Commercial Lines Prices Rose +6% During Q1

According to a survey conducted by Willis Towers Watson, Property and Casualty premiums increased by over 6% in aggregate during Q1 which marks the 2nd quarter in a row for such an increase.   As has been the trend for years, Workers’ Compensation was the only line to experience consistent rate reductions during the same time period. However, many presume there is a hard market ahead for comp as well. Time will tell.

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U.S. commercial insurance prices climbed more than 6 percent in aggregate during the 2020 first quarter compared to the year, Willis Towers Watson’s pricing survey for the sector.

Price increases surpassed 6 percent in aggregate for the second quarter in a row, Willis Towers Watson said.

Once again, nearly all commercial lines saw price hikes. Some saw double-digit increases: Directors and Officers liability, excess/umbrella, commercial auto and property.

For most other lines, however, Willis Towers Watson said price changes trended higher at a similar rate to the previous quarter.

Price increases were more muted for small commercial accounts and higher across mid-market accounts, with large accounts nearing double digits, Willis Towers Watson said.

Workers’ compensation continued to be a notable exception with many carriers reporting rate reductions, Alejandra Nolibos, senior director, Insurance Consulting and Technology for Willis Towers Watson, said in prepared remarks.

As well, Nolibos said that the statistics don’t yet reflect reactions to short and midterm impacts of COVID-19, “among them changes in task and employment mix and the economic situation.” He said that continued analysis of emerging data will track those effects for future premium trends.

Willis Towers Watson’s CLIPS survey is a retrospective look at historical changes in commercial property/casualty insurance (P&C) prices and claim cost inflation.

Source: Willis Towers Watson

https://www.insurancejournal.com/news/national/2020/06/09/571470.htm

 

NCCI Presumptions Tracker

Below are the latest updates from NCCI regarding state presumptions:

Illinois: (Past by Both Chambers on 5.22.20) HB 2455 In Part, Provides That There is a Rebuttable Presumption That an Employee’s Contraction of COVID-19 Arises Out of and in the Course of the Employee’s First Responder or Frontline Worker Employment and That the Injury or Occupational Disease Shall Be Rebuttably Presumed to Be Causally Connected to the Hazards or Exposures of the Employee’s First Responder or Frontline Worker Employment

Massachusetts: (In Joint Committee) HB 4739 Creates a Presumption of Relatedness for Essential Workers Suffering From COVID-19

Michigan: (In Senate Committee) SB 928 Relates to Infectious Disease Presumption for Essential Employees During a Declared Emergency

Ohio: (Introduced the Below)

HB 667 Makes COVID-19 Contracted by a Corrections Officer an Occupational Disease   Under the Workers Compensation Law

HB 668 Makes Coronavirus Contracted by a Peace Officer, Firefighter, or     Emergency Medical Worker an Occupational Disease Under the Workers Compensation Law

As a reminder, NCCI provides regular updates regarding presumption activity.  To access the tracker, click here.

Stay Safe,

Team Libertate

 

WCIRB Releases Cost Evaluation of Conclusive COVID-19 Presumption

See below from the WCIRB regarding the projected cost of COVID-19 claims to be filed by ‘Essential Critical Infrastructure Workers’….At the low end, if only 4.8% of California ECI workers file claims related to COVID-19, the cost to the system will be an astounding $2.2B!

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WCIRB Releases Cost Evaluation of Conclusive COVID-19 Presumption

Oakland CA, April 20, 2020 – The Workers’ Compensation Insurance Rating Bureau of California (WCIRB) released its Cost Evaluation of Potential Conclusive COVID-19 Presumption in California Workers’ Compensation. The evaluation was completed in response to an April 8, 2020 request from the California State Assembly Insurance Committee to assess the impact of a conclusive presumption that COVID-19 claims arising from certain front line workers are presumed to be work-related. Specifically, the WCIRB was requested to provide the cost impact of a conclusive COVID-19 presumption for health care workers, firefighters, EMS and rescue employees, front line law enforcement officers and other essential critical infrastructure (ECI) employees.

