California Rating Beaurau looks to Lower Rating Thresholds, Classification Changes & More

Please see the attached article about the proposed workers compensation rule changes in California.

Since 1982 Compline has proven to be a reliable, responsible and reasonable resource in California.  Their ongoing responsiveness to legislative changes in the state speaks to their continuing value.  Libertate is a proud subscriber to Compline.  We access and utilize their portal for a number of great resources, such as Modwatch, Lead Generation, Pure Premium Behavior Metrics, Strategic Rate Comparisons, Carrier XMOD Comparisons , Carrier Territory Rate Mapper and much more.

We will continue to keep our eye on the changes occurring in this state and are committed to keep you informed.

If you feel your PEO could benefit from an analytical analysis, in CA or elsewhere, please don’t hesitate to reach me at 321-436-8214.

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 –

David –

Sharlie –

Premium renewal rates rise in all sectors but comp: Ivans

See below from Business Insurance. Once again, comp was the only major commercial sector to see premium price relief in 2018.


Insurance premium renewal rates in the fourth quarter rose across nearly all major commercial lines compared with the previous quarter, except in workers compensation, according to the 2018 Ivans Index.

Premium renewal rate changes in commercial auto averaged 4.66% in the fourth quarter, which was higher than any quarter in the previous year, which saw its high in September 2017 with an average premium renewal rate change of 4.5%.

In the business owner policy sector, the fourth-quarter premium renewal rate change averaged 4.23%, which was 0.8% greater than in the third quarter. According to Ivans, BOP experienced the most variability in average premium renewal rates between 2017 and 2018.

Although general liability began 2018 with lower average premium renewal rates, the rate change rose 0.44% in March 2018 compared with the same quarter in 2017. That trend continued with the premium renewal rate change averaging 2.54% in the fourth quarter, an increase of 0.19% compared with the third quarter.

Commercial property experienced quarter over quarter increases in 2018, ending with an average rate change of 3.74% in the fourth quarter, which was 0.4% higher than the third quarter. Umbrella also experienced higher premium renewal rate changes in 2018, finishing the fourth quarter with an average renewal rate change of 2.42%, an increase of 0.7% over 2017.

Workers comp average premium renewal rates, however, dropped to -3.04% from the third-quarter average of -2.76%. The average premium renewal rate change in workers comp also consistently fell compared with 2017, except for during December.

Florida comp rate cut 13.8% in commissioner’s final order

It’s official…effective January 1st, workers’ compensation rates in Florida will decrease by -13.8%.  We will share the new rates as soon as we get our hands on them.


Florida Insurance Commissioner David Altmaier has issued a final order for a 13.8% workers compensation rate decrease for 2019.

This applies to both new and renewing workers comp policies effective in the state as of Jan. 1, according to a statement issued on Friday by the Office of Insurance Regulation.

The final rate reduction is slightly larger than the 13.4% decline submitted by the National Council on Compensation Insurance in August.

Workers compensation rates in the state have been significantly impacted in recent years by two major court decisions: in Marvin Castellanos v. Next Door Co. et al., the Florida Supreme Court ruled 5-2 that Florida’s mandatory attorney fee schedule was unconstitutional while in Bradley Westphal v. City of St. Petersburg, the Florida Supreme Court ruled that the state’s 104-week cap on temporary total disability benefits was unconstitutional.

19% Workers’ Compensation Rate Decrease Proposed for Tennessee

NCCI is recommending a sizable rate decrease for Tennessee at -19%.  If approved, the decrease will be effective 3/1/19.  See more information below from Insurance Journal.


The National Council on Compensation Insurance (NCCI) has filed for a 19.1 percent decrease for workers’ compensation voluntary market loss costs in Tennessee – the largest recommended decrease since reforms to the state’s workers’ compensation system were passed in 2013.

The filing, made towards the end of August, is based on premium and loss experience for policy years 2015 and 2016, according to a filing executive summary released by NCCI. If approved the rates would go into effect March 1, 2019.

NCCI said the proposed decrease is attributed in part to a continued decrease in Tennessee’s lost-time claim frequency. NCCI also noted that both indemnity average cost per case and medical average cost per case have remained “relatively stable” in recent years after adjusting to a common wage level.

The proposed changes in voluntary loss cost level by industry group are as follows:

If approved, the rate decrease would be the eighth consecutive reduction in workers’ compensation rates. Last year, NCCI filed for a rate reduction of 12.6 percent and a 12.8 percent reduction was approved in 2016. Insurance carriers combine NCCI’s loss cost filings with company experience and expenses to develop insurance rates. In 2017, the Tennessee Department of Commerce & Insurance noted that since Tennessee introduced significant changes to its workers’ compensation system in 2014, NCCI filings have totaled loss cost reductions of more than 36 percent.

