May 22, 2013

According to the 96th annual report released last week by the New Jersey Compensation Rating and Inspection Bureau (NJCRIB), New Jersey’s residual market increased by 10.1% and the assigned-risk premiums increased by 42% in 2012.

Brokers should consider various methods to reduce their clients’ experience mods and losses. This will surely help their account have a better underwriting profile in the renewal marketplace. One such service is workers compensation premium recovery, which is the quickest and easiest way to obtain refunds on prior years’ workers’ comp premiums, reduce the current year’s premiums, and reduce future years’ premiums as well. Obviously better safety and loss control and other such services have a major impact also, however, they may take at least a few years to make a real impact. Workers’ comp premium recovery offers real results within 3-4 months.

New York Compensation Rating Board has filed its annual loss-cost filing with the state Department of Financial Services, requesting a 16.9% increase in workers' compensation loss costs, effective on October 1, 2013.

The quickest and easiest way to ensure that your clients (especially those renewing after October 1st) have the best underwriting profile to enter this new hardening market is through workers’ compensation premium recovery. This service offers to knock down current and prior years’ experience modifications, obtain cash back returns, and ensure future savings for your clients to keep.  Knocking down experience mods will certainly help your clients with the new loss-cost increases and experience rating split point change. There are no out of pocket expenses for you or your clients and we pay first-year and renewal commissions to referring brokers.

May 7, 2013

My mortgage company has been calling me lately to tell me that my current mortgage rate is above 5% and it can be lowered to the 3% range.  Why would they want to lower their own rates? They know that other mortgage brokers are calling me every day to tell me to refinance with them for lower rates and they know that if they want to keep my business, they better offer me lower rates as well and beat their competitors at refinancing, even if it means lower interest payments for them.

If you are a workers compensation broker, you are in a similar situation.  

You want to help your clients, but you are already busy with renewals, claims, generating new business, and lots of other things to help your clients.

In today’s Business Insurance, a report from MarketScout shows that workers compensation premiums are leading the rate increases with a 6% increase in April.  Of course April is one of the leading renewal periods for workers compensation premiums.

What does this mean to your clients and prospects?  They are hurting.  Many of them are not doing any better.  Their payrolls are still down, yet their workers comp premiums are shooting up.  On top of this, come October 1st, not only will the hardening market be affecting New Yorkers, the new split point change will drive many insureds’ premiums even higher.

You should be looking for a systematic approach that combs through all of your clients’ workers compensation premiums as far back as 10 years to recover errors and overcharges for them from the errors made by insurance companies.  You and your clients can be doing everything right.  These errors are from the insurance companies.  If an in-depth audit has not been performed within the past 2 years by a specialist, then there has never been a better time to help your clients.

Best of all, unlike my mortgage company, you don’t have to sacrifice any commission loss.  You will only create a new revenue stream for your agency with our workers compensation premium recovery program.

May 2, 2012

Yesterday, NYCIRB Chief Actuary Ziv Kimmel said in an announcement that, effective October 1, 2013, New York Compensation Insurance Rating Board will increase the split point from $5,000 to $10,000.

New York Financial Services Superintendent Benjamin Lawsky has approved a change in the split point used by the New York Compensation Insurance Rating Board to determine experience modifications in the workers' compensation system.

New York has joined at least 40 other states in approving a change in the experience mod split point change. Claims under the new $10,000 threshold will be considered primary and will be weighted at 100% for the purpose of determining each New York employer's experience modifier, or X-Mod. Claims above $10,000 will be discounted.

NYCIRB did not estimate the impact on employers. National experts have said some employers will see their premiums decrease as a result of the change, while others (especially insureds with larger premiums and high loss frequency) could see premiums increase by as much as 50%.

This move might adversely affect some brokers with clients who have large premiums and high loss frequency because their clients will see a sudden increase in their 2013 workers compensation renewal premium.  Your hands are basically tied to take any action because your clients’ 2013 mod is derived from prior year claims that can go as far back as 5 years.

Workers Compensation Premium Recovery is the only answer to the current experience rating split point change.  This service offers to knock down current and prior years’ mods, obtain cash back returns, ensure future savings for your clients to keep, and provide a better underwriting profile to enter the renewal marketplace with.  Knocking down experience mods will certainly help your clients with the new experience rating split point change. There are no out of pocket expenses for you or your clients and we pay first-year and renewal commissions to referring brokers.

