When Robert Hartwig Talks, People Listen…

As I was pulling this post together, for good reason, the old EF Hutton commercials we grew up with (dating myself)…

https://www.youtube.com/watch?v=2MXqb1a3Apg

…came to mind. “When E.F. Hutton talks, people listen”…

As EF Hutton was considered (or at least advertised) as “the smartest guy in room” for all things investments; the same holds true for Robert Hartwig @Bob_Hartwig when it comes to insurance economics. He is the guy insurance company CEO’s call to help predict the future and someone I have had the pleasure to meet and see present on a few occasions. You will not see anyone provide more data and direction in a short session that is credible and meaningful.

Robert, a PHD/CPCU, was the former Chief Economist of the Insurance Institute of America and currently serves as the Clinical Associate Professor of Finance, Risk Management & Insurance @ USC’s Darla Moore School of Business. His latest presentation points to some areas that are important to understand and budget for.

https://www.uscriskcenter.com/wp-content/uploads/2020/09/Inland-Marine-UW-Association-American-Institue-of-Marine-Underwriters-9-30-2020.pdf

I have listed some of my key take-aways below and the slide number you can reference for the detail:

Slide 12 – 12.5-25% reduction in workers’ compensation premiums based on rate reductions coupled with drop in exposure basis due to COVID-19. COVID-19 Claims will not be used for rate-making purposes in most states until 2021. All other lines are seeing material drops in written premium due to usage, but rates at the same time are on the rise.

Slide 13 – Range of workers’ compensation losses on a national basis due to presumption is $.2 – $92B … quite a delta and as you will note, and a far greater one than any other line (which are also not yet understood). The range for Business Interruption losses is next with anywhere from $2B – $22B expected. The courts will be the most impactful on where this end result comes in based on policy interpretation. Policy language and intent will be the battlefronts.

Slide 15 – Cost of COVID v comparable pandemics in recent age – the cost and number of countries impacted by COVID-19 versus other pandemics (SIKA, Swine Flu, SARS etc.) is staggering and exponential.

Slide 30 – Presents the investment yield trends for 10-year US Securities which is a foundational “safe” investment for insurance carriers – down 61%. Puts more pressure on operational results which in turn, more pressure on upward pricing.

Slide 31 – 9 of the the top 10 ever point drops on the S and P ever occurred in 2020. The 3’rd largest percentage drop in history occurred on 3/16/20 at -11.98%/-324.9 points. This volatility is of grave concern to the investment strategies of the insurance carrier community. This also puts upward pressure on pricing.

Slide 41 – Business closures will cause debt of $3T for at least a generation to overcome. This is very saddening and a complex issue to make a call on. Be safe and put us in debt for another generation or open up and hope for the best? Question of the century –

Slide 47 – Rates on most lines of insurance (with the exception of Workers’ Compensation) are rising at a rapid pace. Umbrella (20%) and Directors and Officers insurance (16.8%) being hammered the hardest, with Business Interruption (9.7%), Commercial Auto (9.6%) and Employment Practices Liability insurance (9.4%) also expecting hefty increases.

Slide 50 – Business Interruption insurance will be highly litigated going forward, especially on those policies that do not have a pandemic disease exclusion. This and the presumption issue in regard to workers’ compensation are what will cause the greatest uncertainty going forward as to the exposure to the insurance community and how they react as a result the pandemic.

In conclusion, it has been a long cycle of premium reductions. Drop of exposure basis (payrolls, sales, miles travelled etc) may neutralize overall premiums to some extent, but the “as is or lower” rate renewals of the last decade will be very tough to navigate this year. Get out ahead of your renewals, especially on the specialty casualty side. Let us know if we can help.

Lifting Travel Restrictions

As the country slowly starts to reopen and travel restrictions begin to be lifted, it reminds me of how hard the travel industry has been impacted by COVID-19. Finding workers compensation coverage for this industry can be difficult due to the exposures associated with these risks. Libertate Insurance Services works closely with Beacon Aviation in placing coverage for this industry.  Beacon Aviation Insurance Services knows the ins-and-outs and provides workers compensation coverage for general aviation businesses.

Beacon’s Program offers the following:

Payment Options

  • Pay As You Owe
  • Carrier Direct Bill
  • Carrier Direct Debit
  • Credit Card

Endorsement Options

  • Foreign Voluntary Compensation
  • Voluntary Compensation
  • Waiver of Subrogation
  • Defense Base Act (DBA) Coverage
  • Employer Liability Coverage “Stop GAP”

If you need help placing your workers compensation with your travel or aviation risk, contact Jenny Bush, at jbush@libertateins.com. Click the link below for more details on Beacon’s Program.

