Second Quarter 2018
This has been quite a summer! I planned on reporting on April, May and June numbers in this edition of The Pulse, but when I started to see the numbers rolling in for July, I couldn’t wait to share with you. I am excited to say that once we close the books on July, it will go down in the record books as the best July in United Heartland’s history! In total, we wrote $12.1 million in new business — the most written by UH in the month of July, ever. We also achieved a 94% retention rate — another record breaker — knocking retention out of the park was a critically important strategy for us considering 21% of our direct written premium renews in July.
And, on a policy year basis, we’re right on plan. Here’s a look at how 2018 is shaping up:
New business: New business continues to outpace plan. We have written $45 million in year-to-date new business, which is approximately $1 million above plan. We continue to look for new sources of new business and are exploring opportunities to go deeper with our existing agency plant, in addition to focusing on new states like Connecticut, Oklahoma and South Dakota, which have started to produce results. New states account for 45% of our new premium and we want to keep that rolling.
Retention: Our robust July retention rate of 94% will provide a nice lift to year-to-date numbers, which should put us right around plan at 86%. Maintaining heightened retention percentages will be a keen focus for UH throughout the rest of 2018 — and beyond.
Challenges and Opportunities: Net rate, in a super-intense marketplace, continues to be a challenge. We are seeing an interesting 3-month trend of close to -10% net rate and we expect this to intensify as we head closer to the fourth quarter. As I have reported in past editions, we continue to be very opportunistic on distressed debit mod business. During the past 18 months, nearly 60% of our $100 million in new business had a debit mod. Bottom line, we are not afraid of high mod distressed business; the higher the better, so bring it on.
Profitability: Most importantly, we continue to be profitable; losses are better than plan by almost $10 million. We are very proud of this result in an incredibly challenging market.
This was a stellar few months and it couldn’t have happened without the hard work and dedication you put forth every day. I sincerely hope that everyone is having an amazing summer and again, would like to thank you for the trust and confidence you have in placing your customers with United Heartland.
Vice President, Field Operations
In the last issue of The Pulse, we highlighted United Heartland’s 2017 Agency of the Year Rich & Cartmill out of Tulsa, Oklahoma. View the full press release, here. Along with Rich and Cartmill, we had a few major contributors to our big wins in 2017 — and today, we’re recognizing a two outstanding Agencies of the Territory for their continued commitment, dedication and partnership.
Gregory & Appel, Chicago Region
Gregory & Appel is committed to selling United Heartland’s superior services to further strengthen their book of business with us. Chicago Regional Director Steve Zajc said, “Beyond the numbers, this is an agency that truly partners with United Heartland. Their producers and account managers have a great working relationship with Scott Lerew and our RMS team, which drives the ongoing mutual success.” A recent “win-win” for Gregory & Appel and UH was capturing the business of five new accounts with five different producers, including one with RMS.
To celebrate our partnership with Gregory & Appel, as well as their Agency of the Territory recognition, the team enjoyed an onsite luncheon served by a gourmet pasta chef. Delizioso! We appreciated the opportunity to recognize them for their tremendous efforts while spending time with their team. Congratulations again to Gregory & Appel — we look forward to another successful year!
Associated Benefits and Risk Consulting – Wisconsin Office, Milwaukee Region
We’d like to congratulate our Milwaukee region Agency of the Territory — the Wisconsin office of Associated Benefits and Risk Consulting. Their leadership and marketing team continue to be key partners to UH. They have a steadfast focus on client growth and retention within the region and their RMS is unparalleled. This office has a 100% retention rate and continues to be consistently profitable. Milwaukee Regional Director Tracy Bain said, “There is breadth and depth across this relationship with our production teams, as well as Claims and Loss Control working together to provide our mutual customers with a great experience.” Congratulations to the Associated Benefits and Risk Consulting Wisconsin office!
A few thoughts from our UH Chicago Regional Director of Business Development Steve Zajc:
A Growing Chicago Region
During the last several years, the Chicago Region has enjoyed tremendous success as the most profitable region for United Heartland, with combined ratios below 90% during the last five years and a retention of approximately 90% during the last three years. We’ve put more “boots on the ground,” adding two employees in Indiana and one in Missouri to handle loss control needs in southern Illinois and Indiana.
Recently, we provided our Itasca office employees the ability to work from home. The transition from office to home was received very positively from our staff and they are excited to continue offering regional expertise and a local presence to support the business you provide to United Heartland. UH remains committed to the region with a total of 36 employees, 15 of whom live in Illinois, supporting a $70,000,000 region. All phone numbers remain unchanged and the transition has been seamless.
Business Development Associates Strengthen our Underwriting Bench
Last year we piloted a new position, business development associate (BDA), an adaptation of our existing business development consultant role. We developed this position specifically for employees newer to underwriting. The position proved to be the ideal solution to our challenge of finding experienced staff to support our continued growth. We’ve since added the BDA role to each of our regions and are seeing continued success. We’re proud of the great work our BDAs are doing and are excited to have implemented another change at UH that will make doing business with us easier for our agent partners!
