NCCI Updates on Payrolls and Experience Mods – COVID-19

The National Council of Compensation Insurance (“NCCI”) has come out over the last few days with some important calls in regard to CoVid-19. 

Foremost, the NCCI is changing the class code for those that are still being paid and work from home, but under a different scope of employment.

Secondly, many States continue to revise their triggers for “presumptive coverage” for workers’ compensation.  In all States, first responders are considered to be covered on an occupational basis.  In others, the definition has been expanded to “health care workers”.  In others (ie Illinois), this definition has been expanded beyond first responders and health care workers to pretty much anyone that could be public-facing to include workers in restaurants, retail stores, grocery stores etc.

Lastly, the NCCI has decided that CoVid-19 claims should not be applied to experience modifications.  It is yet to be seen the 10 independent bureaus follow suit, but this is a big deal for those that are on guaranteed cost programs

Part 2 of our NAPEO CoVid-19 seminar on workers’ compensation with NAPEO is tomorrow at 2:30.  Hope to see you on the call —-

The below the latest from our friends at the NCCI –

Employers May Exclude Payroll to Employees Not Working for Workers’ Comp: NCCI

By | April 20, 2020

Businesses that have suspended operations due to COVID-19 but continue to pay employees who are at home but not working will not have to include the payroll paid to these employees in the calculation of their workers’ compensation premium.

The National Council on Compensation Insurance (NCCI) is preparing a reporting code that will be filed for approval by state regulators. The organization hopes to file it this week.

NCCI, the industry’s largest workers’ compensation data and rating organization, will file the change in the 36 states where it is the official rating bureau.

“We’ve had a meeting already with the insurance regulators telling them that it’s coming and sharing some information with them so that they’re ready for it and we hope that they’ll do a quick approval, Jeff Eddinger, senior division executive, Regulatory Business Management, for NCCI told Insurance Journal.

California’s rating bureau has already announced its own rule that this payroll paid during the shutdown will be excluded from reportable payroll. Other states with their own rating bureaus or monopolistic state funds are expected to follow suit.

Citing a desire for consistency across states, the North Carolina Rate Bureau told Insurance Journal it is waiting to see the NCCI rule change and will likely file that language for use in North Carolina.

The rule change is for payroll for people who can’t do their normal jobs from home, but are still getting paid. Without this rule change, that payroll would be included in calculating the employer’s workers’ comp premium. A workers’ comp premium is based on payroll.

“The rule change is going to basically take the payroll for that period of time where the worker’s furloughed and remove it from the calculation,” said Eddinger,

“You can make an argument that while they’re not doing their job, they don’t need workers’ comp coverage so the employers don’t need to pay the premium for that time.”

The trade-off is that a company that excludes an employee’s payroll can’t report any claims for that employee, Eddinger added.

The rule will be retroactive, most likely to March 1. How long the code will remain available will depend on how long shutdowns are in effect.

He said NCCI considered using an existing code for idle workers but determined a new rule would be better.

In another change, NCCI will also begin tracking COVID-19 related claims.

Eddinger does not think the payroll rule change will have a material impact on workers’ compensation carriers.

“It’s like hitting the pause button so you’re not charging premiums, but you also don’t expect any claims so in the end you think that it’s just going to be a wash,” he said.

It’s similar to the situation with auto insurers giving discounts on premiums for certain months, knowing that there will be less traffic and thus fewer claims.

Here is how NCCI’s explains the move on its website:

“NCCI recognizes that circumstances around COVID 19 are extraordinary and warrant an expedited rule change to address the question of payroll for employees who are being paid but are not working as it relates to the basis of premium. If approved, this rule change will be distinct from “idle time” under our current Basic Manual rules (Rule 2-F-1), and a corresponding statistical code 0012 will be created for reporting this payroll. This payroll will not be used in the calculation of premium.”

NCCI has a COVID Resource Center on its website that includes answers to frequently asked questions and a new analysis of the economics impact of coronavirus on the workers’ compensation industry.

California Orders Payback of Insurance Premiums

In an unprecedented move, California Insurance Commissioner Ricardo Lara has ordered insurers that support “workers’ compensation, private passenger auto, commercial auto, commercial multi-peril, commercial liability, medical malpractice and any other insurance line where the risk of loss has fallen substantially as a result of the COVID-19 pandemic.”  It should be noted that no policies can be cancelled and at the same time all premiums are to be returned for March, April and potentially May.