Beacon Aviation Program Appetite

 

Report: COVID-19 Accounts for 1-in-9 California Workers’ Comp Claims in 2020

Wow — We are seeing a depletion of capacity/increased costs for health care and other “client-facing” industries.  The why —

“CWCI says that brings the total for the year to 41,861 claims, or 11.2% of all California job injury claims reported for accident year 2020. Those claims included 224 death claims, up from 160 reported as of Aug. 10.”

.005 of all claims in California are a COVID19 fatality year to date.  The unknowns are the reopens, adjusted reserves and longevity of the severe and critical patients.  Still much unknown –

September 28, 2020

The California workers’ compensation COVID-19 claim count continued to grow in August, albeit at a much slower rate than in July, with new data showing that as of Sept. 21, the state had recorded 5,130 COVID-19 claims with August injury dates, according to data compiled by the California Workers’ Compensation Institute.

CWCI says that brings the total for the year to 41,861 claims, or 11.2% of all California job injury claims reported for accident year 2020. Those claims included 224 death claims, up from 160 reported as of Aug. 10.

The latest claim count shows that the number of COVID-19 claims reported to the Division of Workers’ Compensation doubled from May to June, then increased another 16% in July. The numbers reported for August, however, fell sharply, even accounting for the lag in the reporting of COVID-19 claims, according to CWCI.

The CWCI projects there could ultimately be 8,208 COVID-19 claims with August injury dates. Given that the latest tally suggests COVID-19 claim volume may have peaked in July, CWCI is now projecting 48,086 COVID-19 claims with January through August injury dates, which is less than the January through July projection from last month.

CWCI reports that the distribution by industry shows health care workers continue to account for the largest share of California’s COVID-19 claims, filing 38.1% of the claims recorded for the first 8 months of this year, followed by public safety/government workers who accounted for 15.8%. Rounding out the top five industries based on COVID-19 claim volume were retail trade (7.6%), manufacturing (7.6%), and transportation (5.0%). In addition, the percentage of denied COVID-19 claims declined to 28.6% from CWCI’s May report of 35.5%.

Related:

NAPEO and How to Price Your Workers’ Compensation Exposure

While this year’s “Super Bowl” for NAPEO was a bit different, I was very impressed in what was put together under the shadow of the pandemic.  Great content and albeit virtually, great to catch up with folks.

My dear friend and colleague Tom Stypla did a lunch and learn on how to price client companies for workers’ compensation that is linked here…

How to Price Your Workers’ Compensation Exposure Final

Tom has priced more PEO business than anyone I know.  His understanding of PEO workers’ compensation is extremely impactful.

If we can help you with an underwriting strategy or an individual client, let us know!  321.217.7477 is my cell….

Expect Open Enrollment to be Virtual! How to Prepare.

The Impact of COVID-19 on Open Enrollment Employers can expect major disruptions to open enrollment this year due to the coronavirus (COVID-19) pandemic. As such, employers should stay apprised of current trends and begin preparing sooner rather than later.  Contact your PEO for additional insight or Contact Libertate Insurance if you are considering a PEO.

Trends to Watch

Many organizations are expected to hold entirely virtual open enrollment due to the coronavirus. Virtual enrollment has been trending for several years, and the COVID-19 pandemic is helping to solidify its prominence. A virtual enrollment process typically includes an online enrollment platform for selecting benefits, hosting remote meetings between employees and HR, and downloading benefits resources.

Also, many employers are meeting current employee needs through supplemental health plans with an emphasis on overall well-being. Adding optional health benefits can be a way to limit additional employer spending and provide assistance to employees who need it.

Ways Employers Can Prepare

Open enrollment isn’t always a clear-cut process. Employers can review the following strategies and consider how similar initiatives might improve their own open enrollment efforts:

  • Reach out to employees to determine what kind of enrollment process will work best for them.
  • Confer with management about any operational restrictions that may influence open enrollment.
  • Meet with stakeholders to solidify what the enrollment process will look like.
  • Inform all stakeholders about the enrollment process and where to find benefits resources.
  • Communicate to employees about open enrollment using multiple channels.
  • Understand what additional, supplemental plans are available:
    • Critical illness insurance
    • Cancer insurance
    • Hospital indemnity insurance
    • Accident insurance

Speak with Libertate Insurance today for additional open enrollment resources.