April 10, 2013

A.M. Best Company, Inc.

The Property Casualty Insurers Association of America disputes New York Gov. Andrew Cuomo's claim that workers' compensation reforms would save employers about $800 million in costs, saying instead that the elimination of the Reopened Cases Fund will trigger a cost increase.

Cuomo commented on the recently passed 2013 state budget that contains the reforms. He said $500 million in costs to self-insured employers would be saved simply by consolidating assessments and a large portion of another $300 million in savings would occur via elimination of the RCF, for which payers are charged an assessment.

But Trey Gillespie, senior workers' compensation director at Property Casualty Insurers Association of America, questioned Cuomo's figures. Gillespie said Cuomo's estimate runs counter to an earlier projection by the New York Compensation Insurance Rating Board, which forecast an increase in future loss costs for employers of anywhere from 4.4% to 5.3%. The cost increase would be triggered in part by the closing of the RCF, a move that places $1.1 billion to $1.6 billion in unfunded liabilities onto carriers, he said. The IRB report said the removal of the assessment would largely offset at least part of any increase.

Cuomo's office issued a statement saying the RCF closing would eliminate the need for New York businesses to make payments into the fund. Other savings measures, the governor's office statement said, will increase competitiveness in the workers' compensation market and combat costs.

The savings to the self-insured "will eliminate an overly complicated and bureaucratic system that was not only expensive for the state but also for employers,? Cuomo's statement said. ?The new system will achieve administrative efficiencies and provide predictability to employers.? Of the savings for self-insured businesses, more than half will be generated for businesses in New York City.

One part of Cuomo's initial workers' compensation package that was excluded from the final reform bill was the plan to change the Aggregate Trust Fund. Cuomo sought to eliminate mandatory deposits and to prohibit future deposits into the ATF, which protects claimants whose carriers default on payments, but supporters of reform indicated that the payments were now handled by the Workers' Compensation Guarantee Fund (Best's News Service, Feb. 20, 2013). Carriers and employers believe the ATF to be a cost driver, Gillespie said. The IRB report indicated that long-term savings resulting from elimination of the ATF were needed to help offset the remainder of the cost increases expected on employers under the reform package.

The top five writers of workers' compensation insurance in New York state during 2011, according to BestWeek, were State Farm Insurance Fund of New York, with a 35.98% market share; American International Group, with 14.33%; Liberty Mutual Insurance Companies, with 7.87%; Hartford Insurance Group, with 7.51% and Travelers' Group with 5.06%, according to BestLink.

I do agree with PCI that eliminating the reopened cases fund will result in increase in costs, considering the fact that as per my previous blog, closing the reopened cases fund is bad for employers and insurance companies because they were able to pay less for these claims. Furthermore, employers will probably not see any savings for the next several years from this fund’s closure. Currently, employers in New York are paying a 4.9% assessment for this fund but as there will still be many claims to administer, this assessment will probably not decrease significantly any time soon. The same holds true for the second injury fund whose assessment still remains at 9.6% despite closing down the fund in 2007. I wouldn’t be surprised if the second injury fund assessment stays high for close to another 10 years or more. 

To summarize, per this article, there may be over a billion dollars in unfunded liabilities from closing the reopened cases fund. On top of that, even if there were no future liabilities, due to plenty of pending claims, the assessments for employers will likely continue for several more years.

However, I do feel that Governor Cuomo's overall proposal is great for brokers and employers and creates a more competitive marketplace and is an overall win for brokers and employers (assuming that the assessments that the State Insurance Fund will start paying is the same assessments as private carriers).

Apex Services offers brokers and employers a chance to stay competative by quickly being able to reduce workers compensation costs with our workers compensation premium recovery service.

MarketScout

April 8, 2013

Based upon the composite results of commercial business placed across the United States in March 2013, placing accounts that command large premiums no longer assures the buyer of a more aggressive pricing strategy.