The workers’ compensation reforms that took effect in 2014 included the creation of a new administrative court system to handle workers’ compensation claims – moving the state’s claims process from a tort system to an administrative one. The reforms also established medical treatment guidelines and provided a clearer standard in determining to what degree an injured worker’s medical condition may have contributed to the cause of an on-the-job injury.

In June, a study by the Workers Compensation Research Institute (WCRI) attributed a drop in the average total cost per workers’ compensation claim of 6 percent in 2015 in part to the state’s workers’ comp system reforms.

“Most of the 6 percent decrease in the average total cost per workers’ compensation claim in Tennessee was from a 24 percent decrease in permanent partial disability (PPD) benefits. Total costs per claim incorporate payments for medical treatments, indemnity benefits, and expenses to manage claims,” said Ramona Tanabe, WCRI’s executive vice president and counsel, said in a statement at the time.

The WCRI study, which compared Tennessee workers’ compensation systems in 17 other states, also noted that worker attorney involvement has decreased in recent years and that time to first indemnity payment within 21 days of injury in Tennessee was similar to the other study states during 2016/2017. The study used claims data with injuries dating back to Oct. 1, 2014, and payments made through March 31, 2017.

Insurer trade group the Property Casualty Insurers Association also noted the impact the 2013 reforms have made in the state.

“Tennessee has had excellent financial results in the workers compensation market following the workers compensation reforms of 2013,” said Jeffrey L. Brewer, vice president of PCI Public Affairs. “Claims frequency continues to decline as a result of automation and improved employer safety programs. Loss costs appear to be stable.”

A spokesperson for TDCI said in an e-mail to Insurance Journal that it would be premature for the department to comment on the potential for a rate reduction given that the figures are preliminary and still need to be examined by actuaries. Commissioner Julie Mix McPeak has 90 days from the filing date to make a decision on the filing.

New York Workers’ Compensation Rates to Drop 11.7%

For the third year in a row, rtes will drop in New York this year.  This adjustment was recently approved and will take effect on 10.1.18.  More from our friends at the Insurance Journal…

Regulators Approve 11.7% Rate Reduction for Third Cut in Three Years

The New York Department of Financial Services has approved an overall loss-cost rate decrease of 11.7%, the third straight year that the department has fully endorsed a recommended rate cut.

The New York Compensation Insurance Rating Board recommended the latest reduction in May, and the DFS approved it last week. It takes effect Oct. 1.

The recommended change, following a 4.5% reduction a year ago, was based on the latest statistical data reported by the rating board’s member carriers and reflects the application of generally accepted actuarial principles and methodologies, the board said in May.

Insurance and employer groups have said the reductions are largely the result of legislation over the last two years that was designed to cut benefits expenses for employers. Workers’ advocates said the cuts are due more to the fact that the number of claims have dropped significantly nationwide, more workers are considered independent contractors, and workers may have difficulties navigating New York’s complex comp system.

The 11.7% reduction also comes a month after the state Board of Workers’ Compensation announced a plan to raise medical fees for the first time in years — as much as 23% for physicians. Without that, the recommended rate reduction would have been even greater, the rate filing memorandum suggested.

Loss-of-use impairment guidelines, passed by the 2017 Legislature, accounted for almost a third of the proposed rate reduction, the filing said. Under previous guidelines, some injuries could be “stacked” to provide higher impairment ratings.

New Rules for California Large Deductible Programs

In a move aimed to curb carrier insolvencies in the State of California, there is a proposed rule up for discussion in August to change the carriers able to offer these types of programs as well as the way they are administered by those less then an AM Best straight “A” rating.  Specifically…

The draft rules would require that carriers writing large-deductible policies maintain a minimum credit rating of “A” with A.M. Best Co., a rating of “A” or “A” with Standard and Poor’s, a rating of “A1” or “A2” with Moody’s Investment Services, or a Fitch Ratings Inc. rating of “A” or “A.”

The other oddity is that they think carriers do not already collateralize large deductible programs…

“Carriers that do not meet both the credit rating and capital requirements would be required to collateralize the amount they expect an insured to pay as reimbursement for claim costs. Carriers could satisfy the security requirements by ensuring that an employer sets aside money for the exclusive purpose of collateralizing the large-deductible policy.

That happens every day?