The WCIRB estimates that the annual cost of COVID-19 claims on ECI workers under a conclusive presumption ranges from $2.2 billion to $33.6 billion with an approximate mid-range estimate of $11.2 billion, or 61 percent of the annual estimated cost of the total workers’ compensation system prior to the impact of the pandemic. The WCIRB noted that in developing this estimate it did not include a provision for non-ECI workers who may file a compensable workers’ compensation COVID-19 claim, nor did it adjust for the COVID-19 claims of ECI workers that may be compensable in the absence of a conclusive presumption.

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This and other important workers’ compensation topics will be discussed tomorrow during part 2 of NAPEO’s Coronavirus Updates webinar where our very own, Paul Hughes, will share his thoughts.  Click here for registration details.

 

W. R. Berkley Corporation Announces Senior Executive Appointments

It’s refreshing to see some positive non-COVID news from the industry!

Congrats to our PEO carrier partner, Key Risk (owned by W.R. Berkley) and its new president, Scott A. Holbrook.  The former President, Robert W. Standen, was promoted to Executive Vice President.

Additional details below.

W. R. Berkley Corporation Announces Senior Executive Appointments

4/7/20

Robert W. Standen Named Executive Vice President

Scott A. Holbrook Appointed President of Key Risk Insurance

GREENWICH, Conn.–(BUSINESS WIRE)– W. R. Berkley Corporation (NYSE: WRB) today announced the appointment of Robert W. Standen as executive vice president with oversight responsibility for certain of the Company’s operating units. Scott A. Holbrook will succeed Mr. Standen as president of Key Risk Insurance, a Berkley Company. The appointments are effective immediately.

Mr. Standen joined Key Risk Insurance in 2003 as executive vice president and chief claims officer and assumed the role of president in 2007. He has been instrumental in advancing the operating unit’s leadership position and expansion in the mono-line workers’ compensation segment. His professional designations include Associate in Risk Management (ARM), Associate in Claims (AIC) and Associate in Loss Control Management (ALCM) from the Insurance Institute of America. Mr. Standen earned his Masters of Business Administration degree from St. Joseph’s University and graduated with a Bachelor of Science degree from LaSalle University.

Mr. Holbrook has 25 years of experience in the commercial lines property casualty insurance business. He most recently served as the senior vice president for the Mid-Atlantic division of a leading global insurer. Mr. Holbrook holds a Bachelor of Science degree in finance and marketing from the Virginia Commonwealth University School of Business and is a Chartered Property Casualty Underwriter (CPCU).

Commenting on the appointments, W. Robert Berkley, Jr., president and chief executive officer of W. R. Berkley Corporation, said, “We are pleased to have Rob assume this new position. His deep knowledge of the property casualty insurance business and hands-on experience in managing one of our operating units will be invaluable to our corporate oversight activities. We welcome Scott to the team and are confident that his extensive underwriting background, operating experience and independent agent and broker relationships will enable him to lead the Key Risk team in building upon its success.”

Key Risk Insurance delivers innovative and responsive workers’ compensation solutions that provide clients the freedom to do what they do best. With over 30 years of expertise and 100% focus on workers’ compensation, Key Risk Insurance works with employers to enrich each client’s risk management strategies by creating and executing comprehensive solutions proven to protect people, support business and exceed expectations. For further information about Key Risk please visit www.KeyRisk.com.

Founded in 1967, W. R. Berkley Corporation is an insurance holding company that is among the largest commercial lines writers in the United States and operates worldwide in two segments of the property casualty insurance business: Insurance and Reinsurance & Monoline Excess. For further information about W. R. Berkley Corporation, please visit www.berkley.com.

Products and services are provided by W. R. Berkley Corporation’s subsidiaries and “operating units”. Operating units are not typically legal entities, but for marketing purposes may sometimes be referred to individually as “a Berkley company” or collectively as “Berkley companies”.

 DOWNLOAD THIS PRESS RELEASE PDF FORMAT

Karen A. Horvath
Vice President – External
Financial Communications
203-629-3000

Source: W. R. Berkley Corporation

 

COVID-19’s Impact on the PEO Industry: Flash Survey by LL Roberts Group

PEOs Dealing with the Coronavirus

This PEO Flash Survey regarding how PEOs are dealing with the Coronavirus outbreak involved several interviews with PEO owners and executives, PEO brokers, Insurance brokers serving PEOs, bank representatives that work with PEOs and other vendors associated with the PEO Industry.  This confidential survey was conducted by LJ Roberts of the LL Roberts Group in a conversational or interview manner.  All parties interviewed in conjunction with this survey have been assured that their opinions, observations and comments will be kept confidential.  However, what I can share is that the PEOs, companies, agencies, and organizations interviewed are located and operate from coast-to-coast.  As a result, these observations and opinions are representative of a national perspective concerning the Coronavirus and its impact on PEOs and business in general.