Wow.

How the market will now correct itself in the largest insurance market in the US?  Will other states follow suit?

Detail from our friends at the Insurance Journal…

Tuesday, April 14, 2020

Insurance Commissioner Orders Companies to Pay Back Premiums Due to COVID-19 Fallout

California Insurance Commissioner Ricardo Lara on Monday ordered workers’ compensation carriers and insurers in at least five additional lines to pay back premiums because of the economic fallout of the COVID-19 pandemic.

Ricardo Lara

Commissioner Ricardo Lara

Premiums for March and April must be returned, with May premiums also on the table if the state’s stay-at-home order continues, according to Lara’s declaration.

Other insurance lines that must pay back premiums under Lara’s order include private passenger auto, commercial auto, commercial multi-peril, commercial liability, medical malpractice and “any other insurance line where the risk of loss has fallen substantially as a result of the COVID-19 pandemic.”

“With Californians driving fewer miles and many businesses closed due to the COVID-19 emergency, consumers need relief from premiums that no longer reflect their present-day risk of accident or loss,” Lara said in a statement. “Today’s mandatory action will put money back in people’s pockets when they need it most.”

The news also arrived on the eve of a Workers’ Compensation Insurance Rating Bureau meeting, where Classification and Rating Committee members are scheduled to vote on three proposed regulatory changes to send to Lara in response to the COVID-19 pandemic.

Dave Bellusci, executive vice president and chief actuary for WCIRB, wrote in an email that issues related to premium returns were “not within the WCIRB’s role, which focuses on advisory pure premium rates, experience modifications, payroll reporting. etc.”

Lara’s order requires insurers to provide premium credits, reductions, returns or “other appropriate premium adjustment” by August 2020. The department has requested a minimum grace period of 60 days for policyholders to pay premiums so that policies are not canceled for nonpayment, according to the news release.

The Department of Insurance did not respond to requests for comment on how the order would be carried out with regard to workers’ compensation premiums or whether employers and their insurers still were exposed by having employees work from home.

David A. Sampson, president and CEO of the American Property Casualty Insurance Association, said Monday that insurance companies were finding ways to help customers before Lara made his announcement.

Those arrangements include refunds and discounts for drivers who are traveling fewer miles, waiving late fees and pausing coverage cancellation, Sampson said.

“Over the last two weeks, insurers have announced billions of dollars in premium rate relief to their policyholders,” Sampson said in a statement. “Insurance is a data-driven industry. Rates are continuously adjusted based on losses and claims costs. If regulators allow insurers flexibility, private competitive markets will work to the benefit of consumers.”

The COVID-19 outbreak’s impact on driving patterns has already forced companies to respond and adjust, Sampson said. He added that some line policies, such as those found in workers’ compensation, are audited every year and allow for premiums to be adjusted.

“Now is not the time for arbitrary calls for rate decisions,” Sampson said. “We urge all stakeholders to support flexibility in the marketplace. California has the most complex regulatory structure in the nation. The department should be providing guidance to companies that are trying to implement premium reductions within the confines of Proposition 103.”

California voters passed Prop. 103 in 1988. It requires approval from the Department of Insurance before carriers implement rates for most property and casualty lines. The initiative does not apply to workers’ compensation.

Aside from actions already taken by auto insurance companies, other lines including workers’ compensation are likely to self-adjust in response to the COVID-19 crisis without government intervention, said Robert Hartwig, director of Risk and Uncertainty Management Center at the University of South Carolina’s Darla Moore School of Business.

“In terms of workers’ comp, premiums paid will be largely self-equilibrating irrespective of proclamations from insurance departments,” Hartwig wrote in an email. “Workers’ comp is an audited line, meaning insurers routinely examine policyholder (employer) payroll exposure to ensure that the premium paid matches up with the exposure and risk assumed by insurers. Given that payrolls for many/most employers in the U.S. will fall below expectations for renewals prior to March 1, insurers will wind up refunding some premiums and/or simply collect less in premium over the next several quarters.”

Each insurance line differs by risk, Hartwig said, and a broad-brush approach by an outside party might not be the best solution.

