What can you expect for property and casualty insurance pricing in 2014? Expect some increases, but watch for significant decreases in at least one line of insurance. According to Willis’s recently published Marketplace Realities 2014, new capacity is flooding the market from “as widespread as China and Omaha.” New capital supply offers a more “inviting marketplace,” Willis executives believe. Others insurance experts across the U.S. agree. Here is what to expect in 2014.
Primary and Excess Casualty
Do not expect huge decreases in casualty prices even with “abundant” capacity and “new market entrances,” according to Willis and other experts. With the loss of the federal terrorism backstop looming in December 2014, carriers hesitate to write exposures with large risk concentrations. Underwriters are also avoiding manuscript endorsements, relying more heavily on Insurance Services Office (ISO) language. Standard ISO language has more court decisions behind it, which equates to more predictable loss experience for underwriters to base their rates, many believe. Willis predicts casualty pricing to increase two to 10 percent in 2014.
Auto and Fleet
Auto liability continues to challenge fleet owners nationwide. Experts predict auto liability pricing increases between two to 10 percent. Underwriters are imposing higher retentions on risks with large fleets, heavy trucks or poor loss experience. Carriers like ACE offer auto liability buffer limits, coverage outside the working layer when primary limits do not meet umbrella attachment points.
There are several emerging issues in workers’ compensation. With the Affordable Care Act expected to bring new insureds into the healthcare system, expect strains on the work comp system. This will put pricing pressure on workers’ compensation premiums. While experts predict that earlier treatment for comorbidities will benefit workers’ compensation experience, we predict this will be a long-term benefit. In the near term, Willis predicts work comp rates will increase from 2.5 to 10 percent. The exception is California, where employer can expect rate increases of up to 20 percent.
Employment Practices Liability (EPL)
Adverse claims experience is placing upward pressure on EPL coverage. Entities domiciled in certain California counties may find themselves unable to obtain coverage, Willis predicts. While overall capacity remains “abundant,” there are no new EPL carriers entering the market. Pricing overall will be flat to a 10 percent increase, with private, nonprofit and smaller employees predicted to face up to 15 percent increases. The Equal Employment Opportunity Commission continues its aggressive enforcement plan despite some staggering trial losses for the EEOC in 2013. There is no time like the present to explore ways to decrease your EPL risks and avoid EEOC scrutiny.
When Cyberrisk gets its own page in a white paper discussing rates, you know it is a hot topic among insurers and risk managers. There were more than eight hacking incident per day in the US in 2012 according to the report. With increased security concerns, coverage is now a “must have” for many organizations. Calling the market for stand-alone Cyberrisk “active,” Willis predicts rates will remain competitive. If your firm has had losses, however, Willis predicts slight changes — between -two to five percent overall. There are many new Cyberrisk buyers in the marketplace and pricing for first-time buyers remains competitive. If you outsource your data to cloud vendors, underwriters will review your existing contracts. Your indemnification language will be a critical factor in underwriting your risk.
Directors & Officers (D&O)
Price increases are moderating with pricing expected to be flat to a high of 20 percent for financial services firms. Homeowner and condominium associations as well as educational institutions should expect premium increases. One carrier has indicated a willingness to provide “mega limits” for Side A coverage, which protects executives against claims not indemnified by the corporation. The non-traditional money that is now flooding the insurance industry may lead to downward pressure on D&O pricing in 2014, Willis contends.
We saved the best news for last. With loss ratios hovering between 75 and 85 percent for many property insurers, Willis and other insurance experts predict a big decrease in property insurance pricing. In non-catastrophe exposed risks, expect a 10 to 12.5 percent decrease in pricing. For cat-exposed property, Willis predicts smaller decreases of between five to 10 percent. Any port in a storm, right?
With 2014 rapidly approaching, contact your broker or consultant now to discuss steps you can take to reduce your 2014 commercial premiums.
Whether you’re writing a proposal or preparing a white paper, an executive summary is an integral part of any lengthy or complex report. An executive summary allows the reader to quickly understand the scope of the report, your major finding and your conclusions. It is a succinct wrap-up of the report or proposal’s contents. Because time is such a precious commodity, people who should read an entire report may only skim it. The executive summary allows the readers to know, in one or two paragraphs, what to expect in the report. A well-written executive summary also allows your reader to decide: “Is this worth reading further?”
