First Quarter 2017
During the first few months of 2017, there’s been one word on everyone’s minds here at United Heartland: Momentum. Simply put, we want to maintain the momentum that we built throughout 2016 with your help and use it to achieve even greater success this year. Here’s how 2016 shaped up:
- After ending 2015 with a top line deficit of $15 million in written premium, we crushed our top line initiative and grew up our top line by $40 million in 2016 – a $20 million swing representing 16% growth in DWP!
- We finished with $70 million in new business – a 53% increase from the previous year. This is the best new business result in United Heartland’s history!
- Compared to plan, we nearly tripled the amount of new business written by new agents last year and converted new business with 75% of all new agents in their first year with UH, a 300% increase over historical trends.
- Our calendar year combined ratio for 2016 was 91.5%, 3.5 points below plan.
- Compared to plan, we wrote 14% more loss-sensitive new business through our Risk Management Services (RMS) unit.
- Indemnity frequency was down 20.9%.
- Premium retention for the year was 88.5% – this is our best retention percentage in 10 years!
Nearly three months into the year, we’re pleased with what we’re seeing to start 2017:
- Retention YTD remains extremely strong at 94.3%.
- New business written is at plan YTD.
- Our written premium YTD is $4 million above plan.
- We continue to have an acute focus on distressed accounts looking to partner with our Claims and Loss Control model here at United Heartland; 77% of our new business YTD had a mod of 1.00 or higher.
These achievements, particularly the high retention levels, demonstrate how our value proposition is resonating with our customers. Once they discover United Heartland, they want to stay with us. That’s because of your efforts selling the United Heartland Difference. Consequently, we paid out more than $3.2 million in profit sharing checks to dozens of our most successful agents. But we’d love to see that number go even higher and to have even more of you become eligible for our profit sharing program in 2017.
That’s because we want you to view United Heartland as your one-stop solution for all things work comp. We have the expertise to handle your loss-sensitive accounts, your distressed accounts, your large and mid-size accounts, and even accounts down to $50,000. And through our AF Group brand counterparts, we also can handle your small business accounts, niche accounts or even accounts located outside our current business footprint meaning that together our organization can write up to 80% of the workers’ compensation accounts in our core states. You can trust United Heartland and our enterprise to provide the superior work comp solutions your customers need with the high-quality service they expect.
We’re excited to see what 2017 brings as we do our best to build on the momentum you helped us achieve in 2016. If there’s anything we can do to help you write more business or serve your customers better, please let me know.
Vice President, Field Operations
United Heartland is pleased to announce M3 Insurance of Madison, Wis. as its 2016 Agency of the Year. This award, now in its third year, honors a top-performing agency partner and celebrates their valuable contributions to our business partnership.
“M3 and United Heartland share a similar philosophy when it comes to providing high-touch customer service,” said Tracy Bain, United Heartland’s Milwaukee Regional Director of Business Development. “Because of this, M3 has maintained a consistently high standard for delivering when it comes to new business and retaining accounts. The entire M3 team clearly understands and communicates the value United Heartland brings to their customers and backs it up with solid financial results.”
On a performance basis, M3’s results with United Heartland are impressive having written $2 million in new business with us during each of the last two years.
In 2015, M3:
- Had a 90% hit ratio.
- Had an AY loss ratio of 47%.
Then they followed up that impressive performance in 2016 with:
- A 100% retention rate.
- A 66.7% hit ratio.
- An AY loss ratio of 41.4%.
M3 has become United Heartland’s largest agency with more than $20 million in total premium.
“M3’s leadership team has been a strong advocate of the United Heartland Difference, which makes them such a trusted partner,” said Steve Cooper, president of United Heartland. “The ability of their production teams to articulate to their customers the value of our high-touch service model, superior claims management and loss control expertise is why they have had continued success in writing and retaining business for us. We are pleased to recognize M3 Insurance as the 2016 United Heartland Agency of the Year.”
Thanks to M3 for their commitment to excellence and success in 2016. We will announce regional Agency of the Year winners in the second quarter edition of the UH Pulse in June.
Strong Business Success: At the start of 2016, the Charlotte region crossed the $50 million written premium milestone and used that momentum to achieve great success throughout the year. The region finished the year with:
- 84% premium retention.
- Consistent, year over year increase in submissions between 10%-15%.
- 33.5% accident year loss ratio.
The region is also seeing success with new business across a variety of segments. Here are some of the larger accounts the Charlotte team wrote over the last 12 months:
Premium Class of Business
$1,203,800 Nursing homes
$1,113,600 Nursing homes
$1,107,000 Nursing homes
$ 825,100 Manufacturing
$ 716,200 Behavioral health care
$ 704,800 Home health
$ 653,200 Manufacturing
$ 640,700 Day care (children)
$ 560,800 Behavioral health care
$ 469,700 Personal care services
$ 437,300 Nonprofit
$ 368,900 Nursing homes
$ 350,400 Retirement community
$ 339,400 Property management
$ 305,400 Grocery stores
$ 293,600 Nursing homes
$ 281,100 Assisted living
$ 280,500 Bakery/wholesaler
$ 275,900 Social services
$ 273,500 Hospice care
While their success continues to be driven by health care and nonprofit accounts, as it was at their start in the region, they’ve also been able to expand further into UH’s other core segments, which speaks to the trust that you, our agents, are putting in this team.