“One wild card is how fast all of this will bounce back,” he wrote. “Insurers will need to be judicious in any rebates/discounts offered, offering them periodically only as justified based actuarial determinations — not in response to proclamations by regulators and legislators.”

In addition to ordering the premium return, Lara also ordered carriers to file a report of all actions taken as well as contemplated future actions to refund premiums. The report must include monthly and overall totals for the percentage of refunds applied, aggregate premiums refunded, average percentage of refunds and the number of policyholders receiving a refund.

Take a ‘Deep Dive’ Into the Nonprofit Sector: Nonprofits Treading Water as Market Hardens

April 9, 2020 by Stephanie K. Jones & Amy O’Connor

The task of insuring nonprofit organizations is a complex one and agents, brokers, underwriters and carrier representatives say that in order to fully serve those entities that serve our communities in myriad ways, it’s vital to take the time to understand what they do and how they do it.

Specialists in this segment are more important than ever as the commercial market has tightened and property and liability coverage rates continue to rise, challenging the slim budgets of most nonprofits.

Headlines from the #MeToo movement and large jury awards for sexual abuse cases have also spooked carriers who write nonprofit business into offering smaller limits or pulling out of the space altogether, nonprofit insurance experts say.

As the third largest employment sector in the United States — behind retail and manufacturing — the nonprofit world, made up of 501(c)(3) tax exempt organizations largely focused on contributing to their communities, faces the types of operational challenges that exist in the for-profit universe but also issues that are unique to the charitable sector.

Funding is one such challenge, as nonprofits typically have smaller budgets than for-profit entities with funding coming from donations as well as from contracts with larger nonprofits or local, state and federal governments.

Finding the proper insurance coverage can be another challenge for nonprofit organizations in light of the different factors that affect the organization, such as its funding sources, liabilities that stem from its mission, its property, clients, staffing and a heavy reliance on volunteer participation.

The class requires specialists who take the time to really understand a nonprofit’s different challenges and exposures, experts say, particularly considering the changing market.

“We spend a lot of time on doing what somebody might call a deep dive into what they do,” said Polly Kosyla, president of S. Wolf and Associates, a Chicago-based independent agency focused solely on the nonprofit sector.

She said that includes developing an understanding of the nonprofit’s mission, their activities, the responsibilities of their volunteers and staff, their funding sources and the other entities with which they work.

“I think the front-end work of what we do is very labor-intensive to really get a full understanding of what an organization is not only doing now, but also trying to accomplish in the future,” added Charlie Kosyla, vice president at S. Wolf and Associates.

Because of the variety of nonprofit risks, there’s no one carrier that can provide the coverage needs for all of them, Charlie Kosyla added. In crafting solutions for their clients, it’s a matter of finding a fit with “the collection of carriers and MGAs we work with. It’s fitting all the policies because there’s no one carrier to cover them all. It’s a vast market.”

Peter Andrew, president and CEO of Council Services Plus in New York, an agency that only writes nonprofits, said there are few carriers that regularly and comprehensively work with nonprofit organizations because of their exposures, which can make it difficult for the smaller nonprofits to get all the coverage they need.

“There are certain coverage features that nonprofits like to have that maybe for-profit businesses don’t, like coverage for volunteers, coverage for special events, fundraisers, the ability to name additional insured, funding sources, municipalities, conference, location hosts, things of that nature,” he said. “There’s only a handful of insurance companies who are really writing a policy that’s comprehensive for the nonprofit world in that way.”

Hardening Market

In a space that is already limited in terms of carriers that specialize in it, nonprofit insurance experts say exiting capacity is a huge risk to the segment that could make nonprofits vulnerable to being underinsured or without the coverage they need to operate.

Andrew and other specialists say there are signs of a tightening market with higher rates and lower capacity for both liability and property insurance after many years of a very soft market.

“In addition to a shrinking capacity, some of the for-profits [carriers] are completely withdrawing from the nonprofit market or certain sectors of the nonprofit market, especially sectors that have high exposure to the molestation abuse — so nonprofits serving children, vulnerable adults,” said Brian Johnson, chief underwriting officer for the Nonprofit Insurance Alliance, a nonprofit-focused insurer writing business in 32 states and D.C.”

