Greetings from the NCCI Annual Issues Symposium (AIS)

The National Council this morning gave its annual update on the state of the workers’ compensation line.  As always, Chief Actuary Kathy Antonello did an awesome job of updating the most senior workers’ comp professionals across the globe on all of the relevant economic performance indicators that help us to understand this line of insurance.

The full report can be found off the NCCI website…

https://www.ncci.com/Articles/Pages/II_NewsFromAIS.aspx

…as well as other conference highlights.  Some key points to me from the report:

  • The expected combined ratio for this year is the lowest in almost half a century at an 89.  This is 5 points lower then last year’s 94.  This indicates an operating margin of 11 points on average.
  • The investment income gain went from 10.4% to 12% this year, effectively providing an overall return to workers’ compensation insurers of 23%
  • The overall market volume dropped from $45.6b to $45b in premiums, mostly due to rate drops countrywide.
  • The top five class codes (hardest to place) in the residual market are:
    • Carpentry 5645
    • Roofing 5551
    • Local Trucking 7228
    • Painting 5474
    • Long Haul Trucking 7229

I’d expect a lot of capital support for the line due to these results.

Always a great event and wonderful to catch up with so many friends –

Travelers Group the Largest Writer of Workers’ Compensation in 2017

As a former Liberty Mutual guy, it shocks me they have dropped to 7’th.  For years and years they were #1 on this front…
Amtrust continues to ascend and now at #4 with almost $3B written…
6 of the 25 are competitive state funds with New York at #8 the largest — California (SCIF) now being #13 with the largest overall workers’ compensation premiums speaks to the competitiveness of the overall market…
Lowest overall loss ratio was SAIF (Oregon State Fund) at an incredible 39.44% against the average of 56.9% and the high of 89.14% (AIG)…
Very interesting to see the diverse range of DCC (ALAE) charges… some companies are double digits, while others under 1% to the overall loss ratio…
I’m guessing that the NCCI will be announcing another profitable year for workers’ compensation in Orlando this week during the “State of the Line”…
See you there!
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New Florida Workers’ Comp Rates Effective 6/1/2018

As you all know by now,

OIR approved another rate decrease of 1.8% effective 6/1/2018. I thought it would be beneficial to share these new rates by class code, instead of an average.

Previous Article: https://peocompass.com/florida-workers-compensation-rate-reduction-1-8-effective-6-1/

Click Here for 6:1:2018 Florida Workers’ Comp Rates

 

Hope all is well and have a great weekend.

 

Brian

Buffett Not Eager for Berkshire to Be Cyber Insurance Leader

https://www.insurancejournal.com/news/national/2018/05/07/488425.htm

Some intriguing comments from Warren Buffet on the State of cyber insurance.  My favorite (which I agree with), “I don’t think we or anybody else really knows what they’re doing when writing cyber” insurance, Buffett said Saturday at his firm’s annual meeting in Omaha, Nebraska. “We don’t want to be a pioneer on this.”

From both sides off the table (agent and underwriter) there is still much more to learn in this burgeoning insurance product line which has increased premiums written 35% in the last two years.

Buffett Not Eager for Berkshire to Be Cyber Insurance Leader

By Sonali Basak and Katherine Chiglinsky | May 7, 2018

 

Warren Buffett said he doesn’t want Berkshire Hathaway Inc. being a leader on cyber insurance because neither he nor others in the industry really know the risk.

“I don’t think we or anybody else really knows what they’re doing when writing cyber” insurance, Buffett said Saturday at his firm’s annual meeting in Omaha, Nebraska. “We don’t want to be a pioneer on this.”

Buffett said that cyber risk is part of his estimate that every year carries about a 2 percent chance of a super catastrophe that would cause $400 billion or more of insured losses. While that kind of disaster will wipe out many companies, Berkshire will aim to keep its exposure low enough to remain profitable in such a year, the 87-year-old chairman said.

Buffett said he’s fine with writing some cyber policies to remain competitive, but doesn’t want to be among the top three in the industry. Anyone who claims to know the base case or worst case for losses is “kidding themselves,” he said.

[Property/casualty insurers wrote $1.35 billion in direct written premium for cyber insurance in 2016, a 35 percent jump from 2015, according to reports by Fitch Ratings and A.M. Best.

According to the reports, the largest cyber insurance writers are American International Group, XL Group and Chubb. These companies had a combined market share of approximately 40 percent at year-end 2016. The top 15 writers of cyber held approximately 83 percent of the market in 2016.

Completing the top 10 writers of cyber ranked by direct premium written are: Travelers, Beazley, CNA, Liberty Mutual, BCS Insurance (owned by Blue Cross licensees), AXIS Insurance Group and Allied World.]

Senator Nelson Fundraiser Held On Campus at Libertate Insurance

One of the best things about working out of a non-traditional office is the opportunity to house really cool events.  The recent NAPEO fundraiser for Senator Nelson did not disappoint!