Talented Team: The entire Charlotte team has played an integral part in our ongoing growth and expansion. Experience matters, especially with our management team. Together, Claims Managers Barb Bailey and Steve Burton, Loss Control Manager Dan Follmer, Regional Director Mike McKeon and Regional Underwriting Manager Dana Pierce have more than 70 years of experience with United Heartland, so it’s clear that they have a passion for work comp as well as the company.
The performance of many individuals on this team has earned them recognition within the company as well. Last year, Vickie Mackowiak, Pat McKeon (who is now with UH’s Risk Management Services (RMS) unit) and Tracy Pease earned a Team Award for their exceptional performance in the Florida region during 2015. And earlier this month at our annual All-Employee Meeting, Dan Follmer earned a UH Pfounder award for his efforts to build a strong Loss Control team in the region.
And the team continues to grow. Brian Grey, who was previously a claim representative for the Charlotte region, became a Client Relations Consultant (CRC) for the Charlotte and Kansas City regions early last year, helping to coordinate service with our $750,000-plus accounts. “He has enhanced what we were already doing for these larger accounts and has made a significant impact in ensuring our service remains unparalleled,” said Mike McKeon. Brittani Hamm, who comes from our sister brand, CompWest, joined our Florida team earlier this year as a business development consultant and joins two recently hired senior loss control consultants, Frank Lalama and Damon Schneider. Our RMS team is fully staffed with JP Josetti underwriting in Charlotte, and Kevin Guernsey, conducting the sales function from his base in Tampa, Fla. Causation Investigator Jariod Mattert, who is an AF Group employee, will join the Charlotte regional office by mid-year and service accounts throughout the Southeast for not only United Heartland but also Accident Fund and Third Coast Underwriters.
Developing and strengthening the relationships we have with our customers is a key part of the United Heartland Difference. That is why our Client Relations team works to improve the interactions and experiences our customers have with us, enhance communication between all parties and service our customers proactively. We achieve this by learning the unique operations of their organization and tailoring a service strategy designed to align goals and desired outcomes.
To help us accomplish this, we’re excited to introduce our newest Client Relations Specialist, Kristina Neesam, who has a long history of working with customers to make sure their needs are fully met. Kristina started at United Heartland as an intern in 2008 and eventually joined the UH team full time in 2009 as a claim representative before moving to work with the Client Relations team last year. She has a Bachelor of Science in Communications from University of Wisconsin-Oshkosh and a Masters in Business Administration from Ashford University.
“In this new role, my goal is to make sure that our customers understand the United Heartland Difference and that we are satisfying their needs,” Kristina said. “I am dedicated to providing excellent customer service and look forward to being a UH RiskView (UH’s risk management information system) resource for them. I also strive to provide a high level of service for all of our customers and look forward to building lasting relationships.”
We are pleased to report that A.M. Best has reaffirmed an “A-” (Excellent) rating with a stable outlook for AF Group and its brands, including Accident Fund Insurance Company of America, CompWest Insurance, Third Coast Underwriters and United Heartland.
“We are very proud of our financial position, which is the result of our exceptional teammates working toward consistent, industry-leading performance that has placed us among an elite tier of industry providers,” said Lisa Corless, president of AF Group. “With the support of our agent partners, we are committed to sustaining the financial strength and capital adequacy necessary to support an A.M. Best rating at a minimum of ‘A-’ at all times.”
You have played a significant role in helping us achieve our ongoing success – and we are appreciative of your efforts. We look forward to your continued partnership as we plan for greater achievements in 2017.
As part of AF Group’s digital strategy to build brand awareness, the enterprise has changed the URL to AFGroup.com. We’re excited about this change as it simplifies the web address and aligns the site with the actual holding company name.
Note that previous web addresses for the holding company, including AFGroupInsurance.com and AFHI.com, will continue to direct traffic to the AFGroup.com domain.
On a related note, if you haven’t visited our United Heartland site recently, stop by for a visit and explore all that we’re doing to be differentiators in the marketplace.
Legislative Update is a brief synopsis of relevant legislative activity currently taking place in states where United Heartland does business. For more details or further documentation on any of these legislative activities, contact your underwriter or business development consultant.
AF Group Outlines Concerns with Latest Draft of Insurance Security Standards
The National Association of Insurance Commissioners (NAIC) has produced Data Security Model Law Draft No. 3. AF Group Government Affairs, in coordination with Information Security, remains engaged in the national cyber debate as an active participant in the American Insurance Association’s (AIA) Cyber Task Force. We recognize a need to establish security standards for the industry, but we need a well-drafted law that gives insurers a clear path to compliance without imposing burdens that do not help consumers. We believe it is essential that any model that is adopted by the NAIC and enacted in the states reflects reasonable and practical breach response protocols, protects consumers and is adopted uniformly throughout the country.