Richard Kerr, CEO of MarketScout confirmed the results noting, "Historically, underwriters have been very aggressive in pricing name brand or large accounts. Other than the cache or bragging rights, there are few sound underwriting reasons for aggressively pricing large accounts. Risk is risk and exposure is exposure. In March, underwriters more frequently assessed an appropriate premium for large accounts."

Mr. Kerr went on to note, "Our most recent data showed a significant reversal in pricing strategy for both large ($250,001 to $1,000,000 premium) and jumbo (over $1,000,000 premium) accounts. In February, rate increases for large accounts measured plus 3 percent and for jumbo account plus 2 percent. These increases adjusted to plus 5 percent for both in March. There is also a considerable amount of chatter amongst underwriters regarding pricing in this area so we will be monitoring the situation very carefully."

Workers' compensation, professional and small commercial all received more aggressive month-over-month price increases.

Manufacturing continues to post the largest rate increases as compared to prior year results followed by contracting, service, habitational, and transportation.

The National Alliance for Insurance Education and Research conducted pricing surveys used in MarketScout's analysis of market conditions. These surveys help to further corroborate MarketScout's actual findings, mathematically driven by new and renewal placements across the United States.

Workers compensation rates are on the rise. Even large accounts are no longer experiencing competative pricing. Premiums are going up for employers not only due to the firming or hardening market, but also the experience mod split piont changes that have taken affect in 2013. This is good news for brokers who will make more commissions on the increased premiums. However, they do risk having disgruntled clients who might start thinking that they could find better pricing elsewhere. Workers compensation premium recovery is the quickest and easiest way to help your clients obtain workers compensation refunds and help them have a better underwriting profile for the renewal marketplace. And the best part is that brokers will make first-year and renewal commissions.

Insurance Journal

March 12, 2013

Commercial insurance prices rose by almost seven percent in aggregate during the fourth quarter of 2012, marking the eighth consecutive quarter of price increases and the fourth showing increases across every line surveyed, according to the latest Commercial Lines Insurance Pricing Survey (CLIPS) .

The survey, conducted by Towers Watson, compared pricing data reported by carriers on policies underwritten during the fourth quarter of 2012 to those charged for the same coverage during the fourth quarter of 2011.

Although commercial insurance prices continued their year-over-year upward trend, movements from the prior survey were slight, indicating a pause in the acceleration observed since the start of 2011. Towers Watson said these price change indications were generally consistent with price increases from its prior survey, except for specialty lines, where the survey indicated somewhat larger gains than were reported in the third quarter.

Workers compensation and employment practices liability had the largest price increases year over year, both approaching double digits. For most commercial lines, increases were reported to be in the mid-to upper-single digits, with all lines of business surveyed showing increases of at least three percent.

Standard commercial accounts of all sizes saw rising prices, with larger gains observed in mid-market and large accounts. Specialty lines prices rose at a slower rate than standard lines prices.

Historical loss cost changes reported by participating carriers pointed to an improvement of almost four percent in loss ratios in accident-year 2012 relative to 2011 (excluding catastrophes), as earned price increases continued to more than offset reported claim cost inflation. This indication is a reversal from the estimated three percent deterioration between 2010 and 2011. Carriers reported claim cost inflation estimates of one percent for 2012, which is the second-lowest inflation estimate reported since the launch of CLIPS in the summer of 2005.

“Price increases taken in 2012 will push 2013 loss ratios down, assuming moderate loss inflation,” said Tom Hettinger, Towers Watson’s property/casualty sales and practice leader for the Americas.

CLIPS data are based on both new and renewal business figures obtained directly from 41 participating insurers representing approximately 20 percent of the U.S. commercial insurance market (excluding state workers compensation funds), according to Towers Watson.

According to this article, workers compensation insurance went up nearly by double digits in 2012. As rates continue to climb, brokers will need a tool to show premium reductions to their clients. Apex Services offers a solution that has been proven to be the quickest and more effective way to reduce current and prior years' premiums, all while brokers earn first-year and renewal commissions. Workers compensation premium recovery helps you maintain your clients and win new business!