On Friday, April 20th, Libertate was fortunate enough to participate in this fabulous event that raised money for Senator Nelson who has been a long-time supporter of PEO initiatives such as the Small Business Efficiency Act (SBEA).  Additionally, he helped educate his fellow legislators on how to address PEOs and the Affordable Care Act (ACA).  Thanks to Senator Nelson, NAPEO and to all of those that participated.

GEX Management And LL Roberts Group To Open Joint Sales & Service Center In Northwest Arkansas

Nothing makes me prouder than to see two of Libertate’s clients partnering together to grow the PEO model in my home state of Arkansas.  Congrats, best of luck and Whoo Pig Sooie!!!

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DALLASMay 2, 2018 /PRNewswire/ — GEX Management, Inc. (OTCQB: GXXM), announced that it has reached agreement in principle with LL Roberts Group, a Dallas, Texas-based Professional Employer Organization (PEO), to jointly open and operate a PEO Sales & Service Center in Northwest Arkansas. The center will offer and service a variety of employee administration needs for small and mid-sized businesses. These services will include professional payroll and employment tax administration, workers’ compensation coverage without deposits or year-end audits, a 401(k) plan with no client maintenance fees, group medical, dental, and vision plans, innovative benefits such as Teladoc, as well as Human Resources and Risk Management consultative support.

 GEX Management’s Founder and CEO, Mr. Carl Dorvil, stated, “PEO services are a tremendous resource that can only have a positive impact on the robust economy and rapid growth of Northwest Arkansas.” LL Roberts Group President and CEO, Mr. LJ Roberts, added “We are proud to join GEX Management in introducing high-quality employee administration solutions to businesses across Northwest Arkansas. 

Launch of this Northwest Arkansas PEO Sales & Service Center is slated for May or early June of 2018.

About GEX Management
GEX Management, Inc. is a licensed Professional Employer Organization (PEO) and a Professional Services Company providing comprehensive back office services to clients including HR, Payroll, Risk & Compliance, and Executive Consulting, and provides progressive and complete solutions for employee management and operational needs. http: www.gexmanagement.com

Information on Forward Looking Statements
The statements contained herein that are not historical facts are forward-looking statements within the meaning of the federal securities laws (Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934). You can identify such forward-looking statements by the words “expects,” “intends,” “plans,” “projects,” “believes,” “estimates,” “likely,” “possibly,” “probably,” “goal,” “opportunity,” “objective,” “target,” “assume,” “outlook,” “guidance,” “predicts,” “appears,” “indicator” and similar expressions. Forward-looking statements involve a number of risks and uncertainties. In the normal course of business, GEX Management, Inc., in an effort to help keep our stockholders and the public informed about our operations, may from time to time issue such forward-looking statements, either orally or in writing. Generally, these statements relate to business plans or strategies, projected or anticipated benefits or other consequences of such plans or strategies, or projections involving anticipated revenues, earnings, profits, pricing, operating expenses or other aspects of operating results. We base the forward-looking statements on our expectations, estimates, and projections at the time such statements are made. These statements are not guarantees of future performance and involve risks and uncertainties that we cannot predict. In addition, we have based many of these forward-looking statements on assumptions about future events that may prove to be inaccurate. The actual results of the future events described in such forward-looking statements could differ materially from those stated in such forward-looking statements.

Gig Economy Business Model Dealt a Blow in California Ruling

Gig Economy Business Model Dealt a Blow in California Ruling

It is going to be very difficult for the Ubers, Lyfts and GrubHubs to get around this…

Why not just make these folks employees?

“Industry executives have estimated that classifying drivers and other gig workers as employees tends to cost 20 to 30 percent more than classifying them as contractors.”

$$$

These workers deserve protection as any other employee.  As cool as these business models are, they can make a little less, pay a little more and protect the American worker…

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An Uber sticker above one for its ride-hailing rival Lyft. Even if a ruling like California’s eventually forces such companies to change their business model, that moment could be far off.CreditRichard Vogel/Associated Press

In a ruling with potentially sweeping consequences for the so-called gig economy, the California Supreme Court on Monday made it much more difficult for companies to classify workers as independent contractors rather than employees.

The decision could eventually require companies like Uber, many of which are based in California, to follow minimum-wage and overtime laws and to pay workers’ compensation and unemployment insurance and payroll taxes, potentially upending their business models.

Industry executives have estimated that classifying drivers and other gig workers as employees tends to cost 20 to 30 percent more than classifying them as contractors. It also brings benefits that can offset these costs, though, like the ability to control schedules and the manner of work.

“It’s a massive thing — definitely a game-changer that will force everyone to take a fresh look at the whole issue,” said Richard Meneghello, a co-chairman of the gig-economy practice group at the management-side law firm Fisher Phillips.

The court essentially scrapped the existing test for determining employee status, which was used to assess the degree of control over the worker. That test hinged on roughly 10 factors, like the amount of supervision and whether the worker could be fired without cause.