The comments, opinions, insights, plans, and observations of those interviewed are presented as bullet points below:

  • “As a longtime veteran of the PEO Industry, I’ve never seen anything like this and believe that we are a long way from seeing the worst of it” was a comment made by one mid-sized PEO executive.  This observation was echoed by several of those interviewed.  This observation indicated that those interviewed are in uncharted waters and are now making difficult decisions on challenges not previously experienced by their organizations.

 

  • “I expect this to last for 6 months” was a comment made by one PEO owner and was consistent with many of the remarks made by the survey’s interviewees.

 

  • “We are preparing for worst case scenarios” shared one PEO owner as he is having daily meetings with his senior staffers.

 

  • “This is the most overblown event that I have ever witnessed in my life” stated one PEO owner.  He went on to speculate that the Media was using this as a draw for viewers and readers.  He also feels that there are political factors at play (why the Coronavirus outbreak is so overblown in his opinion).

 

  • “We are reaching out to the state unemployment commission so that we can properly instruct clients on how their employees can get unemployment benefits quickly. While we are always thinking about fighting unemployment claims, this situation is different” shared one PEO owner.

 

  • “This Coronavirus situation will impact how we do business after it’s all over” was a comment made by one PEO representative.  Other interviewees expressed similar observations.

 

  • One PEO owner stated that “most of our client companies cannot go weeks without operating, so we are expecting several clients to simply go out of business”.  Clients going out of business was a possibility that several interviewees shared.

 

  • “This is going to be much worse that the 2008 economic crash” and “this will be the worst SUTA crash the PEO Industry has ever seen” were the comments from one PEO owner.  He also mentioned reports that he attributed to federal government representatives on TV that predicted a possible 20% unemployment rate on the other side of this crisis. He went on to say that he’s grateful that a lot of his clients are priced on client-based SUTA.

 

  • An expectation that the Millennials will be the most impacted from a psychological standpoint. Comments to the effect that the Millennials have never been “economically tested” were shared as a concern.

 

  • A big concern for most interviewees was “communication”, both internally and with their clients. “we need to double-down on our communication processes and initiatives” was one comment made.  Daily phone meetings with work at home employees will be crucial, shared one PEO executive.

 

  • “I can foresee us needing to call upon our rarely used credit line at our banks” was one PEO owner’s expressed expectation.

 

  • “We better be concerned with and thinking about our technology” stated one PEO owner who just placed an order for 6 laptops for possible assignment to work from home staffers.

 

  • “This is a time when leaders show what they are made of and new leaders or key players emerge” was a wise statement or insight

 

  • It was reported that numerous client companies of the PEOs represented in this survey have totally suspended operations or dramatically limited such.  The client company industries that seem to have been mostly impacted are restaurants and the hospitality industry at large, transportation companies and retailers.

 

  • Already, according to a couple the PEO owners interviewed, clients are requesting PEO rate reductions due to the crisis.  One PEO owner expressed concern with this becoming a growing request or expectation of his client base.

 

  • One PEO with an overweighed hospitality industries book of business was especially concerned.  Already mandated closures of restaurants and bars has impacted that PEO’s business, but how long will it be before people are comfortable going out to eat or to go to bars after the crisis is dealt with?—that was the concern expressed.

 

  • “Rotating staff” was a common initiative referenced by the PEO representatives interviewed.  Cutting their internal staffs at the office in half (or more) by having a rotation of having employees work one day at home and the next at the offices.  This was seen as a effort to support “social distancing” and to minimize the number of employees working at the office at one time.

 

  • “Certain job functions cannot or should not be performed by staffers from home” was a comment from one PEO representative.

 

  • “We expect that some of our clients and even our PEO will be taken advantage of by some workers that simply see this crisis as a opportunity to take time off from work” stated one PEO representative.

