Where Will the Wind Blow this Year? …Ask Europe

As the owner of a coastal home, the start of hurricane season always gets my attention along with the predictive models that come with it.  As an early storm spins in the gulf, the threat of windstorms once against is on the forefront.

As a data geek, of huge interest is the data pools collected, weights they are given, intervals of understanding them and algorithms produced and interpretations made as a result.

Out of the shoot some fun facts from our friends at the National Oceanic and Atmospheric Administration (full article at end of blog):

  • “A total of 10 to 16 named storms, tropical-strength or stronger, will likely cross the basin…one to four may become major hurricanes with winds of 111 miles (179 kilometers) per hour or more”
  • “Along the Atlantic and Gulf coasts there are more than 6.6 million homes with an estimated reconstruction cost of $1.5 trillion”

Unfortunately the past has not fared well for NOAA’s US predictive model (GFS) versus that executed by the European Center for Medium-range Weather Forecasting (ECMWF)  An article from last year that highlights the weaknesses of the US  v European model…  is accessible from the below link with highlights below.

https://mashable.com/2017/09/14/hurricane-irma-weather-forecast-models-gfs-vs-european/#03UD9HVxAOqI

  •  “The issue gained prominence after Hurricane Sandy struck New Jersey in October 2012, which the European model hinted at at least a week in advance. The GFS model, however, didn’t catch on to the storm’s unusual track until about 5 days in advance”
  • Critics of the GFS say it needs to be improved with greater computer processing power. In addition, they say, the model needs to process weather information in more advanced ways, with greater resolution in both the horizontal and vertical scale, since the weather on the surface depends heavily on what is going on in the mid-to-upper atmosphere.
  • “Michael Farrar, who heads the Environmental Modeling Center (EMC), which is the lead office within the National Oceanic and Atmospheric Administration (NOAA) that develops and operates computer models, said “it’s no secret” that the GFS has been behind the competition. “While it’s continued to improve remarkably over time… it’s consistently behind the European model,” Farrar said in an interview. “

Because you have a predictive model means you have some basis to understand the future, but not necessarily the best.  The breadth of data ingested along with the timeliness in which it is done along with the proper weightings within are paramount to properly forecasting outcomes.

“Forecast skill score comparisons, maintained by Brian Tang at the University of Albany, show that the European model was far superior to the GFS model during the long trek that Hurricane Irma took from off the coast of Africa, through the northern Leeward Islands, the Caribbean, Bahamas, Cuba, and then into the mainland U.S.”

“Here’s how to read this chart: The GFS model is represented by the acronym, AVNO, while the ECMWF is the European model. All the others are models from other countries and groups, such as the CMC, or Canadian model, and the UKM, from the UK Met Office. Also, the acronym, “OFCL,” represents the official Hurricane Center human forecast.”
To be succinct, this shows we were half as predictive with GFS versus ECMWF.

Annotated version of model verification scores for weather models' forecasts for Hurricane Irma.

“For now, forecasters are stuck with a temperamental model that can fail to catch on to upcoming threats until days after the European model has sounded the alarm.”

As the most innovative country on the technology front, ever… we need to step up our game in predictive analytics on the weather front – volume, velocity and variety – in order to be the world’s front line in understanding the course of “Acts of God”.  For now, the better answers appear to be across the Atlantic.

What NOAA Forecasts for 2018 Atlantic Hurricane Season

By Brian K. Sullivan | May 25, 2018

On the heels of the costliest hurricane year on record, the Atlantic is expected to produce five to nine of the mighty storms during the six-month season that starts June 1, the National Oceanic and Atmospheric Administration said.

A total of 10 to 16 named storms, tropical-strength or stronger, will likely cross the basin, threatening people, real estate, crops and energy resources in the U.S., Mexico and the Caribbean, according to the agency’s annual forecast Thursday. Of those, one to four may become major hurricanes with winds of 111 miles (179 kilometers) per hour or more

“Regardless of the seasonal prediction, Atlantic and Gulf coast residents need to prepare every year,” Gerry Bell, a forecaster with the Climate Prediction Center, said during a conference call. “There are over 80 million people between Atlantic coast and Gulf coast that can be affected by a hurricane.”

Hurricane season is closely watched by markets because about 5 percent of U.S. natural gas and 17 percent of crude comes out of the Gulf of Mexico, according to the Energy Information Administration. In addition, the hurricane-vulnerable coastline also accounts for 45 percent of U.S. refining capacity and 51 percent of gas processing.