In its place, the court erected a much simpler “ABC” test that is applied in Massachusetts and New Jersey. Under that test, the worker is considered an employee if he or she performs a job that is part of the “usual course” of the company’s business.

By way of an example, the court said a plumber hired by a store to fix a bathroom leak would not reasonably be considered an employee of that store. But seamstresses sewing at home using materials provided by a clothing manufacturer would probably be considered employees.

In addition, a company must show that it does not control and direct the worker, and that the worker is truly an independent business operator, not just classified that way unilaterally.

While companies like Uber have had some success arguing that they don’t exert sufficient control over drivers to be considered employers, it would be hard to assert that drivers are performing a task that isn’t a standard feature of their business.

In a recent case involving the restaurant ordering and delivery service GrubHub, for example, a California judge found that food delivery was a regular part of the company’s business in Los Angeles, where the plaintiff worked, potentially satisfying the ABC test. But she ruled in favor of the company, concluding that it did not exert sufficient control over the worker to be considered an employer.

Shannon Liss-Riordan, the attorney for the plaintiff in that case, said she would seek reconsideration in light of the new ruling.

GrubHub said in a statement that it was aware of Monday’s ruling but could not comment because of the appeals process in the case, other than to say it “will continue to ensure delivery partners can take advantage of the flexibility they value from working with our company.”

Uber declined to comment.

The case on which the court ruled Monday was brought by delivery drivers at a company called Dynamex, who had been considered employees before 2004, when the company changed the relationship to a contracting arrangement.

Were the courts to find that workers at companies like GrubHub and Uber, as now constituted, were employees rather than contractors, the companies could respond in several ways. They could simply make their workers employees rather than contactors.

Alternatively, ride-hailing companies like Uber might choose to rein in their operations, providing a more limited platform in which drivers and passengers can negotiate prices and the terms of the service.

Even if Uber and the like are eventually forced to change their business model, however, that moment could be far off. Uber drivers typically sign an arbitration agreement stating that any disputes must be brought individually and outside the court system. While the United States Supreme Court recently heard a challenge to such agreements, it is widely expected to uphold them.

Florida Workers’ Compensation Rate Reduction of 1.8% Effective 6.1

While the rationale for this reduction I suppose makes sense as the brilliant people at the NCCI proposed it, I have to wonder what now happens at the end of the year when data from the 2016 Castellanos and Westphal verdicts comes into play.  Specifically, will rates go up or down this coming year due to increased cost of litigation (Castellanos) as well as the doubled TTD exposure (Westphal).  When rates were reduced this past 1/1 by almost 10 points, data was not in on the impact of these two watershed cases.

Perhaps the NCCI will speak to that in Orlando at their Annual Issues Symposium May 16-18 where they provide guidance on the “state of the line”…This coupled with Anniversary Rating Dates going away will make things lively from a pricing standpoint in Florida for PEO’s.  If you have an effective date prior to 1.1.18, you are now at a pricing deficit of 11.6% (9.8 + the 1.8 effective June 1)….

OIR Approves Workers’ Comp Insurance Rate Decrease

The Florida Office of Insurance Regulation announced today that it has approved a rate decrease for workers’ compensation insurance in Florida. The 1.8% decrease was filed by the National Council on Compensation Insurance (NCCI) in a law-only filing resulting from the effects of the Federal Tax Cuts and Jobs Act.

Florida Chief Financial Officer Jimmy Patronis said, “Reducing insurance costs and financial burdens is great news for our business community. Businesses in Florida support our local communities, create jobs, and help our state’s economy. This rate reduction is a much needed insurance cost savings for Florida businesses.”

Florida Department of Agriculture and Consumer Services Commissioner Adam H. Putnam said, “Reducing the cost of business spurs job growth, and this rate reduction is exactly what Florida needs to continue to create the business climate that will help our economy thrive.”

Florida Insurance Commissioner David Altmaier said, “NCCI has demonstrated through its rate filing that this decrease is an actuarially-sound response to the savings workers’ compensation insurers have realized as a result of recent federal legislation. The data indicates that passing the savings along to businesses through a rate decrease is an appropriate response at this time.”

The overall rate level change is a 1.8% decrease due to a change in the Profit and Contingency (P&C) Factor to 0.5% from 1.85%. NCCI’s analysis to determine the revised P&C reflects provisions from the recently-passed Tax Cuts and Jobs Act, including top corporate tax rate decreases, changes to reserve discount factors, and other factors. This applies to both new and renewal workers’ compensation insurance policies effective in Florida as of June 1, 2018.

About the Florida Office of Insurance Regulation
The Florida Office of Insurance Regulation has primary responsibility for regulation, compliance and enforcement of statutes related to the business of insurance and the monitoring of industry markets. For more information about the Office, please visit or follow us on Twitter @FLOIR_command Facebook.