Hurricane Laura: Tips for our Friends and Clients

Hurricane Season is always a time of anxiety and concern.  Now that the impacts of the season are being felt we have compiled a summary of useful contacts/information to help our friends.  Be Safe and let us know if we can help!

National Flood Insurance Program (NFIP) – for those with an NFIP policy, here is a direct link to their site fema.gov/flood-insurance. Here you can find Claim Forms, Disaster Relief Fund: Monthly Reports, by State, for the progress of Disaster Relief and Emergency Assistance being offered. You can also apply for Emergency Assistance.

Tips from Ready.gov.  Ready.gov is a great place to go in preparing for hurricanes but also has tips to support the aftermath.

Returning Home After a Hurricane

  • Listen to local officials for information and special instructions.
  • Be careful during clean-up. Wear protective clothing and work with someone else.
  • Do not touch electrical equipment if it is wet or if you are standing in water. If it is safe to do so, turn off electricity at the main breaker or fuse box to prevent electric shock.
  • Avoid wading in flood water, which can contain dangerous debris. Underground or downed power lines can also electrically charge the water.
  • Save phone calls for emergencies. Phone systems are often down or busy after a disaster. Use text messages or social media to communicate with family and friends.
  • Document any property damage with photographs. Contact your insurance company for assistance.

Tips for filing an insurance claim after the storm

  1. Contact your insurer as soon as possible, have a copy of your insurance policy handy and in a safe place.
  2. Start documenting loss (property and contents), as soon as it is safe to.  Pictures are a great way to document damage, hopefully you already have pictures of your property from before the storm.
  3. Locate information of emergency services and where they are available in your immediate area. Houston Emergency Operations Center , Louisiana Office of the Governor 
  4. Begin mitigating the damage to your property (temporary repairs), safely, to prevent further damage.  Maintain all receipts related to temporary repairs. Using reputable and licensed/insured contractors for temporary repairs is a good choice for those larger issues that you are unable to address yourself.
  5. Confirm with your insurer before you start discarding of damaged items
  6. Start a claim file, to keep track of calls, damage, and overall progress.  Log contractors that you have spoken with.  You will likely start getting visits from a lot of different service providers; take notes!

Hopefully you have prepared your businesses with a Hurricane Preparedness Plan and are rolling out the phases of such, but if not here is a link for some additional pointers OSHA.gov.

Ready.gov has also prepared an Emergency Financial First Aid kit.

If you have successfully come through this unscathed and want to help here are a few links:

American Red Cross you can make financial donations or sign up to volunteer

Global Giving has set up a Hurricane Laura Relief Fund and also offers a Corporate Giving platform

Gulf Coast Regional Blood Center It’s easy to forget during times of Hurricanes that the simple task of donating blood also helps restock the shelves, so to speak. Those injured from the storm may need blood and this a great way to prevent shortages.  Gulf Coast Regional Blood Centers have information on mobile sites, by day. Locations are already available today.

** As always, with donations, a little due diligence goes a long way.  Make sure you understand the organization that you are contributing to and where your contribution goes.

Be Well, Stay Safe

How much time is an Employer required to give Employees under the FFCRA?

The Florida United Businesses Association (FUBA) released a great Q&A for Employers.  The quick answer is 2 weeks/80 hours, but with everything COVID, we realize that there is generally more behind the scenes.   Here is FUBA’s look into the small print. Great 2 minute read!

**************************************************************************************************

FUBA COVID-19 Update: Can An Employee Get More Than 2 Weeks Of Paid Leave?

Here are the 3 most common questions we get from our small business members about paid leave under the Families First Coronavirus Response Act (FFCRA):

1) One of my employees has already used their 2 weeks/80 hours of paid FFCRA leave but now they can’t work because they have COVID-19. Do I have to give them another 2 weeks of paid leave?

No. The FFCRA requires employers give employees 2 weeks (80 hours) of paid leave only if the employee cannot work because of one of these reasons:

  1. The employee has been told to quarantine by a health care provider or by a government order.
  2. The employee has COVID-19 symptoms and is seeking a diagnosis (i.e., they are getting a COVID-19 test and are waiting on the results).
  3. The employee must stay home to care for someone who has been quarantined by a health care provider or by a government order.
  4. The employee must stay home to care for a child under 18 whose school or childcare is unavailable due to COVID-19. These employees are also eligible for an additional 10 weeks of paid leave, for a total of 12 weeks’ paid leave.

