Workers Compensation & PEO; Not all States are Created Equal

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According to RiskMD, a proprietary, patented, PEO focused data management and analytics firm, some states consistently outperform others regardless of industry or NCCI hazard code; others may surprise you!

Here we looked at undeveloped loss ratios and frequency as a function of claim count per $1M in payroll by NCCI hazard code according to the following groupings;

  • Hazard Groups A & B
  • Hazard Groups C, D & E
  • Hazard Groups F & G

We looked at this data both on national and state specific levels for the past seven years and found that the performance of some states may surprise you. This is based on client company performance aggregated at the state and national levels, regardless of policy structure.

NY and CA, for example, maintained their lowest loss ratios in Hazard Groups F & G and performed most poorly in Hazard Groups A & B over this seven-year period.

NJ, MA, and the National Aggregate performed best by both loss ratio and frequency over the past seven years in Hazard Groups C, D & E.

Performance by loss ratio for TX, FL and IL, increased incrementally as the hazard levels increased, however for these states, the incident of loss (frequency) consistently occurred higher within the Hazard Groups A & B than within the Hazard Groups C, D & D.

Analyzing your historical data is one of the best ways to predict future trends in your book of business and evaluate appropriate pricing of clients.

Find out what truths are hidden in your data.

Speak to a RiskMD representative to learn more.  www.riskmd.com

RiskMD is Granted a Patent

A System and Method for Valuation, Acquisition and Management of Insurance Policies

ORLANDO, September 12, 2018 / — RiskMD is granted a patent for “System and Method for Valuation, Acquisition and Management of Insurance Policies”. The patent focuses on acquiring, valuing and managing workers’ compensation client company exposures regardless of the insurance policy structure. This is the first Professional Employer Organization (“PEO”) specific patent ever issued.Since its inception in 2005, RiskMD has been focused on understanding the diagnostics of the prospective or current coemployed client companies of a Professional Employer Organization (“PEO”) within the overall portfolio of client companies of that PEO.  In order to understand what client companies fit the given portfolio and at what price, we partnered with Appulate to efficiently acquire client data to then apply a proprietary predictive model called “The Barnstable Vintage” to value and thereby price the client company in question.  The vision was “Geico meets workers’ compensation”; acquisition, underwriting, valuation and pricing of a client company based on a pure computer feed with underwriter input only on an exception basis as is shown in exhibit 1 of the patent:

While there will always be a place for underwriters and underwriting, the consistency of process in acquiring and valuing business is intended to focus the underwriter on the “art” versus “science” of underwriting.  How long in business?  Good neighborhood?  Does the owner throw birthday parties for their staff? This is the art and the mathematical formulas behind the predictive models built provide the science.

In an effort to properly manage client companies of a PEO regardless of policy structure, the last piece was to understand and then to build a process revolving around a key identifier; the client company Federal Employer Identification Number (“FEIN”).  Cathy Doss, the first Chief Data Officer for Capital One and current Data Officer for Fannie Mae, architected a similar process at Capital One with the Social Security Number as the key identifier and created a similar process for RiskMD.  The combination of these processes are what provides the foundation for this patent and the vision of RiskMD.  The end result is the ability to spin data amongst the three main data pools of a PEO; policy/application data, claims data and payroll/premium data.  Using Tableau as a visualization tool behind the SQL built mathematical formulas, the end presentations look like the below.

Unlocking PEO client data to make more informed decisions is foremost in understanding how to acquire, value and properly manage insurance policies and the client companies that they insure.  We are passionate about proving out the value and performance of the PEO industry and know that this now patented process will help immensely to that end.  We appreciate all of our clients and carriers support on this effort over the last five years and look forward to further deployment of this tool to the betterment of each party and the industry as a whole.

“The vision of RiskMD was to make data-driven decisions in pricing and managing PEO client companies regardless of policy structure”, said Mr. Hughes.  “Too much time was being spent diagnosing issues and not enough in treating them.  While our now patented process has been in place for years, it is very satisfying to be recognized by the United States Patent Office for the invention”.

PEO Super Bowl 2018 – NAPEO

The industry Super Bowl has started in Phoenix, NAPEO 2018!

Right off an awesome WCI 360 in Orlando wci360.com, where the PEO industry was once again given a full day of programming in the largest insurance industry conference countrywide, Phoenix Is now the destination for all things PEO’s from today until Friday.  I am sure Mr. Cleary and team have their game faces on and will throw an awesome event as always.  Beautiful facility to start for sure.

Personally, I am celebrating my 18’th NAPEO and look forward to seeing all of my old friends that also have dedicated their respective careers to PEO.  Can’t wait to rock it out again with you, starting for some of us at the NAPEO Political Action Committee dinner this evening.

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.”

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 | 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.