Florida is the world’s second-largest producer of orange juice. Along the Atlantic and Gulf coasts there are more than 6.6 million homes with an estimated reconstruction cost of $1.5 trillion, according to the Insurance Information Institute in New York.

Costliest Year

Last year the U.S. was hit by three major hurricanes — Harvey, Irma and Maria — that helped drive total losses to more than $215 billion, according to Munich Re. It was the most costly season on record, surpassing 2005 which produced Katrina. Overall 17 named storms formed in 2017, which fell in line with NOAA’s prediction of 11 to 17.

The forecast is influenced by conditions across the equatorial Pacific. Earlier this year La Nina collapsed and the ocean returned to its neutral state with the possibility of an El Nino forming later this year. El Nino, when the Pacific warms and the atmosphere reacts, ,,increases wind shear across the Atlantic that can tear apart hurricanes and tropical storms, reducing the overall numbers.

Conditions in the Atlantic will also play a role. Hurricanes need warm water to fuel growth and the basin is currently running colder than normal. Forecasters are currently watching a system in the Gulf of Mexico that may become a tropical depression by Saturday.

An average to above-average season means there is a greater chance the U.S. coastline and Caribbean islands are at risk, said Bell.

“When you have a more active season you have more storms forming in the tropical Atlantic and those storms track further westward,” Bell said. “Certain areas have been compromised from last year’s storms that makes hurricane preparedness ever more important this year.”

Milliman’s gradient A.I. platform brings first A.I. predictive analytics solution to the professional employer organization (PEO) market

Huge news announced today by Milliman in the world of artificial intelligence (see below press release).  Milliman’s gradient A.I. is the first solution of its kind to be applied to PEO underwriting and claims management.  We at Libertate have been working with Milliman on this project for the past 18 months as we always felt there weren’t enough tools in the marketplace to help our clients price and evaluate risk.  Let’s discuss in more detail this week in Houston at NAPEO’s Risk Management conference!  Call me for more details at 305.495.5173.

_____________________________________

SEATTLE – MARCH 19, 2018 – Milliman, Inc., a leading global provider of actuarial, risk management, and technology solutions, today announced that gradient A.I., a Milliman predictive analytics platform, now offers a professional employer organization (PEO)-specific solution for managing workers’ compensation risk. gradient A.I. is an advanced analytics and A.I. platform that uncovers hidden patterns in big data to deliver a daily decision support system (DSS) for insurers, self-insurers, and PEOs. It’s the first solution of its kind to be applied to PEO underwriting and claims management.

“Obtaining workers’ compensation insurance capacity has been historically difficult because of the lack of credible data to understand a PEO’s expected loss outcomes. Additionally, there were no formal pricing tools specific to the PEO community for use with any level of credibility – until gradient A.I. Pricing within a loss sensitive environment can now be done with the science of Milliman combined with the instinct and intuition of the PEO,” says Paul Hughes, CEO of Libertate/RiskMD, an insurance agency/data analytics firm that specializes in providing coverage and consulting services to PEOs. “Within a policy term we can understand things like claims frequency and profitability, and we can get very good real-time month-to-month directional insight, in terms of here’s what you should have expected, here’s what happened, and as a result did we win or lose?”

gradient A.I., a transformational insurtech solution, aggregates client data from multiple sources, deposits it into a data warehouse, and normalizes the data in comprehensive data silos. “The uniqueness for PEOs and their service providers – and the power of gradient A.I. – emerges from the application of machine-learning capabilities on the PEOs data normalization,” says Stan Smith, a predictive analytics consultant and Milliman’s gradient A.I. practice leader. “With the gradient A.I. data warehouse, companies can reduce time, costs, and resources.”

To learn more, go to https://www.gradientai.com/. For more on how gradient A.I. and Libertate brought predictive analytics solutions to PEOs, go to http://www.milliman.com/gradient-AI-Libertate-case-study/.

About Milliman

Milliman is among the world’s largest providers of actuarial, risk management and technology solutions. Our consulting and advanced analytics capabilities encompass healthcare, property & casualty insurance, life insurance and financial services, and employee benefits. Founded in 1947, Milliman is an independent firm with offices in major cities around the globe. For further information, visit milliman.com.

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Amazon patents could enable worker monitoring via wristband

Geekwire recently uncovered Amazon patents that will assist with the efficiency of warehouse employees.  Fascinating read regarding a topic that could impact the PEO and Staffing space.

Amazon has received patents for electronic systems that could enable warehouse monitoring through electronic pulses that guide employees by location.

