Brief Update on Recent Activities By David Daniel, Florida PEO Lobbyist

Image result for florida

Update on Recent Activities related to COVID-19 from FAPEO –

There is a lot of COVID-19 related activity we have been working on for Florida PEOs as we face these uncertain times.  This email is intended summarize our recent work.

Emergency Orders at DBPR

With the required annual financial reports due to the Department of Business and Professional Regulation we contacted Secretary Beshears and asked that he issue an order delaying their due date.  Secretary Beshears indicated to us would be taken care of.

DBPR Emergency Order 2020 – 01 was issued March 16.  In the order Secretary Beshears suspends and tolls for 30 days any existing renewal deadline for a license, permit registration or certificate.

DBPR Emergency Order 2020 – 03 was issued March 23, 2020.  The order suspends and tolls through May 31, 2020 all time requirements, notice requirements and deadlines for final agency action or applications for permits, licenses, rates and other approvals under any statutes or rules.

Unemployment Compensation

As you can imagine there are reports from DEO of increased filings for unemployment compensation insurance.  While the UC Fund has significant resources available, as we have seen in the last recession, the unemployment compensation trust fund can go from flush to negative in a short amount of time.

It is expected with the dramatic decline in business activity related to the social distancing and businesses closures, employers will be forced to make some tough decisions with their workforce.  As you know, 443.131 F.S allows the Department of Economic Opportunity the ability to not charge an employer’s unemployment compensation contribution rate for a declared national disaster or an disaster of national significance.  Further, 443. 116 F.S. creates the short-time compensation program which allows an employer to reduce work for employees in lieu of layoffs with DEO approval.  We have requested DEO make the decision that this event and the subsequent layoffs which will follow are not chargeable to an employer’s unemployment compensation rate.  Further we have asked that if an employer chooses a short-time compensation arrangement it would also not be chargeable to their UC rate.

To that end, last week Governor DeSantis indicated in a press conference this event would not be charged to an employer’s unemployment compensation rate.  We are awaiting the official announcement from DEO.  There is no word yet on the short-time compensation and will let you know when we hear more from DEO.

Essential Business Sectors under CISA Guidance

The state and the country have been grappling with the impacts of decisions on social distancing, shelter in place orders and mandatory business closures.  Several counties have already issued emergency orders closing non-essential employers including Miami-Dade, Broward, Alachua and Duval counties.  We have asked the Governor’s Office to include professional employer organizations as essential critical infrastructure workers in any statewide emergency order mandating business closure.  At the direction of the Governor’s Office, we have based our request on Cybersecurity and Infrastructure Security Agency guidance.  (See attached)

While the decision to issue a statewide emergency order closing all non-essential businesses has as not been made to date, our proactive efforts have placed us in the best possible position to remain open.

Additional Readings – Statues Issued

443.131 F.S. – Click here to read more.

443.1116-F.S. – Click here to read more.

DBPR – Emergency Order 2020 – Click here to read more.

CISA Guidance on Essential Critical Infrastructure Workers – Click here to read more. 

State of Florida Emergency Order – Click here to read more.

 

Big Data – How Can It Help You?

“Big data” is present in every part of business and society in today’s world. Every medication that hits the shelves goes through extensive study and comparison utilizing big data. Every intersection with a traffic light uses big data to determine the length of time for each color. Gas prices, food prices, utility bills, EVERYTHING undergoes analysis using big data.

But you may ask, “but David, how does this affect my PEO?”

Answer your own questions and many more at 3:45 today at NAPEO featuring our CEO Paul Hughes!

Big Data – AI/ML Predictive Analytics and the Potential for PEO
Sheldon Brechtel, Jr., Executive Vice President – CIO, CCMSI
John Harman, SVP PEO Solutions Group, Aon
Paul Hughes, CEO, Libertate Insurance, LLC
Chase Pettus, Predictive Analytics, Gradient A.I.

 

If you’d like to know more about what is going on at NAPEO, see the schedule here!

Big Data – AI/ML Predictive Analytics and the Potential for PEO

We hear it all over the news “BIG DATA”, “MACHINE LEARNING”, “ARTIFICIAL INTELLIGENCE”, but what does it really mean and more importantly, what does it mean for your PEO?

Big data is a phrase used to describe an extremely large data set. Take NCCI for example, they are what we would consider “big data” for the PEO industry due to sheer amount of claims and exposure data they posses for the states they administer.

But what does big data mean to you? Find out more at the NAPEO breakout session on Tuesday from 3:45-4:45!

Big Data – AI/ML Predictive Analytics and the Potential for PEO
Sheldon Brechtel, Jr., Executive Vice President – CIO, CCMSI
John Harman, SVP PEO Solutions Group, Aon
Paul Hughes, CEO, Libertate Insurance, LLC
Chase Pettus, Predictive Analytics, Gradient A.I.

 

If you’d like to know more about what is going on at NAPEO, see the schedule here!

History Repeats Itself, Are You Prepared?

