day (6/7/18).  A move that secured the support of Carl Icahn. “By raising the merger price to $14.75, over $100 million of incremental value has been created for public stockholders,” Mr. Icahn said Thursday.

Mr. Icahn also demands that AmTrust changes the record date in advance of any vote to allow shares to vote that were purchased between April 5, 2018 and May 21, 2018.

That date would allow Carl Icahn, who who amassed a 9.4% stake in AFSI between April 26, 2018 and May 17,  2018, to vote on the going-private proposal.

The revised offer, however, failed to appease another shareholder opposed to the deal — Arca Capital (4.2% shareholder). The firm reiterated that it sees $22 per share as the “fair value” for AmTrust.

“We are ready to sit down and negotiate with Barry Zyskind, George Karfunkel, Leah Karfunkel and Stone Point Capital to negotiate a fair deal in good faith with an offer in excess of $22 per share,” Arca Capital Chairman Pavol Krupa said in a statement. “If no deal can be reached, we are very happy for AmTrust to remain public.”



The take out bid of $14.75 was voted on this morning by AmTrust’s outside shareholder and was approved with 67.4% of their vote.

The vote passed with the support of 79.8 percent of common voting stock backing the deal, while the public shareholders – the 45 percent of the shares not connected to CEO Barry Zyskind or his wife Leah Karfunkel’s family –  voted 67.4 percent in favour.

In the statement today the carrier said the deal, which values it at around $2.95bn, is now expected to close in the second half of this year subject to regulatory approvals.

Icahn, whom was originally a dissenter, will make about $30 million on an investment of about $240 million in AmTrust stock and forward derivative contracts. That’s a better than 12% gross return on about a month’s work.


A.M.Best changes AmTrust’s financial strength from A to A- but changes outlook to stable.  Last year AmTrust was placed under review when adverse loss development was noted on their book from 2010 to 2014.  This negative outlook was changed after Best’s review concluding on July 3rd and Best noted AmTrust’s stength on it’s balance sheet.  This news did not impact AmTrust’s move to go private.

–PEOCompass will continue to update you with news regarding AmTrust’s potential merger as it happens.









New Rules for California Large Deductible Programs

In a move aimed to curb carrier insolvencies in the State of California, there is a proposed rule up for discussion in August to change the carriers able to offer these types of programs as well as the way they are administered by those less then an AM Best straight “A” rating.  Specifically…

The draft rules would require that carriers writing large-deductible policies maintain a minimum credit rating of “A” with A.M. Best Co., a rating of “A” or “A” with Standard and Poor’s, a rating of “A1” or “A2” with Moody’s Investment Services, or a Fitch Ratings Inc. rating of “A” or “A.”

The other oddity is that they think carriers do not already collateralize large deductible programs…

“Carriers that do not meet both the credit rating and capital requirements would be required to collateralize the amount they expect an insured to pay as reimbursement for claim costs. Carriers could satisfy the security requirements by ensuring that an employer sets aside money for the exclusive purpose of collateralizing the large-deductible policy.

That happens every day?

I find this rule shortsighted as it is not the rating of the carrier that is as important as the way the carriers manage these programs.  Institutionalizing minimum financial ratings for large deductibles in my opinion is just a “cya” for regulators, hurts the open market and limits this product to the “big boys”.  The regulators  need to pay more attention to the process, the carriers and filings that govern them and they would continue in a business-friendly atmosphere and not suffer the hits to the guaranty fund.

Finance Department Projects Millions in Savings From Large-Deductible Rules

Soon-to-be-proposed rules that would increase capital and credit requirements for carriers writing large-deductible workers’ compensation policies in California could prevent insolvencies and save tens of millions of dollars a year, according to the Department of Finance.

The Department of Insurance plans to start the formal rule-making process Friday by opening up a public comment period on proposed regulations intended to ensure that insurers writing policies with deductibles of $100,000 or more are able to handle the risk of a covered employer becoming insolvent or failing to reimburse the carrier for claim costs, according to an agency official who spoke on the condition that he not be identified.

The department plans to hold a public hearing on the proposed rules in August.

Although officials were not ready Friday to speak about the rules publicly, the department submitted draft rules to the Finance Department. That is required when state agencies estimate that the impact of a regulatory proposal may exceed $50 million in costs.

The draft rules would require that carriers writing large-deductible policies maintain a minimum credit rating of “A” with A.M. Best Co., a rating of “A” or “A” with Standard and Poor’s, a rating of “A1” or “A2” with Moody’s Investment Services, or a Fitch Ratings Inc. rating of “A” or “A.”

Additionally, the rules would require carriers to maintain a sum of paid-in-capital — the amount of money invested in a company used to represent earnings from selling equity — of at least $500 million.