“Carriers are getting out of foster care, they’re getting out of camps, they’re pulling back limits on misconduct, on D&O; they’re even taking it out of the umbrella in some cases. They’re non-renewing or maybe extending [coverage] for a month,” said Peter Persuitti, managing director of the Nonprofit Practice at Arthur J. Gallagher.

Nicole Jolley, director of Nonprofit at Church Mutual Insurance Co. in Merrill, Wis., noted there has been “some tightening in the property space and we’re looking at liability as a potential next line of business that will be hardening.”

She added that the #MeToo movement and changes in sexual misconduct reviver statutes across the country, where many states are suspending the statutes of limitations for abuse and molestation, are having an impact on liability rates for both nonprofit and for-profit businesses.

Certain segments, particularly those that have exposure to minors or vulnerable adults, are seeing the biggest shift due to a swell in plaintiff attorneys going after nonprofits.

Mike Liguzinski, division president, Specialty Human Services at Great American Insurance Group in Cincinnati, Ohio, said the social inflation caused by a very proactive plaintiff bar, which is pursuing and winning more verdicts and high jury awards, is impacting rates. It’s not a new phenomenon, rather a trend that seems to cycle around about every 10 years, he said.

“We’re going to see rising rates for the next two to three years because of social inflation,” Liguzinski said.

Brad Baumgartner, executive vice president with IMA Inc. in Denver, said liability and property coverages in the nonprofit space are mirroring what is happening in the P&C market in general.

“Comp prices are coming down, which is great, because that has historically been a big spend for them. But just like anywhere else in health and human services, professional liability has been going up,” he said.

Nonprofit insurance broker Jordann Coleman with Heffernan Insurance Brokers in Walnut Creek, Calif., said a soft workers’ comp market has been a “silver lining” for many nonprofits as property and liability rates rise.

“Workers’ compensation has been the one area that we’ve been able to — at least rate-wise — provide some relief,” she said.

Carriers that specialize in nonprofits are taking note of the market changes.

Liguzinski wouldn’t go so far as to say that the market is in a crisis mode, but he acknowledged his company is “getting a ton of calls” from brokers trying to place business. “Let’s put it this way: Our phone is ringing. We don’t have to go looking for it,” he said.

Johnson of the Nonprofit Insurance Alliance tells a similar story.

“Our submission account for 2019 was up overall 25% year-over-year, and a lot of that is because some of the for-profits [carriers] are saying, ‘Yep, we’re out. We’re not doing it anymore.'” he said.

While the market is changing, Polly Kosyla says coverage is still available for most of her clients.

She said she has been in insurance long enough to remember a time when there were no carriers that would insure a shelter or provide a sexual abuse liability policy.

“There certainly are carriers that are willing to write a bulk of what our clients do,” she said.

Kosyla said her agency has succeeded in weathering the ups and downs in carrier capacity by working with a core group of carriers that “we can go to for more standard risks and … more unusual risks.”

For accounts that aren’t in the religious sector and haven’t been hit with lawsuits, Heffernan’s Coleman says coverage is still available, and she hasn’t seen much change from the specialized carriers that write the business.

“I think the ones that are in it have been in it for the long haul and will continue to stay in it for the long haul,” Coleman said.

Council Services Plus’ Andrew said he doesn’t think the nonprofit market is in crisis — yet.

“There’s only a handful of insurance companies who are really writing a policy that’s comprehensive for the nonprofit world, and when they start to go away or they start to firm up, then there’s even less options in the marketplace,” he said. “I don’t think it’s reached crisis level, but does it have to reach crisis level for us to get ahead of something?”

He said the landscape is shifting, and, “if we’re not careful, we’re going to have hundreds and hundreds, if not thousands of nonprofit organizations wasting resources to pay for more premiums or being outright canceled and not being able to get insurance. Then we really have a crisis.”

Impact of Funding

A nonprofit’s revenue sources are highly influential not only to how the organization is managed and its ability to complete its mission, but to the development of an insurance program for the risk, the experts say.

Many nonprofits receive funding from grants or contracts from municipalities, states or the federal government, and that funding dictates the level of limits or coverages that nonprofits must have.