Causation Consultants Help Customers Reduce Their Losses
The role of the causation consultant, first employed by UH in 2011, helps us drive savings and better serve our customers. These specialized consultants provide detail investigations of certain claims (often soft tissue injuries) to determine if the work environment was the probable cause of the injury. Here’s a recent example of the impact our causation consultants have illustrated:
- Scenario: An employee reported an injury involving a diagnosis of right shoulder tendinitis.
- Assessment: One of our senior claims causation specialists performed an extensive causation assessment, including filming the employee’s work movements, which yielded the following discoveries: “Low exposure to shoulder tendonitis based on the overall job duties. The injured worker’s job tasks change daily, with essentially no repetitive tasks that require sustained shoulder postures in excess of 60 degrees of flexion or abduction.”
- Result: The IME physician reviewed the report and video and found the original diagnosis was not directly, or casually, related to the employee’s work activities, nor have they accelerated or aggravated the existing shoulder condition. The claim closed for $2,901, nearly $47,000 less than the average cost of a shoulder sprain/strain in Iowa.
Our causation consultants continuously improve the value we bring to our customers, and in fact, have proven to be such a huge success that AF Group now employs four causation consultants across our enterprise.
Last summer we recognized UH’s Diana Stegall, senior loss control specialist, who had recently been elected as the American Society of Safety Engineers (ASSE) senior vice president (missed it? click here). We’re proud to announce that Diana’s journey to president continues. For the next 12 months, Diana will serve as the ASSP president-elect, following which she will begin a one-year term as the organization’s president. Continue reading as Diana tells us about her year as ASSE senior vice president and exciting things ahead.
“This has been an exciting time to be involved with ASSP. There were several highlights this year:
- We voted last year to change our name to the American Society of Safety Professionals, from American Society of Safety Engineers, to better reflect our diversity.
- We signed The Singapore Accord, which is based around a global framework for what it means to be a safety and health professional. More than 40 organizations signed the accord, which is being used by countries and universities worldwide to ensure a common level of expertise.
- Our research workshop brought together representatives from academics, governmental organizations, industry and sister professional organizations to study what research is currently available and where the opportunities are to collaborate. A similar workshop was held around Hispanic workers in the spring. The year culminated with our largest conference to date, with more than 5,000 paid attendees.
- Each of these events and interactions allows me to talk about United Heartland and to gather ideas to help our clients.”
With accomplishments like this already in hand, Diana is anxious to get started on even more amazing things in the coming year. “As the ASSP president-elect this year, I am excited about working with our new executive director, Jennifer McNelly, as we take the strategic plan and start to explore what our true opportunity is for improving health and safety in the workforce — not just in the US, but globally. Between the recently signed ISO 45001 (a global OHS management system) and the global framework, we are poised to truly make a difference in people’s lives!”
Please make sure to congratulate Diana next time you see her!
Last quarter we talked about the benefits of the new profit-sharing program and put it to task in an example involving a high-performing agency (Missed it? Click here). This quarter we want to show you how you can target the next highest premium tier, thus incentivizing new business and retention.
Take an agency that wrote $6 million in 2016, $7 million in 2017 and has written $3 million through June of 2018. If this agency finishes 2018 the way they started and writes $3 million more through the end of the year, the 3-year written premium would be $19 million, which qualifies the agency for Tier 6 in the profit sharing program. Assuming a 3-year adjusted loss ratio of 40% and an earned premium of $19 million, this agency would earn a profit sharing factor of 3.5% and a payout of ($19 million * 3.5%)/3 = $221,700.
However, if this agency can write $4 million in the second half of 2018, the 3-year premium is $20 million and this agency now qualifies for Tier 7. Assuming the same 40% adjusted loss ratio, the profit sharing factor jumps from 3.5% to 4.3%! With that same $19 million of earned premium, the payout would be $272,300, more than $50,000 higher!
Curious what you could be earning from our new plan? Review our new profit-sharing flyer for requirements, as well as calculation grids for three-, two- and one-year agencies. Or contact your business development consultant with any questions and to see how you can find strategies to take advantage of our new profit sharing program for years to come!
We’re excited to announce LEAD with Comp, a new 12-month AF Group training program, which provides agency staff with the tools to become experts in workers’ compensation — a true testament to our steadfast commitment to our agent partners’ success.
LEAD with Comp (which stands for “Learn, Engage, Act and Deliver”) exclusively targets newer agency professionals and focuses solely on the practical application of work comp in real world situations, while our Certified Authority on Workers’ Compensation (CAWC) program remains focused on concepts and theory of the industry. The LEAD with Comp program also includes a mentorship component which pairs agency leadership with less experienced agency staff, with the goal of developing the next generation of agents.
This unique program will equip participants with the knowledge necessary to be successful in the workers’ compensation market space, and the relationships to do so. We aim to teach agency team members how to build value by presenting the workers’ compensation policy to clients first.