The organization of exposure performance for a PEO is found in its ability to predict and benchmark against the historic results of peers and the industry as a whole. Historical performance is a metric a lot of people lose sight of. We tend to look at current, or maybe past year performance most often, but come time to forecast losses, promulgate a mod or re-price our business 3, 5, 7, or even 10-year performance comes into play.

We’ve seen time and time again from PEO’s that come time for actuarial review, they are misunderstand or are even surprised with the numbers they are presented. RiskMD bridges the understanding of potential issues within a given portfolio of business entirely. On the fly, you are able to create an accurate Loss Development Triangle with corresponding link ratios for multiple measures. From total incurred, to ‘Loss Time Only’ incurred claims, you can create an accurate triangulation based off your data, for any development interval you would like!

A loss triangle and its corresponding link ratio are the primary methods in which actuaries organize claim data that will be used in an actuarial study. The reason it is called a loss triangle is that a typical submission of claim data from a client company shows numeric values forming a triangle when viewed. The triangle allows you to track loss data at set valuations (development periods) so you can see development from valuation to valuation. The difference between each valuation is known as the link ratio. True development is represented typically in a pure dollar figure, where as a link ratio is represented as the growth between periods.

Within RiskMD you can view a plethora of Loss Triangles. The first selection you need to make is whether you want to organize your triangulation based on accident or policy year. We have taken into account that not all our clients have the same effective dates, so we give you the option to select your program effective date. The next thing you need to think about is what type of triangulation you would like to look at? Below is what’s available in RiskMD:

Total Incurred – A pretty standard triangulation, a measure of development for total incurred (total paid + total reserved)

Total Paid – Measure of development for total paid

Total Reserve – Measure of development for total reserves

Med Only – Measure of development for total incurred if the claim is marked ‘Medical Only’

Lost Time Only – Measure of development for total incurred if the claim is marked ‘Indemnity’

Medical Paid – Measure of development for all medical paid

Medical Incurred – Measure of development for all medical incurred (medical paid + medical reserved)

Indemnity Paid – Measure of development for all indemnity paid

Indemnity Incurred – Measure of development for all indemnity incurred (indemnity paid + indemnity reserved)

Number of Claims – Measure of development for claim count. Will show outliers for claims reported late

% Closed Claims – Measure of development to show your claims closure rate and number of claims still open in correspondence to the accident or policy year it occurred in

Example dynamic Loss Development Triangle

RiskMD worked with a pricing actuary who has been in the field for the past 20+ years to create this dynamic model. Powering the visualization is YOUR data. No matter if you want to see the development on a month-to-month basis, or on an annual development, as long as RiskMD has the data, the visualization can be rendered.

Knowing that, if you are having issues producing year end reports, or if you want to stay ahead of the game and know where you sit prior to your next actuarial study, contact us today! We will get you squared, or need I say triangled away!!

Big Data was a BIG Deal at NAPEO’s Risk Management Conference

Last week’s Risk Management Conference hosted by our friends at NAPEO was a huge success! For those that weren’t able to attend click here to access the Big Data presentation that was presented by the following individuals:

  • James Benham / JBKnowledge
  • Paul Hughes / Libertate Insurance Services
  • Kristin Meeker / CCMSI
  • Chase Pettus / gradient A.I.

NAPEO’s Risk Management Conference Ready to Invade Nashville on March 6th and 7th!

NAPEO’s annual Risk Management Conference is right around the corner! It’s a must see conference for those interested in risk management and other related areas of focus. Click here to access the agenda. Below are presentation topics:

  • Workers’ Compensation Rate Update
  • Crime Insurance
  • Big Data
  • Cyber Security
  • PEOs and Cannabis
  • Payroll Fraud

Libertate is proud to be a sponsor of this wonderful conference. We hope to see you there. If attending, we would love to buy you a drink and talk about insurance, data and the PEO industry!

Paul – phughes@libertateins.com

David – dburgess@libertateins.com

Sharlie – sreynolds@libertateins.com

Are YOUR Client Companies Profitable?

The business model of many PEO’s includes utilizing the resale of workers’ compensation as a profit margin. For this to be successful, the PEO must understand the liabilities and assets affiliated with each of their workers’ compensation policies and price them appropriately. Both guaranteed cost and loss sensitive platforms have many variables which need to be understood over the course of the policy term to do this successfully. Because of this, understanding profitability at a portfolio or even a policy level can sometimes be a challenge. Understanding the profitability of individual client companies within master policies or with exposures spread over multiple policies adds an additional level of complexity.

At RiskMD we are able to seamlessly solve this problem! By tracking assets (premium) and liabilities (claims) of each client company based on their unique FEIN we are able to understand loss ratios and loss/profit margins on each client company within a given book of business. This holds true regardless of how coverage for the client company is structured, i.e. master policies, MCP’s (multiple coordinated policies), client direct policies or a combination thereof. This also holds true year-over-year regardless of changes in carriers or policy structure for any given client company.

This analysis of each client company can be performed using the carrier’s billed premium or the PEO’s charged premium. This allows us to understand performance of clients and policies as the carrier would view them, giving us greater leverage for negotiating pricing at renewals. Additionally, this allows us to understand client and policy profitability to the PEO itself.

