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.

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.

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.

1. Beware of prospects who are pressing you to provide your services (especially payroll only) ASAP.
2. 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.
3. Require secured funds for payroll payments from new clients. Wire transfers are a commonly used method in the industry.
4. 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).
5. Consider requiring an up-front deposit or onboarding fee.
6. Beware of prospects who are unwilling to participate in a face-to-face meeting.
7. Pay card requests for an entire workforce are suspicious, too.
8. 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.