AF Group’s primary concern with the NAIC Insurance Data Security Model Law Draft No. 3 pertains to uniformity and the fact that NAIC cannot make the current landscape more complicated for insurers by creating an additional layer of potentially conflicting security and breach requirements. Additionally, there can be minimal or no commissioner/legislative editing of the model by each individual state or collectively through a lead state. Neither of these concerns has been addressed to date.
Given that this is the third draft, regulators and the industry are experiencing growing fatigue with this issue. At this point, our AIA cyber task force intends to submit comments which clearly communicate very serious changes need to be made to this draft for us to support this model. At this time, AIA is working to provide examples of our continued objections in order to include in a formal response.
Proposed House Committee Bill Would Change Fees
The 2017 Session of the Florida Legislature convened on Tuesday, March 7, and will last 60 days. Workers’ compensation legislation seeking to address not just the issue of attorneys’ fees but also adoption of a loss cost rating system and other revisions have been released by the Senate (SB 1582) and the House. Recently, the House Insurance & Banking Subcommittee held an initial meeting to consider a Proposed Committee Bill (PCB) that would among other things retain the statutory attorneys’ fee schedule but provide for an hourly “departure fee,” adopt a loss cost rating methodology, and provide for medical fee schedules. Initial analysis executed by the National Council on Compensation Insurance (NCCI) indicates the PCB will generate significant system savings.
State Senate to Review House Work Comp Bill
The Senate is scheduled to consider House File 518 this week, which was passed by the Iowa House of Representatives. HF 518 reduces benefits for shoulder injuries by 80%, by changing description from full-body injury to scheduled injury. The proposal would not allow administrators from considering loss of earning capacity when establishing a claimant’s permanent partial disability award if the claimant returns to work at the same or greater salary. The bill was amended to include up to $15,000 in vocational rehabilitation for injured workers who can no longer pursue employment in their previous line of work. The legislation was also amended to remove language that ended benefits for injured workers at age 67 or 150 weeks after the date of injury.
WorkCompCentral reported claimants’ attorneys flooded the Iowa Division of Workers’ Compensation with an extraordinary number of filings of original notices and petitions. From March 1-13, there were 854 new filings, compared to an average of 400 per month.
Gov. Scott Walker-Backed Bill Would Impact State’s Labor Board
Wisconsin Gov. Scott Walker has introduced Assembly Bill 64, a two-year budget bill, to the State Legislature. Within AB 64, there’s a provision that would eliminate the state’s Labor and Industry Review Commission (LIRC), which reviews workers comp administrative decisions. AF Group in coordination with the Wisconsin Insurance Alliance is currently analyzing the potential impact of this proposal on the industry. As more details are solidified, we’ll be sure to keep you informed.
Industry Leaders to Pursue Rule Changes to Address Access to High-Risk Pool
Majority Floor Leader Rep. Matt Lehman (R-Berne) and House Insurance Committee Member Rep. Peggy Mayfield (R-Martinsville) both introduced separate language in the 2017 session to address increased access to the high-risk workers’ compensation pool. Indiana currently has a +/-50% range for schedule rating. Rep. Lehman’s proposal in House Bill (HB) 1318 would have made a change to +/-25%. Rep. Mayfield proposed limiting the ability to deny access to the high-risk pool in HB 1559.
An agreement was reached to remove the language from HB 1318 as well as not move forward with 1559. Instead, the industry, led by the Insurance Institute of Indiana, will work with the Indiana Compensation Rating Bureau (ICRB) on a solution outside of the legislature. The ICRB believes changes can be addressed through their rules as opposed to a statutory change. The ICRB suggests a solution to file a new rule with the Commissioner, based on the existing national rule in the NCCI Basic Manual, which defines a reasonable offer in the regular market. The national rule defines “reasonable” when the regular market offer is less than or equal to the assigned risk market premium. Thus, any offer above the assigned risk market premium would not meet the definition of reasonable, and the employer would qualify for an assigned risk policy.
Industry Neutral on State’s Proposed Work Comp Changes
The Illinois Senate has introduced a bipartisan package of 13 bills intended to provide framework for ending the current budget impasse and address workers’ compensation reform. Senate Bill 12, which addresses work comp, is neither good enough to support nor awful enough to oppose at the present time, so the industry has taken a neutral position, and insists on the need for the key improvements.
Several Work Comp Bills Under Consideration
AF Group legislative counsel reports there are several workers’ comp bills that are percolating currently, but will most likely end up in a conference committee in May, as per custom in Oklahoma. HB 1462 and SB 737 are the major omnibus bills that will attempt to address some of the roughly 40 constitutional infirmities of the 2013 reform bill identified by the courts thus far. The proponents of opt-out and their legislative supporters hope to include provisions sufficient to resuscitate that alternative system. We have a long way to go legislatively in 2017 for Oklahoma.