Trust…Trust…Trust… has no Trust. So if your client has been out of a trust for a few years, find ways to reduce and recover overcharges on their current premiums because I’m sure they would like their money back to pay off these assessments!
Businesses across New York State could be facing judgments or shutdowns at job sites if attorneys negotiating to pay down $924.6 million in claims left from the state’s failed group self-insured trusts don’t reach a deal with the State Workers’ Compensation Board (SWCB).
Crain’s New York Business reported on Friday that scores of New York businesses would be forced to shut down if forced to pay the assessments.
Crain’s quoted an SWCB spokesman as saying, “That’s kind of what they signed up for,” in response to complaints from New York business.
SWCB said businesses in the trusts represented by Phillips Lytle have paid $48 million in assessments so far.
“All of this will be avoided if they simply contribute towards the workers’ compensation obligations of their own employees,” the spokesman said.
A 4007 requires SWCB to make another report on the status of the trust system to lawmakers and Gov. Andrew Cuomo by Dec. 31.
The board’s Dec. 1, 1011, report on the status of individual trusts is here.
The Crain’s article is here.
Vermont is one of six states in the eight-state Northeastern Zone that have seen recommendations for lost cost increases by NCCI. New York saw the biggest jump in the region, approving a 9.1% increase, effective on Oct. 1. New Jersey and New Hampshire also saw increases, and NCCI has requested increases in Connecticut and Rhode Island.
A win-win for brokers…
“Prospects for revenue and earnings growth for U.S. insurance brokers in 2012 will likely match or exceed levels reported for the first nine months of 2011, Fitch said in its “2012 Outlook: U.S. Insurance Broker Industry.”
I believe that based on all the 2012 Workers’ Comp premium increases, plus the fact that payrolls at this moment are staying flat or increasing (not decreasing)—2012 should definitely be a better year for brokers.
See Business insurance article here: U.S. broker industry stable with modest growth prospects: Fitch
The way I see it—Brokers have been getting very nice pricing out of AIG. For example in NY brokers have taken business from SIF many times with AIG. So if AIG feels they can raise Workers Comp’ premiums——The market is really turning. See Wall Street Journal article here: AIG’s Chartis Raising Rates, Allowing Rivals To Follow
THE MARKET IS TURNING.
After six years and eight months, the soft market cycle has finally broken,” Richard Kerr, CEO of the Dallas-based electronic insurance exchange, said in a statement. “November 2011 is the first composite rate increase since the soft market began in February 2005.”
See article from Business Insurance U.S. property/casualty composite rates post first rise since 2005: MarketScout
Question: HOW ARE THEY DOING BETTER THAN EVERYONE ELSE? Will the Loss Costs decrease really affect pricing given that in PA a broker/carrier can use schedule credits or debits?
The PCRB has submitted to the Pennsylvania Insurance Department a filing of Pennsylvania loss costs, with a proposed effective date of April 1, 2012. That filing proposes an overall average loss cost decrease of 5.66 percent.
According to the PCRB, claims frequency has experienced an average annual decline of 5.7% between 2003 and 2009, even though indemnity costs increased by 5.2% per claim and medical severity increased by 4.8%. The filing needs the approval of the Pennsylvania Insurance Commissioner Michael F. Consedine.
Based on the filing, effective April 1, there would also be a 0.0037 increase in the employer assessment factor—from 0.0188 to 0.0225—in order to support the Pennsylvania Uninsured Employer’s Fund.
The PCRB circular is here.
When I read this article by Insurance Journal, I see opportunity for brokers– YES broker opportunity.
The way I read it: Employers are more and more going to be looking for value-added services that will help reduce higher workers’ comp costs.
A broker can:
A) Get new accounts by offering workers’ comp services to help keep losses down.
B) BOR accounts by helping employers recoup overpaid premiums and look like a hero broker —offering way more then their current broker.
C) Offer some type of worker’s comp savings program to current clients to maintain your book of business.
With payrolls down and no sign of any big turning point, brokers need to add a lot more business to their current book. And with rates on the rise, existing clients will get their renewal quotes and will see big increases from the past year and they will shop around, BUT a broker that is focused on servicing clients with lots of extras will WIN!!
see article here Workers’ Compensation System’s ‘Elephant in the Room’
Check out this posting by DePaolo’s Work Comp World
Oregon Department of Consumer & Business Services biennial report on ranking of state’s cost of workers’ compensation to measure how one state compares to other states. Connecticut was ranked as the sixth most expensive workers’ compensation market in the country in the 2010 Oregon biennial report, compared to a ranking of 20th most expensive state in the 2008 Oregon report. Connecticut finished with higher rates then New Jersey and New York.
With rates going up in Connecticut, labor wants the Legislature to create a state fund, while business interests are hoping for a statutory cap on the price of repackaged drugs.
Let’s see how this all plays out and remember that CT has some major insurance companies in the state that oppose a state fund, declaring that it would drive out competitive private carriers afraid of price competition.
See post here A CT State Fund? Rate Hikes Insufficient for Change
There is real frustration about the fact that the New York State Insurance Fund’s assessment charges are 10.1 vs. 20.2 for private carriers!
Surprise,
Included in the 2007 NY workers comp reform laws was a cap on the amount of PPD benefits for claimants after March 2007 and required private insurers to deposit lump-sum PPD benefits into the state Aggregate Trust Fund after July 2007.
However, employers argued in Randy Raynor vs. Landmark Chrysler et al. that the lump-sum provision should not apply to employees who were injured prior to March 2007 but received benefits after July 2007 because it would be “speculative” to calculate lump-sum, uncapped awards for those claimants.
In the attached article were NYS court of appeals affirmed a lower appellate court ruling, the accident happened in 2004 a couple of years before the new reform yet the court ruled that even though the PPD was uncapped the insurance company had to put $200,000 into trust-fund right away versus the old system in which carriers typically made regularly-scheduled payments to injured workers.
It now looks like even on old (uncapped claims with accident dates prior to 2007 ) once the worker is being classified PPD, the private insurance carrier is obligated to deposit the present value sum of future indemnity payments into the Aggregate Trust Fund (ATF). In many cases, this will be in the hundreds of thousands of dollars.
I would suggest getting Section 32 happy BUT claimants attorneys are very well aware of the above ruling so …
Bottom line: Brokers will need to keep their clients experience mods and premiums from rising because the trust-fund law has early HIGH reserves written all over it!
The New York State Insurance Fund and self-insured employers are exempt from the mandatory ATF deposits, giving private insurance carriers a competitive disadvantage.
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workers compensation refunds Comments Off on 2007 Reform gives private insurers a competitive disadvantage to SIF, carriers will have to part with millions much earlier then under the old system
YAY!!! YAY!!! YAY!!! GO BROKERS GO…
Average renewals increased 1.2 percent in general liability, 1.6 percent in property and 2.1 percent in workers’ compensation, according to results of the survey. Here is the article RIMS Benchmark Survey: Average Renewal Premiums Are Up