Charlie Kosyla said brokers need to pay attention to those details, so that nonprofits have all the proper insurance in place and carriers feel comfortable writing the risk.

“The funding difference between a nonprofit and a for-profit is a for-profit might have a product that they’re selling or might have a revenue stream that’s coming in and supporting the business, whereas a nonprofit, they’re going to rely on multiple revenue streams,” Charlie Kosyla said.

“Nonprofit organizations are under obligation contractually to have certain insurances in place, and if that insurance isn’t available or it’s only available at a cost prohibitive price, then it threatens the nonprofit sector unlike it threatens any other sector,” Andrew said.

Andrew noted he has had clients with $8,000 budgets that have to spend $2,000 on insurance; dedicating such a big portion of their budget to insurance takes away their ability to help their local community.

“Every dollar that goes to insurance is one less dollar to its mission,” said Andrew. “We can’t do that to communities.”

Helping Nonprofits During Uncertain Times

Nonprofit experts agree this segment needs agents and underwriters who specialize in it and can help their clients understand their exposures and what coverages they need. That knowledge will be especially important to helping nonprofits navigate a firmer market with limited coverage availability.

“Insurance isn’t the top of their list of things that they’re doing on a daily basis,” Baumgartner of IMA said of the nonprofits with which he works.

Baumgartner said sometimes he sees exposures a previous broker hadn’t paid much attention to. Nonprofit brokers need to do a “thorough risk review, where you’re reading the terms and conditions of the various policies, discussing the limits, and benchmarking the pricing,” Baumgartner said. “I’ve run into a number of scenarios where there are a lot of coverage gaps.”

Polly Kosyla said many clients who have transitioned to her agency previously worked with agents that had been trained to work with commercial accounts but not necessarily with nonprofits.

“We get a lot of clients who are with insurance that doesn’t fit them or had premiums that are way too low or way too high because it doesn’t fit what they do. I can understand why a commercial agent would be frustrated trying to figure out how to insure a group that they really don’t understand,” she said.

An agent’s expertise and deep understanding of the client’s operation is not only essential to the client, it’s a big factor in how underwriters look at the risk, as well, said Penny Parisoff, non-profit product management director at GuideOne Insurance in West Des Moines, Iowa.

She said agents need to understand the types of clients the nonprofits serve and clearly articulate their story to the underwriter.

“I think that’s true on all of the nonprofits — because the nonprofit space has such variety to it — is that agent really learning the risks?” she said.

Agents and brokers can help their clients by working with them on their processes and procedures, their safety culture and preventative measures, and help them establish a risk management plan with steps in place, Great American’s Liguzinski said.

“Help them wear that hat or co-wear the hat with them, the risk manager hat,” he said. “A number of the carriers have risk management tools and portals and online training, and sending out a loss control person to work with them on their processes, procedures, background checks.”

Nonprofit Insurance Alliance’s Johnson says he tells his brokers one of the most important things to do is understand what contracts nonprofits are signing “because it’s the broker’s job to help the nonprofits figure out what coverages they need, what limits they need, and an important factor of that is what contracts are they signing, what liability we’re taking on.”

He also noted that brokers need to understand the differences in policy forms that different carriers offer and “not just go where you get the most commission, not just go where you know the person best.”

“Make sure you understand the policy so you’re going to get the nonprofit the best coverage available for the best price. Understand loss control services that the companies are offering,” he said. “Make sure you’re taking advantage of their employment risk management services.

Make sure you’re taking advantage of their driver training.”

He added brokers should be aware of different statute changes around the country and the changes in social inflation and he cautioned against brokers going with a policy that offers the highest limits because it may not be to the benefit of smaller nonprofits.

“It’s easy for a broker to say to a nonprofit, ‘You need a $10 million umbrella. Get as much coverage as you can get as possible,’ because they can never be accused of not offering to give them enough coverage — they’re protected,” he said. “Nowadays, what that does is it puts a target on their back, so the lawyers will say, ‘They got $10 million of coverage. I think I’m going to demand $10 million.’ It never fails.”

Andrew says he wishes more brokers would become specialists in the nonprofit sector and learn about it on a “grassroots level.”

That intimate knowledge would help underwriters feel more comfortable offering coverage in the segment.