February 6, 2012

New York Governor Andrew Cuomo in January during his state of the state address announced Workers Comp reform as part of his 2013-2014 fiscal year budget proposal. Immediately after the reforms were announced, industry groups, including the Property Casualty Insurers Association of America (PCI) and the American Insurance Association (AIA), and the National Association of Mutual Insurance Companies (NAMIC), came out in support of the reforms, describing them as common sense. We spoke to Simon Feuer, president of Apex Services, about New York’s Worker Comp reforms and what they may mean for insurance brokers and carriers in the state and their customers. Based in New York, Apex is a leading national independent compliance audit firm for Workers Compensation premium recovery.

(AG):  Explain some of the reforms Governor Cuomo is proposing and their potential impact on the insurance market and employers.

Simon Feuer (SF): “Cuomo’s proposals include transferring $1.75 billion of the New York State Insurance Fund (NYSIF) reserves to the state coffers. This includes a $750 million transfer from the insurance fund in his budget proposal for the coming year. Another $1 billion would be taken from the fund as part of the state's budgets in 2014 and 2015. This massive transfer of funds raises big questions that are unanswered at this point about the state fund’s ability to pay an estimated $3 billion in unfunded workers compensation claims in the coming years made by state employees for which NYSIF paid benefits but never received reimbursement from the state.  The governor’s office argues that approximately $2 billion held in reserves by NYSIF to pay assessments as a percentage of losses to the State Workers Compensation Board will no longer be needed. NYSIF will start paying assessments based on a percentage of premium like all the other workers compensation carriers in the state. 

“The proposed reform to require the State Insurance Fund to start paying assessments to the state Workers Compensation Board based on a percentage of premium is a major win for brokers and private insurance companies writing workers compensation business in the State of New York. Up until now, the State Insurance Fund has had a major competitive advantage over private carriers in New York. NYSIF writes direct business, therefore brokers are not receiving commissions, and based on their low assessments, it’s hard for brokers and private carriers to compete. As of October 1, 2012 (when the new rates were published), private carriers are paying an 18.8% assessment, while the State Insurance Fund is paying a 9.2% assessment. The State Insurance Fund pays less than half of the assessment charges that private carriers pay because they claim that they have a sufficient amount in reserves to pay special funds, and have been exempt from having to pass this charge onto their policyholders. Under this new reform, it appears that the State Insurance Fund is going to be paying the same assessments as private carriers. I am sure brokers writing business in New York are thrilled with this proposed change, along with all the private carriers. This is also good for employers because they now have the option of choosing from a broader selection of carriers with competitive pricing.

“Cuomo also proposes to simplify and rationalize the assessment mechanism for the workers’ compensation system; employers would be assessed on their pro-rata share of premiums, regardless of how they secure their workers’ compensation coverage. This would combine all five of New York State Workers' Compensation Board's assessments on employers into a single assessment, saving carriers a lot of money in administrative costs as they will not have to deal with so many invoices and paying so many different assessments to so many different places. It appears that the Workers Compensation Board is currently sending out 14 different invoices each year to collect the assessments, some of which are billed quarterly. Hopefully, carriers will pass down these

savings to their insureds. This would be another big win for the carriers and New York State, as the state will also save on administrative costs.”

Simon also explained that the proposed reforms will also repeal a statute that requires insurers to make contributions to the Aggregate Trust Fund to cover future indemnity benefits when a claimant receives a permanent disability rating. “This would greatly benefit insurance carriers as it would mean much more cash left in their bank account while they pay out the claims, helping to keep them more solvent. It would also be good for employers because this increases the possibility of making a settlement,” said Simon.

AG: Cuomo’s proposal also includes increasing the minimum weekly benefit for injured claimants from $100 to $150. How will this impact insurers and employers?

SF: “This increase is definitely not good for insurance companies or employers. In fact, former New York Governor Spitzer, as part of his 2007 reform, raised the maximum weekly benefits which previously were capped for years at $400 a week. Today, thanks to Spitzer’s increases, the average weekly benefits are now capped at $792.  What this means is that you have employees who make more money being more motivated to go out of work and remain out of work. Even if the employee never stayed out of work but just received a settlement for, let’s say, an injury to an extremity of their body, before the 2007 reform the amount would have been somewhere around $12,500; now they would be receiving about $25,000 due to the maximum weekly benefit increase in 2007, which has significantly added to the cost of workers comp in New York. In fact, recently I was speaking to an insurance company executive about the increase in 2007. He felt that that the only thing that prevented the system from suffering on an even greater scale from this change was a bad economy with very few jobs available. Fewer people were willing to risk being out of work and losing their jobs. However, basically, when offering people more money, some unfortunately tend to abuse the system.”