The patent filings, first reported this week by the news site Geekwire, come amid concerns over workplace conditions for the company, which has seen rapid growth in its warehouses or “fulfillment centers” key to its logistics.

The publicly available patent documents show how wrist-worn devices could deliver ultrasonic pulses that could direct employees to the location of bins for packages being sought.

“Ultrasonic tracking of a worker’s hands may be used to monitor performance of assigned tasks,” according to one of the documents.

“The ultrasonic unit is configured to be worn by a user in proximity to the user’s hand and to periodically emit ultrasonic sound pulses… The management module monitors performance of an assigned task based on the identified inventory bin.”

In a statement to AFP, Amazon said it files numerous patents on new technologies that may or may not be implemented.

“The speculation about this patent is misguided,” the Amazon statement said.

“Every day at companies around the world, employees use handheld scanners to check inventory and fulfill orders. This idea, if implemented in the future, would improve the process for our fulfillment associates. By moving equipment to associates’ wrists, we could free up their hands from scanners and their eyes from computer screens.”

Any deployment of such systems would likely trigger a backlash over labor conditions and heighten fears over workplace surveillance.

In the patent document, Amazon said the system is designed to help with “time-consuming acts” to locate items in warehouses.

Amazon’s growth has been fueled by technologies that help it speed shipments to enable deliveries in one or two days. It has invested heavily in automated technology and robotics.

On Thursday, Amazon reported its quarterly profit doubled to $1.9 billion, compared with $749 million a year earlier.

In 2015, a New York Times article described Amazon’s workplace culture as a “hurtful,” Darwinian setting in which employees were pitted against one another to the point of tears to improve productivity.

At the time, Amazon chief executive and founder Jeff Bezos said he did not recognize what he called the depiction of “a soulless, dystopian workplace.”

http://www.dailymail.co.uk/wires/afp/article-5345005/Amazon-patents-enable-worker-monitoring-wristband.html

All Hands on Deck in Tallahassee

From our friends at the Florida Association of Professional Employer Organizations (“FAPEO”).    It could not be said in a more powerful manner the need to continue advocacy for the PEO industry as we continue to grow and be an even more powerful piece of supporting workers’ compensation for the employees of the State of Florida.  I look forward to seeing you there — This will take place on Feb 19-20 2018.

 

 

From: Robert Skrob
Sent: Thursday, January 18, 2018 9:35 AM
Subject: Lies and Insults in the Lawmaking Process

 

You’ve had a string of successful years in the PEO industry. Market share has increased and payrolls grown.

 

This makes our enemies angry.

 

Some people outside of the PEO industry are on the losing side of your growth. When you sign-up a new client that has never worked with a PEO before, that means they are canceling other relationships.

 

Rather than make their offering more competitive, many of those canceled provider complain to lawmakers. They accuse your company of cheating the system, fraud, and failing to pay for injuries. Sure, in the process they do everything they accuse you of, but the reality is lawmakers don’t know that.

 

Lawmakers hear a lot of negative misinformation from people outside the PEO industry.

 

That’s why it’s important for you to tell the other side of the story. To explain to your lawmakers exactly how you help worksite employees get better benefits, help your clients focus on growing their business and how you help government improve compliance and collect more taxes.

 

On February 13-14, we’ll host the Florida PEO CEO Legislative Summit. This event is free, I attached a brochure with more details.  Just RSVP so we can save you a seat.  http://www.fapeo.org/wp-content/uploads/2016/12/2017-PEO-Legislative-Summit.pdf

Here is the hotel information:

There is block of rooms at the Doubletree Hotel located at 101 S. Adams Street in Tallahassee, FL. FAPEO has arranged a special rate of $169.00 per night for this event. You can make your reservation for the night of February 13th using this link: http://bit.ly/2CGrkwo or by calling 1-877-800-2652 and mention that you are with FAPEO.

This event will give you insights into workers’ compensation reform efforts, insider information on how the reshuffle created by lawmakers moving into the Trump administration will impact the lawmaking process and a time to weigh in on issues impacting the PEO industry.

 

Plus, we’ll use the opportunity of having you in Tallahassee to set up meetings for you with your local lawmakers to educate them on how the decisions they make impact your PEO and the clients and co-employees you serve.

 

Our lawmakers will make decisions on hundreds of issues over the next few weeks. Few lawmakers understand what you do and yet they hear a lot of nonsense from those who want to make your PEO less competitive. While we work hard to educate each lawmaker about the PEO industry, there’s nothing as powerful as hearing directly from a company within his or her community.