 

  • One crucial factor to consider when determining if PEO staffers will be allowed or instructed to work from home is the quality of their internet connectivity and computers.  Some employees lack either or both internet connectivity and/or a home computer or laptop. A few of the PEO representatives stated that they were assigning laptops to some staffers and a couple had recently bought extra laptops for this very purpose.

 

  • A PEO representative stated that they were having their staffers working from home use their office voiceover IP phones at home.  This was allowing them to receive and initiate calls from their office phone lines while working at home. Another PEO was having the office phones and extensions for staffers working at home forwarded to the employee’s cell phone while they are working from home.

 

  • “Core crews” will be needed at the PEO’s base of operations were consistent responses with all the interviewees. When pressed for what team members at the PEO would be classified as “core” the common response was “our leaders” and those associated with getting printed checks and reports out to the clients. Payroll, IT, HR, and accounting were the types of personnel that would be called upon most during the Coronavirus outbreak according to most interviewees.

 

  • “Hyper-hygiene” was another practice that was referenced by several survey interviewees.  Emails, bulletins, texts, posters, handouts are all being utilized with the PEO’s internal staff and with their clients. Handwashing, using disinfectant cleansers, covering your mouth and nose when coughing or sneezing, etc… are all tips and practices being promoted.

 

  • Most of the PEO owners and executives interviewed stated that they have internal (PEO) planned staff reductions. Some have already implemented reductions and are considering more. The common observations is that revenues are dropping rapidly due to client company payroll reductions or total suspensions. “It’s easy math” said one PEO owner referencing that the PEO’s staff size and payroll are a factor of the revenue generated, which is based on client companies processing payrolls through the PEO.

 

  • “I’m focused on assessing the probable economic impact on our PEO and what I need to do now to prepare for a dramatic reduction in revenue” was shared by one PEO owner, however other interviewees expressed the same concern.

 

  • At least two of the PEO owners interviewed stated that they have not yet considered internal PEO staff layoffs but acknowledged that that would be a possibility.

 

  • A few of those interviewed said that they have already heard of PEOs that were contemplating closure.  Others predicted that there will be PEOs that “go out of business” as a result of the Coronavirus crisis.  At least one of the PEO owners interviewed said that he will be looking for a “fire sale of PEOs prior to them going under”.

 

  • After speaking with PEO bank representatives and the PEO representatives that work with treasury management, there does not seem to be any concern with banking.  Bank representatives confirmed that they are implementing their own “work from home” initiatives, reducing operating hours, and utilizing minimal branch staffs during this Coronavirus outbreak. The bankers feel like they are a crucial and required facet of not just serving the PEO Industry, but in supporting the worldwide economy and society—as a whole. No changes in how PEOs are served are planned at this time by the bank representatives interviewed.

 

  • An optimist PEO owner said that this is “SARS 2.0”.  He went on to state that his PEO had done very well since the last declared virus outbreak.

 

  • Increasing “cloud-based file share processes” was another initiative that some of the PEO representatives shared.  Those respondents stated that they already had such practices in place but would add staff members to that access and expand capacity to utilize this type of resource.

 

  • Some of the PEO owners expressed pride in how their key employees were stepping up and declaring their commitment to the PEO and the clients.  Volunteers for staying at the office (as part of the aforementioned “core crew”) were noted. At the same time, one PEO owner stated that this situation has been “enlightening” to him as it pertains to various staff members.

 

  • A question that asked (or fear expressed) was that WSEs that become infected with the Coronavirus will be eligible for workers’ compensation benefits.  This was a particular concern for those PEOs with large deductibles associated with the PEOs’ workers’ comp polices. One workers’ comp broker expressed that he expects that to end-up being the case (i.e. that Coronavirus claims will be compensable under workers’ comp). While SUTA rate increase were commonly fears and expected as a result of this crisis, might experience modifiers for the PEOs to be impacted as well, was at lease one PEO owner’s concern.

 

  • “Our leaders need to work hard to keep spirits up (referring to the PEO’s internal staff)” was a PEO owner’s comment.

 

  • A push to promote pay cards and direct deposits to those client companies that still issue paper checks is underway at some of the PEOs interviewed. A mild concern that FedEx might suspend operations was expressed by a couple of PEO representatives.

 

  • PEO representatives shared they are keeping a close eye on what the federal government is doing in the way of any “economic relief package”.