Employers are only required to give the 2 weeks paid leave one time. Once an employee has used their 2 weeks of paid leave, they don’t get another two weeks even if they meet one of the reasons above.

If one of your employees has used their 2 weeks of paid leave and then gets sick with COVID-19 or has to quarantine because they were exposed to someone with COVID-19, you can decide whether to allow the employee to take unpaid leave or to use any vacation/sick time the employee has. But you do not have to provide another 2 weeks of paid leave under the FFCRA.

The only time employees may get additional paid leave is for reason #4 above: if an employee has to stay home to care for a minor child whose school or daycare is closed due to COVID-19, they may be entitled to an additional 10 weeks of paid leave.

2) One of my employees took 4 days of paid FFCRA leave last month because he had a COVID-19 test and was waiting on the test results. He returned to work when the test was negative, and we paid him for the 4 days he was out. Now we need him to quarantine because his wife has COVID-19 and we do not want him coming to work for 14 days. Can he now use the 6 remaining days of paid leave?

Yes. The employee is entitled to take the remaining hours of paid leave (6 work days in this example). The rest of the leave can either be unpaid or vacation/sick leave at the employer’s discretion.

3) One of my employees took their 2 weeks (80 hours) of paid FFCRA leave and then was furloughed. We’ve now rehired her and she’s back at work. Does she get another two weeks of paid leave?

No. Employees are only entitled to 80 total hours of paid sick leave under the FFCRA.

If you are a FUBA member and have questions about paid leave in your business, call FUBA’s team of experts at 800-262-4483 or email us with your questions.

For more information about paid leave under the FFCRA, including documentation you should get from your employees who take this leave as well as tax credits for businesses who provide this paid leave, please visit FUBA’s Coronavirus Resources for small businesses:

Paid Leave for Employees if School/Daycare/Summer Camps are Closed

With the new school year fast approaching and some schools electing to delay the start date, we want to make sure employers are plugged into the requirements of FFCRA. Small businesses are required by the Families First Coronavirus Response Act (FFCRA) to give employees paid leave from wok in certain circumstances relating to COVID-19. One requirement is that the child’s school/daycare/summer camp must be unavailable because of COVID-19.

The below article from FUBA helps breakdown the requirements of FFCRA.

Small businesses are required by the Families First Coronavirus Response Act (FFCRA) to give employees paid leave from work in certain circumstances relating to COVID-19. Employees who cannot work due to very specific reasons related to COVID-19 are entitled to two weeks of paid leave, with an additional 10 weeks of paid leave if they have to stay home to care for a son or daughter whose school, daycare, or summer camp is closed due to COVID-19.

If you have an employee who cannot come to work because they have to take care of a child because the child’s summer daycare – a school, camp or other program in which the employee’s child is enrolled – is closed or unavailable for a COVID-19 related reason, the employee may be entitled to paid leave.

Keep in mind that the child’s school/daycare/summer camp must be unavailable because of COVID-19. School being closed for summer vacation does not qualify an employee for paid leave because school is always closed during the summer and that closure is not related to COVID-19. If school does not reopen in the fall due to COVID-19, that may qualify employees for paid leave. However, if schools reopen but the employee’s children are attending online or digitally, the employee may not qualify for paid leave.

If an employee requests paid leave, you should get the following:

  1. The employee’s name and the dates the leave is requested
  2. A statement of the COVID-19 related reason the employee is requesting leave
  3. A statement that the employee is unable to work or telework for this reason
  4. Documentation supporting the reason for leave

The employee also needs to give you the name and age of the child they will be taking care of, the name of the daycare/summer camp that has closed, and they must provide a statement that no one else will be caring for the child while the employee is on paid leave. If the child is older than 14, the employee must show that special circumstances require them to stay home with the child during daylight hours.

Employees taking paid leave because their child’s daycare/summer camp is closed due to COVID-19 must be paid two-thirds their regular rate of pay, up to $200 per day. Learn more about calculating pay here.

You can offset the cost of their leave by keeping a portion of the quarterly federal employment taxes you would otherwise deposit with the IRS. If the cost of the leave is more than your federal employment tax bill, you can request an advance refund from the IRS using form 7200. To claim a payroll tax credit, you must retain the documentation described above and comply with any IRS procedures for claiming the tax credit. For more information about how to claim these payroll tax credits and what documentation is required, click here. For more information about form 7200, click here.

Click here to learn about other reasons that entitle employees to paid leave.

______________________________________________________________________

This article was written by FUBA Workers’ Comp