The executive summary should be very near the beginning of your document and set out by a heading and unique formatting. If you know your presentation will be read by many employees, for example if you’re responding to a Request for Proposal (RFP) for broker services, write the executive summary to the highest ranking person who will read your report.
In the executive summary, avoid the nuts and bolts of how to implement a project, but provide an overview of the problems being addressed, what action to take, and what the benefits of taking that action are.
Your executive summary should be a call to action. Use action phrases such as “We recommend” or “The problems you have faced in prior data conversations can be avoided by utilizing our project management experts.”
Broadly speaking, an executive summary should do the following:
1. Tell your readers what your report contains or what it evaluates.
2. Explain any method of analysis you used.
3. Summarize your findings.
4. Succinctly state your recommendations.
5. Briefly state any limitations you encountered that might have impacted the results of your report.
It may be a good idea to write your executive summary after you have written your report. When you have completed your report or proposal, use a voice recorder and summarize each section of your report. For example, in a white paper, you may have headings such as “problems of integrating technology,” “what to look for in a claims management system,” and “what to expect during data conversion.” Briefly describe the findings of each major section in your white paper, with a strong emphasis in your executive summary of the conclusions that your company, of course, is best positioned to solve. Keep your summary brief — an executive summary should probably be fewer than 1,000 words.
If you’re pitching your product or service to a large organization in your document, the executive summary may be the only part of the presentation that the decision makers read. From there, your report may be passed to lower-level managers to determine whether your proposal has merit. You may only get one shot at convincing a senior executive that your company or product is worth further exploration. A strong executive summary can mean the difference between winning that new account or losing it to your competitor. The extra efforts you apply to develop this summary can reap huge rewards.
We provide editorial services to some of the nation’s finest carriers, agents and risk management consultants. If we can help you, please contact us at 602.870.3230 to discuss your writing and editing needs.
Excuse the slightly tongue-in-cheek lead-in, because this week’s Cavalcade of Risk is full of great risk management information. We visit a variety of risk management experts for their take on current events impacting their practices. Take a few minutes, grab a cup of coffee and visit and interact with our contributors.
In this post, Dr. Sidorov looks at a recent scientific study that examined national insurance data to determine what happened to the commercial health insurers in the wake of the Obamacare rule that they spend at least 80 to 85 percent of their income on medical care. It turns out that the most vulnerable part of the health insurance market-individual insurance-saw a decrease in profitability.
Jeff Rose helps us through the maze of medical conditions that can limit your ability to buy health insurance in his post. If you have an aortic valve disorder like aortic stenosis or aortic insufficiency, these conditions will impact you when you apply for life insurance. Insurance companies are very cautious about aortic valve disorders because of their potential to cause serious heart problems. There is hope, however. Jeff informs us you can still get insurance despite your condition. It really depends on a few factors, including the seriousness of your condition. To get a better idea of what to expect, read his guide to insurance underwriting for aortic valve disorders.
Here’s a news flash: If you are uninsured, there is a risk of being overcharged for hospital services. In California, the risk is 0. Jason Shafrin of The Healthcare Economist explains why here.
Recently, there have been some remarkable changes in how life insurance is now underwritten, including the use of social media and new technology. Henry (Hank) Stern of InsureBlog has the details.
Julie Ferguson of Workers’ Comp Insider isn’t talking scratch when she asks: “How much risk do you want to take with your kids’ chicken nuggets?” Chickens are on the front burner on the legislative circuit lately with the USDA seeking to overhaul poultry processing regulations that many see as unsafe for workers. But Julie notes that there is more than just worker safety at stake. Read her fast take on fast food here. I would have said, “Winner winner; chicken dinner.” Except after reading her post, and watching the video, I may go vegan. Soon.
David Williams of Health Business Blog says that a patient advocate tells him that it’s “dangerous” to rely on online doctor ratings and reviews and to rely on the “facts” instead. David argues that the case against reviews is seriously overrated and the proposed alternative paths are not as promising as they sound. Read his comments here. I have to admit, I’m a big believer in Yelp and a frequent Yelper myself. I don’t go out to dinner without checking Yelp, let alone try to find a service provider, doctors and dentists included.
Here are some closing thoughts from yours truly regarding the trends I and other risk management experts throughout the US are currently seeing.
- Enterprise risk management is becoming increasingly important to organizations.
- Jury verdicts continue to rise. Check your liability limits and double check your policies to determine if you have defense inside or outside limits. Most professional liability policies provide defense within limits, and defense costs can erode your limits significantly.