Our second LEAD with Comp program will kick off in Lansing, Mich. from Sept. 18 – 20. We look forward to continuing our strong partnership with you, and hope you’ll send a member of your staff to participate in this exciting opportunity. To register, click here.
More information about LEAD with Comp can be found on our website.
For the eighth consecutive year, United Heartland was selected in the mid-size workplaces category and named to the list of Top Workplaces in southeastern Wisconsin by the Milwaukee Journal Sentinel. Cue a round of applause for UH!
“Receiving this award for the eighth year in a row is a proud accomplishment for our organization,” said Steve Cooper, president of United Heartland. “We are a company that deeply cares about our employees, customers and agents. First-in-class customer service is our highest priority and an exceptional work environment helps United Heartland employees provide service that separates us from the competition. The end result is highly satisfied customers and agents.”
Check out the full press release, here.
When it comes to managing claims, AF Group and its brands — including United Heartland — are committed to providing superior service and cost containment solutions. We strive to keep costs manageable for our policyholders while providing injured workers with superb care.
To help you highlight our superior and innovative claims services, we’ve created this brochure. This piece provides a snapshot of our medical management strategies, such as Care Analytics, early detection and pharmacy programs, and predictive modeling. It also highlights our experienced claims team demonstrating our knowledge and expertise in this area. Feel free to share this brochure with your United Heartland customers!
The governor recently signed workers’ compensation reform House Bill 2. The Kentucky Department of Insurance recently approved NCCI’s advisory loss cost filing relating to House Bill 2. The filing reflects an overall decrease of 5.3% from the most recent filing that became effective Oct. 1, 2017, with a proposed effective date of July 14, 2018. The majority of NCCI’s decrease can be attributed to a portion of the legislation that in all but the most serious PPD claims, terminates the employer’s obligation to pay medical benefits after 780 weeks (15 years) from the date of injury or last exposure. Positive portions of the bill initiated by the industry are the implementation of a drug formulary and creation of an evidence based medical fee schedule.
The proposed workers’ compensation reform package, which included a medical fee schedule and was endorsed by the state Workers’ Compensation Advisory Council (WCAC), was introduced in the form of SB 665, but faced very strong opposition from hospitals and did not progress. It was a very difficult time to move such a proposal because of it being an election year, compounded with a very short legislative session. 2019 not being a major election year statewide in Wisconsin may possibly increase the likelihood of a proposal gaining more traction. AF Group will remain engaged throughout the process.
Positive workers’ compensation drug formulary legislation SB 369 has been signed into law. This formulary will protect workers by addressing the appropriate utilization of all FDA-approved medications and limit compound medications within the workers’ compensation system. Except during a medical emergency, the bill prohibits workers’ compensation and occupational disease compensation reimbursement for drugs not specified in the ODG Workers’ Compensation Drug Formulary.
Summary: SB1737, which contains workers’ compensation rate approval language (including a portion that carriers cannot increase discretionary rating by more than 5% without sending notice to policyholders/agents 30 days in advance) passed the legislature and awaits consideration by the governor. AF Group doesn’t view the change to prior approval for the rate process as an extremely significant issue because we execute prior approval in numerous other markets. The rating notice is a concern and will initiate the development of new processes internally and externally to comply. AF Group will take steps to produce an effective communication process with agents and insureds that aims to reduce confusion.
Specific Detail Regarding Notices: All workers’ compensation policies issued, delivered, amended or renewed require the insurer to provide notice of its intention to renew to the policyholder and to the authorized agent whenever the premium will result in excess of 5% above the rate recommendation filed with DOI (less increased loss costs, experience rating, etc.). Such notice is to be provided at least 30 days before expiration of the policy and must indicate: 1) the amount of premium increase or an estimate; and 2) the reason for the increase in premium above the rates recommended to DOI. All policies currently in force today will have to comply with this new law as ofJan. 1, 2019. So, for Jan. 1 renewals with rate increases as defined in the bill, these policies will require notices by Dec. 1, 2018.
California Election Results
All and all, not a bad result in governor primary, which potentially has the most impact on our industry moving forward.
Governor: Lt. Governor Gavin Newsom (D) and San Diego businessman John Cox (R) will face off in the general election. There was some speculation that two Democrats would move through to the general election, but Republican voters coalesced around Mr. Cox and pushed him through. Lt. Gov. Newsom enters the race as a heavy favorite in a state where Democratic registration outpaces Republican registration by nearly 20 points.
Attorney General: Insurance Commissioner Dave Jones failed to move forward to the general election, coming in fourth among the four candidates. Xavier Becerra (D), the current attorney general, will face Steve Bailey (R).
Insurance Commissioner: Former Insurance Commissioner Steve Poizner was the leading vote-getter among the candidates, edging out Senator Ricardo Lara (D) who will be his opponent in November. Mr. Poizner dropped his Republican affiliation and is running without a party affiliation. This is shaping up to be a close race. Mr. Poizner is well funded and has some name recognition from his prior term as commissioner. Sen. Lara has the advantage of running as a the only Democrat in the race in a very blue state where the Democratic turnout is expected to be higher in November.