 

A briefing from you about your company is a lot more powerful than David Daniel or I giving legislators a presentation about the PEO industry in theory.

 

Make your plans now for February 19-20. I attached a brochure with additional details.  Just send Suzanne or me an email to RSVP.

 

 

Approved WC Legal Fees up 36 percent in 16-17, what will the 17-18 fiscal year look like?

Injured workers racked up nearly $186 million in approved legal fees in 2016-2017, a 36 percent increase from the previous year, a state report on the workers’ compensation insurance system shows.  This is with the Castellanos v. Next Door Company ruling, which repealed restrictive attorney fees caps, only being in place for 7 out of 12 month in the 16 -17 fiscal year.

In all, attorneys’ fees in the workers compensation system totaled nearly $440 million during the 2016-2017 fiscal year. The majority — nearly $254 million — were forked out by employers defending workers’ compensation claims.

Issued by the Office of the Judges of Compensation Claims, the 2016-2017 annual report notes that $185.6 million in approved legal fees for injured workers is the highest amount paid in nearly a decade and is attributable to a 2016 Florida Supreme Court ruling.

“Clearly, there is a trend suggested of increasing claimant attorneys’ fees in the wake of (the ruling),” the report, released last month, notes.

The report shows that in 2016-2017, more than $75 million in hourly fees were approved for claimants’ attorneys, a nearly 200 percent increase from the $25.8 million in hourly fees that were approved the previous year.

During the same period, the report shows that fees paid to workers’ compensation attorneys under legislatively approved fee caps decreased about 31 percent.

It is the second consecutive year that legal fees increased for injured workers and employers and reverses what had been a five-year trend of lower legal costs for both sides in workers’ compensation cases.

Workers’ compensation is a no-fault system meant to protect workers and employers. It is supposed to provide workers who are injured on the job access to medical benefits they need to be made whole. Those who are injured for at least eight days also are entitled to indemnity benefits, or lost wages. In exchange for providing those benefits, employers generally cannot be sued in court for causing injuries.

While the system is supposed to be self-executing, injured workers hire attorneys when there are disputes over the amounts of benefits they should receive.

Florida businesses faced some of the highest workers’ compensation costs in the country in the early 2000s. Business interests argued that attorney involvement — legal fees in the aggregate totaled $427 million in fiscal year 2002-2003 — was the reason for the high costs.

The Legislature responded by passing a sweeping rewrite of the workers’ compensation system in 2003 that, among other things, tied the recovery of plaintiff attorneys’ fees to percentages of the amount of recovered benefits. The law was tweaked in 2009 to make clear that workers’ compensation judges were precluded from awarding additional hourly fees for plaintiffs’ attorneys.

But in a 2016 ruling known as Castellanos v. Next Door Company, the Florida Supreme Court ruled that the restrictive fee caps violated injured workers’ due process rights and authorized judges to award fees outside the fee schedule if adhering to it yielded unreasonable results.

Business interests lobbied the Legislature earlier this year to, at a minimum, limit the hourly rates that attorneys could charge. But lawmakers did not approve a change.

Despite the marked increase in legal costs for 2016-2017, the report notes that when adjusted for inflation, aggregate attorneys’ fees in Florida workers’ compensation have decreased by more than $100 million over the past 14 years.

Source: https://www.news4jax.com/news/florida/legal-fees-increase-in-workers-comp-system

Florida’s Workers’ Comp Rate Decrease By Industry

FORT MYERS, Fla., Nov. 27, 2017 /PRNewswire/ — What goes up must come down is a fundamental law of gravity and roller coasters.  But it is also starting to become an appropriate depiction for Florida workers’ compensation rates, according to Mark Webb, senior vice president of Lykes Insurance.

“In what is heralded as good news for employers, the Florida Insurance Commissioner approved an amended filing on Nov. 9, 2017 ordering an average decrease of 9.5 percent in workers’ compensation rates effective Jan.1, 2018,” says Webb. “This decrease was slightly more than the 9.3 percent decrease proposed by the NCCI in August.”

Webb notes that this is an average decrease. The actual decrease is allocated among classifications by industry as follows:

Office and Clerical -11.5 percent
Goods and Services -10.6 percent
Manufacturing -10.3 percent
Contracting -7.19 percent
Miscellaneous -8.3 percent

This decrease was filed based on a reduction in claim frequency over the two years prior to 2016.  However, it does not take into consideration the two Supreme Court decisions in 2016 that brought the 14.5 percent increase last December: the Castellanos and Westphal decisions.