 

  • Asking PEO sales reps to stay away from the office was a precaution one PEO reported.  This is due to the salespeople moving amongst different locations (prospects and clients) stated the interviewee.

 

  • “During and after this crisis, we will be considering our expanded use of outsourcing non-client facing functions for our PEO (back office functions like reconciliations and payroll processing were mentioned)” was shared by one PEO owner.  He said that he thinks that this type of outsourcing (to India) could reduce the costs associated with those functions by as much as 50%.

 

  • “We are looking at every cost cutting measure that we can take in order to deal with lost revenue” stated a PEO owner.  He mentioned staff reductions, elimination of travel and entertainment expenses, and reduced hours for part time workers.

 

  • Interestingly, a couple of the PEO owners are planning “sales promotions” such as “no admin fees” for one, two and even three months for new accounts that come onboard during this crisis.  Also, sales promotions are being implemented by some PEOs in the form of bonuses on new business to be paid to the agents or brokers.

 

  • The PEO brokers seem to be the most stunned as they feel that they have no control and are dependent on the PEOs to tell them what is happening and what will happen moving forward.  Of course, PEO commissions to brokers are based on payrolls processed and typically do not involve any form of “base salary”.

 

  • Some PEO vendors and insurance brokers expressed that the adverse impact on them will likely be somewhat delayed as reported workers’ comp premium collections are not immediate and PEO failures are not yet identified or reported. They seem to feel a bit “powerless” in assisting their PEO clientele.

We will continue to communicate with our survey respondents and will look to provide an update later during this Coronavirus crisis in order to keep our PEO friends and affiliates aware of Industry veterans’ experiences, observations, and opinions.  Please let us know if you have any questions or additional comments that you want to share.

LL Roberts Group

 

Components of COVID-19 Relief Legislation

Below is a summary of the COVID-19 Relief Package from our friends at FisherBroyles

Components of H.R. 6201, COVID-19 relief legislation Temporary Expansion of Family and Medical Leave

  • H.R. 6201 would require employers with fewer than 500 employees to provide up to 12 weeks of job-protected leave, ten weeks of which would be paid.
  • Leave would be for “qualifying need related to a public health emergency.”
  • Qualifying need is defined as to mean “the employee is unable to work (or telework) due to a need for leave to care for the son or daughter under 18 years of age of such employee if the school [meaning a primary or secondary school only] or place of care has been closed, or the child care provider of such son or daughter is unavailable, due to a public health emergency.”
  • A “public health emergency” is then defined to mean “an emergency with respect to COVID-19 declared by a Federal, State, or local authority.”
  • The leave applies to employees who have been employed for at least 30 calendar days, rather than the 12-month period under the current FMLA.
  • The Secretary of Labor has the regulatory authority to exempt employers with fewer than 50 employees if the provision of paid FMLA leave “would jeopardize the viability of the business as a going concern.”
  • Employers with 25 or more employees would be required to reinstate employees after their FMLA leave period ends.
  • Employers with fewer than 25 employers do not have to reinstate an employee if they are experiencing significant economic hardship.
  • The first 10 days for which an employee takes leave could be unpaid leave, or the employee could choose to substitute any accrued vacation, personal or sick leave (including in certain instances the emergency paid “sick” leave described below).
  • After the initial 10 days, the employer would be required to provide paid leave based on an amount that is not less than two-thirds of an employee’s regular rate of pay and the number of hours the employee would otherwise be normally scheduled to work.
  • The bill caps the amount of the paid leave, per employee, to no more than $200 per day or $10,000 in the aggregate.
  • This provisions would be effective “not later than 15 days after the date of enactment.”