To learn more about RiskMD’s patented process and how to understand YOUR data, contact David Sink at (407)613-5489 or by email: dsink@riskmd.com

The E-merging Risk that Keeps on E-volving: Cyber

As providers of service and insurance to PEO’s, small and medium-sized businesses are the “bread and butter” of clients targeted.

“According to an ISO analysis, 80 percent of cyber breach victims in 2017 were small and medium-sized businesses.” — Neil Spector, president, ISO, a Verisk business

Great article on the current state of cyber from our friends at insurancejournal.com

The E-merging Risk that Keeps on E-volving: Cyber

    6 Reasons Cyber Remains Top Emerging Risk

    Property/casualty insurance experts may not agree on everything but there is a consensus that the most important emerging risk for the industry remains the five-letter word: CYBER. It is not new, of course, but it stays atop emerging risk lists because of its dynamic and pervasive nature.

    Insurance Journal defines emerging risks as those that are new and not yet widely recognized, or perhaps recognized but not well understood. A number of industry leaders explain why cyber remains such an important risk to watch.

    Not Slowing Down

    The number of data breaches and the average costs of cyber-crime are rising every year. These trends show no signs of slowing down. In fact, cyber risk is becoming more concerning as crime-as-a-service gains popularity and artificial intelligence technologies are used more frequently in attacks. Internet of Thing devices are increasing the attack surface and providing more ammo for hackers. One of the more difficult aspects about insuring cyber risk is the dynamic nature of the risk. Just a few years ago, cyber-attacks primarily involved stealing private credit card and health information from large companies. Today, cyber criminals focus on completely different tactics for making money, such as locking out users from computer systems using ransomware, or secretly hijacking computers to mine cryptocurrency. And large corporations aren’t the only targets. According to an ISO analysis, 80 percent of cyber breach victims in 2017 were small and medium-sized businesses. — Neil Spector, president, ISO, a Verisk business

    Keeping Up with IoT

    The biggest risks involve cyber crime. Under “emerging risks,” one of the biggest is the Internet of Things (IoT), and the cybersecurity risks created by billions of interconnected devices. The challenges for agents and brokers multiply in regard to understanding the potential implications, such as IoT devices in homes and businesses — tracking sensors, fire/flooding/intrusion warning devices and more. Agents need to be aware of the questions to ask clients to ensure they are offering complete coverages. They need to be vigilant in keeping up with the IoT devices emerging at an astonishing pace. — Robert Rusbuldt, CEO, Big “I” Independent Insurance Agents & Brokers of America.

    High Severity

    There are many scenarios where cyber risk comes into play, but one example is related to vehicle systems. Luxury automobiles, for example, have up to 150 or more computer programs that impact vehicle performance. Tractor trailer technology is also advancing rapidly, and just one of those systems being hacked could have catastrophic results. WSIA conducts a biennial survey of members regarding emerging issues. Cyber exposure jumped in priority this year, with members agreeing the issue has high severity in terms of current impact industrywide. — Jacqueline Schaendorf, president and CEO, Wholesale & Specialty Insurance Association

    Cyber Property Damage

    One definite area of emerging peril is the threat of substantial property destruction caused by intrusions into sensitive computer networks and connected hardware devices. Long gone are the days where the worst aspect of cyber vulnerabilities amounted to stolen credit card information or lost privacy. Instead, a new breed of cyber exposure is unfolding whereby energy infrastructure facilities and other industrial works have been targeted with cyber attacks causing explosions, wreckage and business interruption. Most expect these risks will soon expand to domestic infrastructure and transportation operations with the prospect of major instances of property damage and life-threatening injuries.

    — Joshua Gold, shareholder attorney, Anderson Kill

    Immature Market

    Cyber comes with a bit of a double-edge sword. On one hand, it is a new market that is growing faster than any other for the industry. But being an immature market means more time is needed to flesh out the data to improve underwriting. Where cyber may be a more interesting market — perhaps even one that helps us peer into the future value of insurance — is how risk mitigation tools are being incorporated into the mix. We are seeing many carriers partner with technology companies in order to assess the actual vulnerabilities within the customers. This presents more stability for underwriting. Customers’ value may evolve in the future toward risk mitigation and resilience building. This would be a shift for an industry that — at least for the past several decades — has based its value on price. — Sean Kevelighan, president and CEO, Insurance Information Institute

    Accumulation Risks

    In a study titled “Advancing Accumulation Risk Management in Cyber Insurance,” global insurance think tank The Geneva Association focused on the danger of accumulation risks as a threat to cyber insurance. The report highlights several cyber accumulation risk challenges:

    • Insurers and reinsurers could underestimate non-affirmative cyber exposure leading to an unplanned shock from a major event. Non-affirmative cyber exposure occurs when a cyber attack causes major losses by triggering coverages in other classes.
    • Data are of insufficient quality, are incomplete and/or lack the necessary consistency for more advanced modeling techniques.
    • Governments predominantly fail to provide frameworks for the sharing of large- scale cyber-terrorism-losses.

    – Anna Maria D’Hulster, secretary general, The Geneva Association