These two cases resulted in retroactive changes to claimant attorney compensation and impairment benefits.  Few deny that these court decisions are and will continue bringing upward pressure on the cost of claims, and it seems unlikely that the Florida legislature will take any action on reforms to address this issue, especially in the wake of a rate decrease.  According to Logan McFaddin, Southeast Director for the Property Casualty Insurers Association of America, “Experience data relating to the impact of Castellanos and Westphal continues to mature and will likely be reflected in future rate filings.”

This sentiment was reflected in the order from the Insurance Commissioner that directed the NCCI in future recommended rate filings to provide a detailed analysis of the impact of Castellanos, including reopening of older claims, changes in reserves and settlement rates, changes in claim frequency and severity, increasing attorney involvement, and fees paid to attorneys.

One issue that needs to be acknowledged is the possibility of a mid-term cancellation and re-write of a workers’ compensation policy to take advantage of the new rates. While it is uncertain how willing insurance carriers will be to embrace this action, this should be evaluated on a case by case basis, because there are some reasons for concern over this strategy.

First, a mid-term change will eliminate any potential dividends that may be earned on a policy. Also, carriers may choose to apply a short rate cancellation penalty if a policy is cancelled and moved to another carrier. The short rate penalty is approximately 10 percent of the unearned premium, which, if applied, would completely negate any advantage of the 9.5 percent rate decrease. Finally, if rates do go back up next year, the policyholder would be moving up the date that the policy would be impacted by the higher rates.

“The bottom line is, as usual, uncertainty prevails,” Webb concludes. “With the uncertainty surrounding the market impact and future rates, it is important to not allow a rate decrease to bring complacency to the significance of safety and claims management in your workers’ compensation program.  We strongly suggest working with your advisors and advocates to help you prepare for whatever the future may hold for workers’ compensation.”

Source: http://markets.businessinsider.com/news/stocks/Dealing-with-the-Workers-Compensation-Roller-Coaster-1009678544

Workers’ Comp Drug Spend Continues to Drop, According to CompPharma’s 14th Annual Survey of Prescription Drug Management

MAGGIE VALLEY, N.C.–(BUSINESS WIRE)–CompPharma’s 14th Annual Survey of Prescription Drug Management in Workers’ Compensation showed an average 11 percent reduction in payers’ pharmacy spend, driven by a 13.3 percent reduction in opioid cost. The survey analyzed the 2016 pharmacy cost data of 23 workers’ compensation insurance carriers, third-party administrators, self-insured employers, and state funds.

Working with their pharmacy benefit managers, payers cut one of every six dollars in opioid spend, which the report called a “truly remarkable result.” In contrast, across all payer types, pain medication use declined by a scant 1 percent (Quintiles IMS).

“Clearly the efforts of workers’ comp regulators, payers, desk-level staff, PBMs and prescribers have paid off,” said Joseph Paduda, president of CompPharma, LLC. “While we have much left to do, this represents a dramatic improvement in the lives of thousands of patients.”

Payers are far from complacent, with all respondents expressing grave concerns about the risk of opioid addiction or dependency. Most are continuing to refine and improve programs to help patients address pain while minimizing use of opioids, relying on physician and/or pharmacist review of claims, early identification of potentially risky prescribing, and increased use of drug testing.

In contrast, compound drug utilization and spend has dropped dramatically and is no longer of great concern to payers.

A complimentary copy of the 2016 survey can be downloaded from https://tinyurl.com/CP2017RxSurvey.

NAPEO Forms Cybersecurity Task Force

As an fyi, NAPEO has formed  a Cybersecurity Task Force to better understand the exposures of PEO and how to mitigate them.  A very timely and critical task force that I am very proud to be a part of – This is by far the most misunderstood exposure to PEO today.

“NAPEO recognizes the critical business and compliance risks faced by our members concerning cybersecurity. Although many member resources such as PEO Insider and various conferences have featured helpful information and programs for members on this topic, NAPEO recognized more is needed and formed the NAPEO Cybersecurity Task Force to help fill that gap. The Cybersecurity Task Force is comprised of a cross section of professionals with expertise in insurance, law, technology and the business environment of PEOs. Its primary mission is develop a set of best practices which NAPEO members could use to strengthen their compliance efforts and minimize their legal and business risks. The Task Force’s first step will be to survey members to gain a deeper insight into the cybersecurity concerns and exposures of members, which will be used to help shape the best practices the task force will produce. For more information, please contact Farrah Fielder.”