- Workers’ compensation costs have moderated in a few states; however, don’t expect to see rates decrease anytime soon, like never. Medical costs continue to escalate nationwide, outstripping wage loss benefits paid.
- Cyber risks continue to be the bane of businesses at home and abroad; however, hackers increasingly target small-to-medium sized businesses because they seem to provide the path of least resistance to hackers.
- Commercial insurance prices increased by six percent in the second quarter of 2013, the 10th consecutive quarter of price increases, according to a recent survey conducted by Towers Watson. Now is the time to bulletproof your risk management practices and consider increasing your deductibles or taking higher self-insured retentions.
This does it for another edition of Cavalcade of Risk.
It’s not too late to join us! I’m teaching the revised curriculum for The Institutes Associate in Claims Class, AIC 37, Managing Bodily Injury Claims, for Prepacademy, an on-line learning organization that provides an outstanding way to prepare for and pass your exams.
We began last night, but have a week breather. Our next AIC 37 class covering Chapter 2 starts on Thursday, September 26. It’s not too late for you to join. You can also listen to the recording from Chapter 1 to catch up before our next class. For more information about this exciting web-based training opportunity, click this link.
We’re just winding up the Workers Compensation portion of the AIC. Prepademy is a convenient and easy way to successfully study for your Associate in Claims and other Institutes designations.
The Insurance Information Institute offers a free, 200-plus page handbook for journalists who cover insurance. It’s available as a free download at this link. While it can be hard to understand the intricacies of insurance jargon and how the industry operates, this guidebook answers many questions and provides a handy reference to various organizations who can assist journalists with more information.
Maximum medical improvement (MMI) is a term used frequently in workers’ compensation claims management. Often, your adjuster will explain that a case is not ready to settle because your employee has not “reached MMI.” What is MMI? From the employer’s viewpoint, achieving MMI is one of the most important goals in a workers’ compensation claim. MMI is the point at which treatment options have been exhausted and, generally speaking, temporary total disability payments can be terminated. MMI may also be referred to as “permanent and stationary.”
Case law varies in defining MMI
Case law in various states defines MMI in a variety of manners. In Ohio, for example, MMI is defined statutorily as “a treatment plateau.” In California, the Division of Workers’ Compensation defines MMI this way: “Your condition is well stabilized and unlikely to change substantially in the next year, with or without medical treatment. Once you reach MMI, a doctor can assess how much, if any, permanent disability resulted from your work injury.” Texas defines MMI statutorily as “the earliest date after which, based on reasonable medical probability, further material recovery from or lasting improvement to an injury can no longer reasonably be anticipated.” MMI will vary depending on the claim’s jurisdiction.
MMI – “As good as it gets”
The common thread of both case law and lengthy discussions attempting to define MMI is this – the employee is at a treatment plateau: his or her medical condition will probably not substantially improve. MMI then, might be described this way: “This person’s medical recovery is as good as it gets.”
Does MMI mean the employee can function at his or her pre-injury status? Not necessarily. Even if the employee has not reached his or her pre-injury status, however, the employee can achieve MMI. Some states such as Texas are very clear in stating that an employee’s recovery need not be equal to or better than the pre-injury state.
Defining MMI may be clearly defined in statute, but getting your doctors to declare an injured employee at MMI is not always straightforward. One way to determine if an employee is MMI is to send a nurse case manager with the employee to the medical provider. The nurse should ask this important question: “Is the employee’s recovery as good as he or she will get?” If the doctor says, “Yes,” then obtain a written opinion to that effect and begin the settlement process.
Lack of cooperation in treatment can be managed
What about the claimant who refuses to cooperate in his or her recovery? All reasonable treatment must have at least been offered to the employee. There are times when further diagnostic testing and evaluation are deemed medically reasonable and necessary. It may later be determined that no further treatment would benefit the claimant, or where further treatment is identified and the claimant refuses the treatment. In that intervening time until the employee refuses treatment, the claimant has, in many states, not reached MMI and the employer still owes benefits. Only when treatment is recommended and refused, or not undertaken within a reasonable time, has an injured worker reached MMI. For example, a consulting surgeon may recommend a back fusion; however, the employee declines surgery. In this case, the claimant has usually reached MMI and your claims administrator can begin to conclude the case.
Pressuring the employee for a quick decision on surgery may push the employee to obtain an operation he or she would otherwise refuse. If may be best to give an employee a few weeks to consider his or her decision to obtain further treatment rather than insist on an immediate answer, even if it means paying a little more in temporary disability.