I find this rule shortsighted as it is not the rating of the carrier that is as important as the way the carriers manage these programs.  Institutionalizing minimum financial ratings for large deductibles in my opinion is just a “cya” for regulators, hurts the open market and limits this product to the “big boys”.  The regulators  need to pay more attention to the process, the carriers and filings that govern them and they would continue in a business-friendly atmosphere and not suffer the hits to the guaranty fund.

Finance Department Projects Millions in Savings From Large-Deductible Rules

Soon-to-be-proposed rules that would increase capital and credit requirements for carriers writing large-deductible workers’ compensation policies in California could prevent insolvencies and save tens of millions of dollars a year, according to the Department of Finance.

The Department of Insurance plans to start the formal rule-making process Friday by opening up a public comment period on proposed regulations intended to ensure that insurers writing policies with deductibles of $100,000 or more are able to handle the risk of a covered employer becoming insolvent or failing to reimburse the carrier for claim costs, according to an agency official who spoke on the condition that he not be identified.

The department plans to hold a public hearing on the proposed rules in August.

Although officials were not ready Friday to speak about the rules publicly, the department submitted draft rules to the Finance Department. That is required when state agencies estimate that the impact of a regulatory proposal may exceed $50 million in costs.

The draft rules would require that carriers writing large-deductible policies maintain a minimum credit rating of “A” with A.M. Best Co., a rating of “A” or “A” with Standard and Poor’s, a rating of “A1” or “A2” with Moody’s Investment Services, or a Fitch Ratings Inc. rating of “A” or “A.”

Additionally, the rules would require carriers to maintain a sum of paid-in-capital — the amount of money invested in a company used to represent earnings from selling equity — of at least $500 million.

Carriers could also satisfy the requirement by being part of a holding company group that maintains a qualifying credit rating and has sufficient equity.

Carriers that do not meet both the credit rating and capital requirements would be required to collateralize the amount they expect an insured to pay as reimbursement for claim costs. Carriers could satisfy the security requirements by ensuring that an employer sets aside money for the exclusive purpose of collateralizing the large-deductible policy.

Irena Asmundson, chief economist for the Department of Finance, said in a May 21 letter to the Insurance Department that the proposed rules are estimated to increase costs to employers by about $20 million per year. However, the rules are expected to prevent one insurer insolvency every four years, and fewer insolvencies are expected to save about $42 million a year.

Asmundson said the projections were based on the department’s representations in a standardized regulatory impact assessment submitted in April.

An impact assessment summary, signed by Deputy Insurance Commissioner Geoffrey Margolis, says four insurance carriers have become insolvent over the last 15 years “largely because of their involvement with high-deductible workers’ compensation insurance policies.”

Nationally, the four companies had an estimated $624 million in combined incurred losses, $360 million of which arose from the Golden State and were passed on to the California Insurance Guarantee Association.

Margolis said mitigating the risk of insurer insolvencies would shield CIGA from incurring liability for some claims and reduce assessments the guaranty association charges to carriers.

The Department of Insurance has reviewed data for all work comp carriers in California and determined only nine that are writing large-deductible policies would fall short of the proposed credit risk requirements, according to the impact assessment.

The full impact assessment says the nine insurers could pursue mergers or acquisitions, start writing different lines of insurance or phase out large-deductible policies to raise capital to meet the $500 million threshold. But the “most reasonable plan of action” would be for the nine carriers, who are not identified by name in the assessment, to collateralize their deductible receivables.

The carriers have an aggregate $200 million in deductible premium for work comp policies in California. The Insurance Department estimates that the total amount that would need to be collateralized to protect against the risk of potential unpaid future deductibles is about $800 million.

“By requiring that employers obtain additional collateral that is set aside specifically for paying workers’ compensation deductibles, an insurer may protect its obligations without significantly alienating its client employers who might otherwise have to alter their business operations,” the assessment says.

Margolis said during a telephone interview Friday that he wouldn’t discuss specific provisions until regulatory language is proposed at the start of formal rule-making process. Speaking generally about the pending rules, he said, “Insurance Commissioner (Dave) Jones’ goal is to provide reasonable, tailored guides for insurers writing high deductible policies and reduce the risk of insolvency associated with them.”

It’s not clear how carriers view the proposal.

Jeremy Merz, western region vice president of state affairs for the American Insurance Association, said he had not seen the copy of the draft rules posted to the Department of Finance website and could not comment on them.

Rules on the Finance Department’s website are different from an earlier draft that the Insurance Department released before holding a stakeholder meeting to discuss the proposal in March.

Mark Sektnan, vice president of state government relations for Property Casualty Insurers Association of America, was not available for comment on Friday.