“If more brokers got into the sector and took time to understand the sector, then yes, more companies would understand what nonprofits are and then understand that these organizations are not the risk that they might be perceived. No one’s taken the time to really talk through what this organization does with an underwriter,” he said.

Nonprofits are evolving and working to address and manage their exposures, said Persuitti. “It’s a very dynamic sector that is in many ways at the edge of lots of risk, but very committed to screening its volunteers. It’s learned so much. It’s taken that knowledge and science and the advancements of technology.”

Persuitti said despites its challenges, the nonprofit segment is a “remarkably growing space” that is very rewarding to work in.

Andrew said he hopes the insurance market will work to ensure the availability and affordability of insurance for nonprofits before it becomes a crisis because that would be devastating for not just the nonprofits themselves, but the communities they help.

“That worries me because I see what these small community-based organizations are doing on the local level,” he said.

Insureds and insurers benefit from fair premiums being charged for the risk — not too high or too low, he said. The broker’s job is to “bring those two ends together” so both sides get a fair deal.

“When those two things come together, the nonprofit’s expectations and the company’s understanding, boy, that’s a great thing,” Andrew said. “We don’t have enough of that right now.”

 

Want to know more about how COVID-19 could affect your company? Give Sharlie Reynolds a call at 305-495-5173 or email her at sreynolds@libertateins.com.

W. R. Berkley Corporation Announces Senior Executive Appointments

It’s refreshing to see some positive non-COVID news from the industry!

Congrats to our PEO carrier partner, Key Risk (owned by W.R. Berkley) and its new president, Scott A. Holbrook.  The former President, Robert W. Standen, was promoted to Executive Vice President.

Additional details below.

W. R. Berkley Corporation Announces Senior Executive Appointments

4/7/20

Robert W. Standen Named Executive Vice President

Scott A. Holbrook Appointed President of Key Risk Insurance

GREENWICH, Conn.–(BUSINESS WIRE)– W. R. Berkley Corporation (NYSE: WRB) today announced the appointment of Robert W. Standen as executive vice president with oversight responsibility for certain of the Company’s operating units. Scott A. Holbrook will succeed Mr. Standen as president of Key Risk Insurance, a Berkley Company. The appointments are effective immediately.

Mr. Standen joined Key Risk Insurance in 2003 as executive vice president and chief claims officer and assumed the role of president in 2007. He has been instrumental in advancing the operating unit’s leadership position and expansion in the mono-line workers’ compensation segment. His professional designations include Associate in Risk Management (ARM), Associate in Claims (AIC) and Associate in Loss Control Management (ALCM) from the Insurance Institute of America. Mr. Standen earned his Masters of Business Administration degree from St. Joseph’s University and graduated with a Bachelor of Science degree from LaSalle University.

Mr. Holbrook has 25 years of experience in the commercial lines property casualty insurance business. He most recently served as the senior vice president for the Mid-Atlantic division of a leading global insurer. Mr. Holbrook holds a Bachelor of Science degree in finance and marketing from the Virginia Commonwealth University School of Business and is a Chartered Property Casualty Underwriter (CPCU).

Commenting on the appointments, W. Robert Berkley, Jr., president and chief executive officer of W. R. Berkley Corporation, said, “We are pleased to have Rob assume this new position. His deep knowledge of the property casualty insurance business and hands-on experience in managing one of our operating units will be invaluable to our corporate oversight activities. We welcome Scott to the team and are confident that his extensive underwriting background, operating experience and independent agent and broker relationships will enable him to lead the Key Risk team in building upon its success.”

Key Risk Insurance delivers innovative and responsive workers’ compensation solutions that provide clients the freedom to do what they do best. With over 30 years of expertise and 100% focus on workers’ compensation, Key Risk Insurance works with employers to enrich each client’s risk management strategies by creating and executing comprehensive solutions proven to protect people, support business and exceed expectations. For further information about Key Risk please visit www.KeyRisk.com.

Founded in 1967, W. R. Berkley Corporation is an insurance holding company that is among the largest commercial lines writers in the United States and operates worldwide in two segments of the property casualty insurance business: Insurance and Reinsurance & Monoline Excess. For further information about W. R. Berkley Corporation, please visit www.berkley.com.