AG: The proposal also includes issuing bonds to cover the $800 million in liabilities of the self-insured group trusts. How do you view this proposed reform?

SF: “This is good news for employers as this would appear to put less financial responsibility on employers that were insured with trusts and shift a good portion of the hefty bills to the state.

“What’s more, the proposed reform also calls for closing the Reopened Case Fund, which is a fund that is activated when a claim reopens at least seven years after the work-related accident and three years since the last payment or award of lost wages. This is bad for employers and insurance companies because they were able to pay less for these claims. Furthermore, employers will probably not see any savings for the next several years from this fund’s closure. Currently, employers in New York are paying a 4.9% assessment for this fund but as there will still be many claims to administer, this assessment will probably not decrease significantly any time soon. The same holds true for the second injury fund whose assessment still remains at 9.6% despite closing down the fund in 2007. I wouldn’t be surprised if the second injury fund assessment stays high for close to another 10 years or more. 

“The fact remains that since the 2007 Workers Compensation Reform Act, which attempted to reduce the costs for employers in the State of New York, rates have gone up. Prior to the passing of the Reform Act in 2007, assessments stood at 18.6%; now, they are 18.8%. 

“Governor Cuomo says his aim with the proposal is to lower costs and save the state and New York employers $1.3 billion, but he did not provide any details for that estimate. Therefore, our evaluations are based on the information we currently have. There definitely seems to be some positive changes that all parties will benefit from and be happy with, but the question still remains: How will Governor Cuomo’s changes show long systemic growth?

“No matter what, the facts show that currently New York’s 18.8% assessment surcharges are the highest in the nation, with the average assessment surcharges nationwide at 3.8%. Ultimately, these reforms bode well for insurance brokers, as it looks like the market will continue to firm and premiums will remain high. However, as costs rise, brokers should continue to do everything they can to reduce their clients’ costs and work to retain their customers.”

About Apex Services

Apex Services offers brokers the quickest and most effective solutions to help maintain their current clients and win new business with its workers compensation premium recovery program for brokers. Apex’s program helps to differentiate agencies in an increasingly tough insurance market. For more information about Apex, you can contact Simon at 888-380-2739 or email him at simon@apexservices.com. You can also visit www.apexservices.com.

Business Insurance

December 12, 2012

Modest rate increases but little improvement in underlying underwriting profitability are likely to continue for the property/casualty insurance industry in 2013, according to an analysis released Wednesday by Keefe Bruyette & Woods Inc.

The industry remains overcapitalized despite increased shareholder dividends, share repurchases and increased catastrophe losses, said KBW in “2013 Outlook: More of the Same, Slow Firming Continues.” The report added that KBW expects investment results to be under pressure for the foreseeable future, and “while underlying underwriting results may slowly improve going forward due to modest rate increases that are in excess of loss costs trends, we expect favorable prior-year reserve development to wane.”

The report says the “long-sought-after hard market will remain elusive” until excess capital is eliminated and insurers face balance sheet pressure. While the current firming “should keep things heading in the right direction,” the industry would have to experience significant balance sheet erosion before the market truly hardens.

The report also says underwriting is key to insurers' success in the current environment. “Strong underwriters are able to generate good results regardless of where we are in the underwriting cycle,” said KBW.

Whether or not rates are firming or hardening, or increases slowly or rapidly, the fact of the matter is that your clients are seeing increases in their workers compensation premiums, especially this time of year when so many of them are renewing. Although as the broker, you are blameless in your clients' rates increasing, you are always the first to be blamed and your clients are likely to keep their options open. Offer your clients workers compensation premium recovery to show them that you are doing everything possible to get them refunds on prior years' policies, as well as provide them a better underwriting profile to enter the renewal market with. This program has no upfront costs for you or your clients. We only get paid based on results and we offer first-year and renewal commissions.

To summarize, you maintain your current clients, win new business, and generate a new revenue stream for yourself and your brokerage.