Chronic pain and MMI
Many injured workers allege chronic pain. Chronic musculoskeletal disorders and diagnoses such as arthritis and fibromyalgia impact workplace injuries. In most cases, if the employee’s pain would be materially improved by participation in a pain clinic or pain program, the injured worker has not reached MMI. A patient with chronic conditions may require continuing treatment to maintain his or her recovery or to avert any further deterioration. However, if further treatment is directed solely to maintenance of the patient’s condition and there is no likelihood of further improvement, the patient is at MMI.
The most difficult situation is when the employee’s symptoms fluctuate dramatically. These employees will complain of “good days” and “bad days.” These types of symptoms are troublesome and often delay MMI; however, fluctuation alone is immaterial to a decision of MMI. When symptoms fluctuate, the time it takes to determine whether the patient is at MMI may increase. However, the underlying reasoning remains the same: if the patient has plateaued or the number of good days is growing, consider the patient MMI and begin the settlement process.
However, before deciding MMI has occurred because the employee has had no continuing substantial improvement, the adjuster must offer all “reasonable treatment.” Reasonable treatment does not include experimental procedures. Reasonable treatment usually means treatment that is based on evidence-based medicine guidelines such as the Official Disability Guidelines. With alternative treatments plentiful, employees may want try therapies with only anecdotal track records of success. Just because there are untried treatments available, this does not make them reasonable. Treatment options should be evaluated on a case-by-case basis. When addressing requests by employees for alternative treatments, solicit the treating physician’s opinion in states where employers can direct medical treatment.
MMI is an often subjective and always an important goal
Reaching MMI is subjective and often a time-consuming and sometimes frustrating process. A great deal of state-specific case law concerning the definition of MMI provides some guidance. If you are in doubt, your claims adjuster or legal counsel should assess the likelihood that your employee’s condition has stabilized to the point of MMI. If so, your adjuster or legal counsel should begin to immediately attempt to settle the claim.
In conjunction with Prepademy, I’ll be teaching the revised curriculum for The Institutes Associate in Claims Class, AIC 37, Managing Bodily Injury Claims, beginning August 28, 2013. For more information about this exciting web-based training opportunity, click this link.
We’re just winding up the Workers Compensation portion of the AIC. Prepademy is a convenient and easy way to study for your Associate in Claims designation.
As part of my dedication to continuing education, I recently received my Senior Professional in Human Resources (SPHR) re-certification. This renewal of my SPHR certification means that I stay current in human resources issues facing today’s business owners and claims departments.
The SPHR is the industry gold standard among human resource professionals. I keep up-to-date in this important area for two reasons: 1) because SPHR training supports me in becoming a more skilled curriculum developer and trainer and 2) because a lack technical talent both in the US and abroad impacts the insurance industry now and will even more so in the coming decades.
Here is the most recent version of Cavalcade of Risk, a bimonthly risk roundup. This month’s focuses mainly on health insurance, but there are always good risk management topics covered.
You no doubt frequently receive solicitations and ads from insurance companies promising to save you money on your auto or homeowners insurance. Most consumers are looking at each expense they pay to cut costs. However, buying cut-rate insurance may cost you much more in the long run.
Insurance is your first line of defense against life’s calamities. After a loss, these are just a few of the problems a good insurance company can help you solve.
Provide prompt and courteous service year round after a loss.
Provide knowledgeable adjusters who can assist you in making important post-loss decisions.
Find a top-rated repair shop to repair your damaged car.
Promptly and conveniently provide a replacement vehicle while your vehicle is in the shop if you purchased rental coverage.
Pay for a similar alternative living space if you are unable to occupy your home after a loss.
If you are sued after a loss, provide a strong defense with excellent legal counsel.
Provide prompt board-up services after a loss.
Help you locate a trustworthy contractor if your home or roof is damaged.
Cut-rate insurance carriers cost less because they generally provide fewer services and less coverage. The decision to purchase insurance should go beyond price. Protection for your home and family after a loss is priceless.
Several of my friends have recently been involved in auto accidents and found themselves lacking rental reimbursement coverage and gap coverage. Gap coverage helps make up the difference between a totaled new car and its depreciation if the vehicle is damaged while the owner is still “upside down.” A good independent insurance agent can help you avoid these necessary coverage gaps.
Don’t get suckered into buying insurance solely based on the lowest premium. If you have a loss, cheapest may cost you.