Products and services are provided by W. R. Berkley Corporation’s subsidiaries and “operating units”. Operating units are not typically legal entities, but for marketing purposes may sometimes be referred to individually as “a Berkley company” or collectively as “Berkley companies”.

 DOWNLOAD THIS PRESS RELEASE PDF FORMAT

Karen A. Horvath
Vice President – External
Financial Communications
203-629-3000

Source: W. R. Berkley Corporation

 

Texas Mutual Dividend Checks Arriving Two Months Early

Dividend checks coming early to support our policyholders
We know that supporting our policyholders during this uncertain time is more important than ever, which is why our board of directors has voted to pay dividends two months early. Like many of you and your clients, we don’t know the economic impact that COVID-19 will have on our business, but we do know that we are in a good position to distribute this dividend in this critical time.
We’re proud to share that our teams are working hard to finalize this year’s individual dividend payout of $330 million to over 57,000 policyholders. This year marks the 22nd year that we are paying dividends to our policyholders, bringing the total to over $3.1 billion back to Texas businesses since 1999.
View dividends online on April 13, checks mailed April 20
On April 13, you will be able to log into texasmutual.com to view dividend information and amounts for your clients. We’ll send a reminder email when that information is available to view. Checks will be mailed April 20. Unfortunately, we won’t be able to offer hand-delivery to agents because of the stay-at-home order, but we encourage you to share the good news with your clients.
We are working diligently to deliver dividends to our policyholder owners ahead of schedule. We are on target to meet the dates communicated in this email, but appreciate your understanding if we need to make any adjustments.
Dividend questions?
We know that you may receive questions from your clients about dividends and we’re here to help you. In anticipation of the questions you may receive: At this time, we do not have direct deposit available. If your client needs us to reissue a check, they can call us at (800) 859-5995. You can view dividend amounts for qualifying policyholders on April 13. Policyholders can view dividend information in their accounts on April 20, which is when we will mail checks. View dividend FAQs for more information.
Thank you for trusting Texas Mutual to serve your clients. Learn more about our dividend program at texasmutual.com/ownershippays.

COVID-19 Impact to Insurance Programs and Carriers

I hope this post finds you safe and well in our new world.

As you may be aware, the most credible association in regards to insurance projections is the Casualty Actuarial Society (“CAS”) casact.org.  This is the fellowship of the “mathematical prophets”.

The below link is a very timely white paper that addresses the lines of insurance that will be most impacted due to this pandemic.  Specifically:

-Health Insurance

-Workers’ Compensation

-Liability (general and specialty casualty)

-Cyber

-Event cancellation

-Property

The full report can be accessed by clicking here.

I think that some of these lines of insurance are directly impacted, especially health, workers’ comp and event cancellation.  What that impact will be has yet to be understood as the cost of medical and timeline of indemnity unknown. Other lines have the potential to be impacted such as cyber and liability.  Property should have the least impact unless the feds step in.  If they force the issue and do not subsidize, the money is not there to cover the claims.

Our prayers to you and yours –

 

 

Workers’ Comp Premiums Could Skyrocket With COVID-19 Claims

Source: Bloomberg Environment

  • Health-care workers likely eligible for workers’ comp
  • Grocery, delivery workers will argue for eligibility

Health-care workers and emergency responders will benefit from rules eased in some states around workers’ compensation that will allow them to collect benefits if they can prove they caught Covid-19 on the job. Some say essential workers like grocery store employees and delivery workers also should qualify.

But employers need to be aware of the changing rules, and be prepared for the likely end result—skyrocketing premiums.

State workers’ compensation boards around the country are amending rules for benefits payouts to include health-care workers exposed to the virus and then quarantined.

Attorneys are keeping a close eye on the questions, such as who should be eligible to receive benefits, how does a worker prove they caught Covid-19 on the job, and how will an influx of successful claims affect businesses’ premiums to insurance carriers.

“If everybody who gets sick on the job is able to file a compensation claim and everyone is successful, it may bankrupt a company,” said Michael Duff, a workers’ compensation professor at the University of Wyoming.

Quarantined Workers

Workers’ compensation is a state-mandated insurance program that provides pay to workers who are injured on the job—in return, the worker agrees not to sue their employer. Like unemployment insurance, workers’ compensation rules vary by state.