Creation of a Temporary Paid Sick Leave Program

  • H.R. 6201 requires employers to provide full-time employees with 80 hours of certain emergency paid “sick” leave related to the coronavirus (with special rules for part-time employees).
  • The paid sick leave could be used in any of the following circumstances:
    • The employee is subject to a federal, state or local quarantine or isolation order related to COVID-19.
    • The employee has been advised by a healthcare provider to self-quarantine due to concerns related to COVID-19
    • The employee is experiencing symptoms of COVID-19 and seeking a medical diagnosis.
    • The employee is caring for an individual who
      • Is subject to a federal, state or local quarantine or isolation order related to COVID-19, or
      • Has been advised by a health care provider to self-quarantine due to concerns related to COVID-19.
    • The employee is caring for a son or daughter where the school or place of care of the son or daughter has been closed or the child care provider of such son or daughter is unavailable, due to COVID-19 precautions.
    • The employee is experiencing any other substantially similar condition specified by the Secretary of HHS in consultation with the Secretary of the Treasury and the Secretary of Labor.
  • Full-time employees would be entitled to 80 hours of paid leave
  • Part-time employees are entitled to “a number of hours equal to the number of hours that such employee works, on average, over a 2-week period.”
  • The required paid leave ends with the employee’s next scheduled work shift following the end of the qualifying need.
  • The required sick pay is calculated based on the employee’s regular rate of pay or, if higher, the applicable minimum wage rate.
  • In the case of leaves to care for a family member or child, however, the required sick pay is based on 2/3rds of the regular rate of pay.
  • For part-time employees whose schedule varies from week to week, special rules apply to calculate the average number of hours.
  • The maximum amount of required sick pay per employee is $511 per day and $5,110 in the aggregate.
  • In the case of leaves to care for a family member of child, however, the maximum amount of required sick pay per employee is $200 per day and $2,000 in the aggregate.
  • The bill imposes notice requirements and prohibits employers from discharging, disciplining or discriminating against employees who take paid sick leave.
  • The Secretary of Labor is instructed to provide a model notice within seven days after enactment.
  • An employer is also prohibited from requiring employees to look for or find replacement employees to cover the hours during which the employee is using the paid sick time.
  • Violations are punishable under the FLSA.
  • The paid leave provisions go into effect “not later than 15 days after the date of enactment” and expire on December 31, 2020.

Refundable Tax Credits to Pay for Leave

  • H.R. 6201 provides provide a series of tax credits to those employers subject to expanded FMLA and emergency paid “sick” leave requirements.
  • The employer-related credits, which are refundable, would be applied against the employer portion of Social Security taxes for each quarter equal to the “qualifying” paid leave wages paid by the employer.
  • The tax credits would apply with respect to both the FMLA-expanded paid leave as well as the emergency paid “sick” leave.
  • The amount of the tax credits varies based on the type of leave.

Tax Credit for Expanded FMLA Leave

  • H.R. 6201 would provide employers a refundable tax credit equal to 100 percent of the “qualified family leave wages” that the employer is required to pay for a given quarter under the Expanded FMLA Leave.
  • The amount of the qualified family leave wages that would be taken into account for purposes of the credit per employee is $200 for any day for which the employer pays the employee qualified family leave wages, up to a maximum amount for all calendar quarters of $10,000 per employee.

Tax Credit for Emergency Paid “Sick” Leave

  • H.R. 6201 would provide employers a refundable tax credit equal to 100 percent of “qualified sick leave wages” that the employer is required to pay for a given quarter under the Emergency Paid Sick Leave Act.
  • The amount of qualified sick leave wages for purposes of the credit would vary depending upon the reason for the leave.
  • For employees who must self-isolate, obtain a coronavirus diagnosis or comply with a self-isolation recommendation from a public official or health care provider, the amount of qualified sick leave wages taken into account is capped at $511 per day.
  • The bill also allows for an increase in the amount of the tax credit equal to the amount “of the employer’s qualified health plan expenses as are properly allocable to the qualified family [or sick] leave wages for which such credit is allowed.”
  • The tax credit would apply to wages the employer pays between (1) a date that the Secretary of the Treasury must specify within 15 days after the date of enactment and (2) December 31, 2020.

Free Coronavirus Testing

  • H.R. 6201 would require that group health plans and health insurance issuers of group to cover FDA- approved COVID-19 diagnostic testing products.
  • Cost covered include the items and services furnished during a provider visit (office, telehealth, urgent care and emergency room) to the extent those items and services relate to the furnishing or administration of the testing product or the evaluation of the individual’s need for the testing product.
  • The mandated coverage must be provided without “any cost sharing (including deductibles, copayments and coinsurance) requirements or prior authorization or other medical management requirements.”
  • The requirement to cover COVID-19 testing costs starts from the date of enactment until the Secretary of HHS determines that the public health emergency has expired.

To see COVID-19 information, please visit fisherbroyles.com