Carriers could also satisfy the requirement by being part of a holding company group that maintains a qualifying credit rating and has sufficient equity.

Carriers that do not meet both the credit rating and capital requirements would be required to collateralize the amount they expect an insured to pay as reimbursement for claim costs. Carriers could satisfy the security requirements by ensuring that an employer sets aside money for the exclusive purpose of collateralizing the large-deductible policy.

Irena Asmundson, chief economist for the Department of Finance, said in a May 21 letter to the Insurance Department that the proposed rules are estimated to increase costs to employers by about $20 million per year. However, the rules are expected to prevent one insurer insolvency every four years, and fewer insolvencies are expected to save about $42 million a year.

Asmundson said the projections were based on the department’s representations in a standardized regulatory impact assessment submitted in April.

An impact assessment summary, signed by Deputy Insurance Commissioner Geoffrey Margolis, says four insurance carriers have become insolvent over the last 15 years “largely because of their involvement with high-deductible workers’ compensation insurance policies.”

Nationally, the four companies had an estimated $624 million in combined incurred losses, $360 million of which arose from the Golden State and were passed on to the California Insurance Guarantee Association.

Margolis said mitigating the risk of insurer insolvencies would shield CIGA from incurring liability for some claims and reduce assessments the guaranty association charges to carriers.

The Department of Insurance has reviewed data for all work comp carriers in California and determined only nine that are writing large-deductible policies would fall short of the proposed credit risk requirements, according to the impact assessment.

The full impact assessment says the nine insurers could pursue mergers or acquisitions, start writing different lines of insurance or phase out large-deductible policies to raise capital to meet the $500 million threshold. But the “most reasonable plan of action” would be for the nine carriers, who are not identified by name in the assessment, to collateralize their deductible receivables.

The carriers have an aggregate $200 million in deductible premium for work comp policies in California. The Insurance Department estimates that the total amount that would need to be collateralized to protect against the risk of potential unpaid future deductibles is about $800 million.

“By requiring that employers obtain additional collateral that is set aside specifically for paying workers’ compensation deductibles, an insurer may protect its obligations without significantly alienating its client employers who might otherwise have to alter their business operations,” the assessment says.

Margolis said during a telephone interview Friday that he wouldn’t discuss specific provisions until regulatory language is proposed at the start of formal rule-making process. Speaking generally about the pending rules, he said, “Insurance Commissioner (Dave) Jones’ goal is to provide reasonable, tailored guides for insurers writing high deductible policies and reduce the risk of insolvency associated with them.”

It’s not clear how carriers view the proposal.

Jeremy Merz, western region vice president of state affairs for the American Insurance Association, said he had not seen the copy of the draft rules posted to the Department of Finance website and could not comment on them.

Rules on the Finance Department’s website are different from an earlier draft that the Insurance Department released before holding a stakeholder meeting to discuss the proposal in March.

Mark Sektnan, vice president of state government relations for Property Casualty Insurers Association of America, was not available for comment on Friday.


Massachusetts Lowers State Assessment Cost for 4th Straight Year

The Baker administration said Wednesday that businesses will pay an assessment of 3.83 percent on their insurance premium, as compared with the current 4.56 percent. The new assessment rate will go into effect on Sunday, when the state’s 2019 fiscal year begins.

While, this news is great for Massachusetts employers, this does not address the state’s overall low rates that are driving carriers out of the state.

Under state law, businesses have to provide workers’ compensation insurance to their employees to cover them for injuries or illnesses suffered on the job. The assessments on businesses help fund the state’s Department of Industrial Accidents, which oversees the workers’ comp. system.

When Gov. Charlie Baker took office in January 2015, the assessment rate for workers’ compensation was 5.8 percent of employers’ premiums. It’s fallen every year since. The biggest drop during Baker’s term came last year, when the rate dropped by nearly a fifth.

The new 3.83 percent rate is the second-lowest rate in the past decade, behind the 3.34 percent that businesses paid the state in the 2014 fiscal year under Gov. Deval Patrick. The highest rate this decade came during the 2010 fiscal year, when it rose up to 7.22 percent.

Administrations typically seek to lower the rate as much as they can, while maintaining the workers’ comp. fund’s financial stability.

Is Your Co-Employed Policy Being Evidenced Properly on your Acord 25 Certificate of Liability Insurance (COI)?


A Professional Employer Organization (PEO) can secure workers’ compensation coverage for their client companies a number of different ways.  The structure and naming conventions used on each policy are often set by the state in which coverage is afforded.  The NCCI classes these policy types with an Policy Type Code of 1-8.  The attributes of each policy type dictates how coverage for that policy should be evidenced on an Acord 25 Certificate of Liability Insurance (COI).  Not surprisingly, however, many agencies servicing PEO clients, who have limited knowledge of the complex and varying PEO policy structures used to properly insure co-employed employees, often evidence coverage improperly on COIs.