In early March, Washington’s Department of Labor & Industries announced that it “will provide benefits to these workers during the time they’re quarantined after being exposed to COVID-19 on the job.”

And on March 13, Kentucky Gov. Andy Beshear’s office announced that Kentucky Employers’ Mutual Insurance will “expand coverage benefits to include the quarantine period for first responders and medical personnel,” a news release stated.

Still, many states haven’t changed their policies, and experts say proving causation can be tough for workers.

Proving Exposure at Work

Earlier this month, the Occupational Safety and Health Administration declared that coronavirus was a recordable injury—meaning an employer would have to notify the federal safety agency when a worker caught the disease at work—and issued guidance to that effect.

Safety attorneys said the guidance left confusion about how to prove whether a worker actually contracted the virus on the job, said Joshua Henderson, partner at Norton Rose Fulbright US LLP in California.

“At the moment, the question of causation is where there is a lot of uncertainty,” Henderson said. “Whether it was caused by a condition at work.”

Some lawyers and activists think grocery store workers and delivery drivers are eligible for workers’ comp benefits, since their employers deem them essential workers and they could be at higher risk of COVID-19 exposure based on their persistent contact with the public as the pandemic rages across the country.

Duff argues that there are scenarios where a worker could establish causation is by citing one’s essential employee status.

“If you’re required to come in and deemed essential employees, because you are by definition required to come into work during a pandemic, then I think the argument would be, ‘My risk of contracting this disease is by definition higher than the general public.’ What you’re basically saying is, ‘My workplace increases the risk of me contracting the disease’,” Duff said.

He said he believes many workers will qualify for claims, causing employer premiums to rise, and the pandemic exposes fissures in workers’ compensation rules and labor law as a whole.

“If I was in management, I’d figure out a strategy that is fair but won’t hasten my demise or subject me to extraordinary financial pressure,” Duff said. “I would be thinking about how I would responsibly contest claims in a way that doesn’t make me look like an ogre.”

Jeff Eddinger, regulatory business management specialist at the National Council on Compensation Insurance, told Bloomberg Law that no national data is available that can outline the impact of COVID-19 on premiums. Assuming there’s an influx of workers’ compensation claims from the health-care sector, “that would certainly cause some upward pressure on claim costs in the system, but then I would say on the other side of that, during this time where people are telecommuting and some industries shut down, that creates downward pressure because people aren’t working. Those two things could offset each other.”

Duff said employers should develop practices and policies that can reasonably contest claims, but “don’t unreasonably respond to workers because my customers aren’t going to feel good about it.”

Grocery, Delivery, and Essential Workers

Edward W. Guldi, a New York plaintiff’s workers’ comp attorney at The Perecman Firm, P.L.L.C., also said it’s not likely grocery or delivery drivers would be successful in worker’s comp claims.

“Nurses are going to get their claims, the hospital workers, too,” Guldi said. “The people who aren’t are grocery store workers, waiters, office workers and delivery drivers and basically everybody else who doesn’t qualify.”

He compared their position to the Sept. 11 firefighters and first responders in New York who initially were denied workers’ compensation. Later, the state legislature passed Article 8-A, which addressed the complications caused by the two-year statutory filing deadline, allowing those injured or sickened in rescue, recovery, and cleanup efforts access to compensation.

The New York Committee for Occupational Safety and Health—an organization of unions, worker centers, and activists—already has begun lobbying for sick workers to receive workers’ compensation in New York. A representative from the organization wasn’t available for comment.

John Ruser, president and CEO of the independent, nonprofit Workers Compensation Research Institute, said one way to ensure nonhealth-care workers are covered by workers’ compensation is through state legislation.

“In some cases, legislators passed a law that said certain conditions are presumed to be work-related, therefore all claims that come from a class of workers related to COVID-19 would be compensable. Legislators can pass that,” he said.

Guldi said maybe the New York State Assembly “will do the right thing for those who have this illness. I know when George Pataki was governor, it took unions and police unions and 9/11 widows and lobbying to make that happen.”

To contact the reporter on this story: Fatima Hussein in Washington at fhussein@bloombergenvironment.com

To contact the editors responsible for this story: Cheryl Saenz at csaenz@bloombergtax.com; Martha Mueller Neff at mmuellerneff@bloomberglaw.com