Below is a brief tutorial outlining the 5 most common PEO policy types to help you make sure your COIs are being generated properly.

Common PEO Policy Types:

  1. Master Policy
    1. 1st Named insured is PEO
    2. Policy includes the applicable blanket Alternate Employer Endorsement(s) as required by each state, extending coverage to the client companies of the PEO
    3. Co-employment exists
    4. NCCI Policy Type 8
  2. Multiple Coordinated Policy (MCP)
    1. Naming convention is established by the State(s) where coverage is provided and typically includes both the PEO and Client Company as the 1st named insured
      1. i.e. “PEO Name L/C/F Client Name”
      2. i.e. “PEO Name for workers leased to Client Name”
    2. No alternate employer endorsement is needed as both the PEO and the Client are named as insureds on the policy
    3. Co-employment exists
    4. NCCI Policy Type 4
  3. Client Direct Purchase
    1. 1st Named insured is the Client Company
    2. Policy includes an alternate employer endorsement naming the PEO
    3. Co-employment exists; coverage is also extended to non-leased employees
    4. NCCI Policy Type Code 7
  4. Mini-Master Policy
    1. 1st Named insured is PEO
    2. Policy includes an alternate employer endorsement naming only one client company and its affiliated entities
    3. Co-employment exists
    4. NCCI Policy Type Code 5
  5. Alternate Services Offering (ASO)
    1. 1st Named insured is the Client Company
    2. Policy does not include an alternate employer endorsement and the PEO is not named on the policy
    3. NO co-employment exists
    4. NCCI Policy Type Code 1


Proper COI Structure by PEO Policy Type:

Policy Type Insured Section of COI Description of Operations (DOO) section of COI Notes
Master Name of PEO as listed on the Policy Dec Page Client Company being evidenced and effective date when coverage was extended to that Client Company is stated here DOO should include a disclaimer stating coverage is extended to leased employees except in monopolistic states and any other coverage details pertinent to evidenced policy
MCP Name of PEO and Client Company as listed on the Policy Dec Page Client Company being evidenced and effective date when coverage was extended to that Client Company is stated here DOO should include a disclaimer stating coverage is extended to leased employees except in monopolistic states and any other coverage details pertinent to evidenced policy
Client Direct Name of Client Company as listed on the Policy Dec Page PEO is listed as alternate employer DOO should include a disclaimer stating coverage is extended to leased and non-leased employees except in monopolistic states and any other coverage details pertinent to evidenced policy
Mini-Master Name of PEO as listed on the Policy Dec Page Client Company being evidenced and effective date when coverage was extended to that Client Company is stated here DOO should include a disclaimer stating coverage is extended to leased employees except in monopolistic states and any other coverage details pertinent to evidenced policy
ASO Name of Client Company as listed on the Policy Dec Page Nothing specific to co-employment is needed Nothing specific to co-employment is needed

Speak to an experienced PEO agent to learn more.


Young Consumers Willing to Let Insurers Spy on Digital Data – If It Cuts Premiums

As a sociology major and Orwellian it is hard for me to not think about “Big Brother” when reading these types of reports.  My gut would tell me that the younger generation of people that understand data management the most would be most conference about data collection – seemingly not the case –

The majority of people between 18 and 34 would be willing to let insurance companies dig through their digital data from social media to health devices if it meant lowering their premiums, a survey shows.

In the younger group, 62 percent said they’d be happy for insurers to use third-party data from the likes of Facebook, fitness apps and smart-home devices to lower prices, according to a survey of more than 8,000 consumers globally by Salesforce.com Inc.’s MuleSoft Inc. That drops to 44 percent when the older generations are included.

As consumers share more of their personal data online, governments increased their scrutiny of how it’s collected and used following the harvest of 61 millions Facebook users’ accounts by U.K. firm Cambridge Analytica. The European Union’s new privacy law, known as the General Data Protection Rules, took effect on May 25.
Of the older generations, 45 percent of 35- to 54-year-olds are happy to allow insurers broad access to their digital identity, while 27 percent of those 55 and older would do so.

Insurers are investing millions improving their digital offerings amid growing competition from fintech startups. But that’s a work in progress: 58 percent of the survey’s respondents said that systems don’t work seamlessly for them, with many citing difficulty filling out a form online. And 56 percent said they would switch their insurance provider if digital service is poor.

“Insurers are already struggling to deliver a connected experience,” said Jerome Bugnet, EMEA client architect at MuleSoft. That is happening “before even considering how they bring all these new data sources into the equation.”