Second Quarter 2015
Oh, happy summer! I don’t know about you, but my favorite day of the summer is June 21, the summer solstice. That’s when the tilt of the Earth’s semi-axis in the northern hemisphere is most inclined toward the sun, creating the longest day of the year.
The longest day of the year is a very relatable term to most insurance professionals as most of us are running the gauntlet known as “7/1” (cue the ominous music). That said, it’s hard to believe that we are almost halfway through the year and knocking on the door of the third quarter.
Let me update you on a few key financial measures for United Heartland:
- Our accident year loss ratio is currently 39.5%. It marks our most profitable start to a year since 2006 and positions us strongly for growth as we head into the rest of 2015.
- Overall retention has been strong and remains close to plan at 80%. For accounts with premium of $400,000 or greater, retention is at 82%.
- Unfortunately, new business has not been as strong for the year thus far. We have booked $16.2 million year to date, relative to a goal of $19 million. However, I am very encouraged by our new business prospects for June and July. As of this writing, we have bound $5 million in new business for June with several additional opportunities percolating.
- Our submission activity on accounts generating in excess of $400,000 is up 25% this year compared to last. Thank you for keeping us top of mind for your large account placement.
I would also like to tee up a very important United Heartland initiative for 2015 and beyond. UH is committed to reaffirming our position as your partner on the tougher-to-place, higher mod business within our core classes. Our claims and loss control platform gives underwriting the confidence to price and write this segment of business. We are targeting committed, service-value insurance buyers that have an aggressive desire to improve their programs and results.
Our historical success speaks volumes about our ability to achieve results on these accounts. Out of all current policyholders with a mod over 1.00 when we wrote them as new business in 2010 (meaning all four years of their experience mod is UH experience), 85% experienced a mod factor decrease, going from an average experience mod of 1.27 to 0.93 — a 26.6% decrease! United Heartland is focused on identifying service-value buyers and partnering with distressed accounts to drive new business results and deliver positive customer outcomes.
Vice President, Field Operations
Eight Years and Still Going Strong: With eight years under its belt as of April, the Charlotte region continues to thrive for United Heartland. As Southeast Regional Director Mike McKeon explains: “Now that we’ve been here a while, agents know that we consistently deliver a high quality workers’ compensation product. There’s a strong, positive feeling about us. We’ve convinced agencies that we’re for real and we’re not going anywhere.”
As of June 1, 2015, the region has achieved:
- $7.8 million in new business from 28 new accounts
- $45.4 million in in-force premium
- 31.1% accident year loss ratio
- 110 new submissions in Florida, compared to 67 for all of 2014
This growth continues to come in segments that are the region’s core strengths: health care, long-term care and nonprofits. Manufacturing is another segment where United Heartland is making a name for itself. After little business during the first few years in the region, manufacturing now represents the fourth-largest segment with 14.4% of written premium in 2014.
Flourishing in Florida: The expansion into Florida remains a highlight for the region and illustrates what can be achieved when you assemble a great team. Senior Business Development Specialist Vickie Mackowiak, Senior Loss Control Consultant Pat McKeon and Senior Claim Representative Tracy Pease have earned high praise from agents in the region for their high-touch service. Here’s one sample from an agency vice president: “The client is so happy with your service and really appreciates the partnership with United Heartland. The client is glad they made the change and you have delivered on everything you said you would do and more. I am looking for new business for UH based on this client’s feedback and the service and support you have provided the insured.” Through their teamwork, the United Heartland reputation continues to grow and helped us to earn $1 million in new business in June, our first time ever to hit that premium mark in a month for the state. Their efforts will also help us as we expand the business segments we service in the coming months.
More Agency Appointments: Speaking of expansion, United Heartland has also been busy appointing more agencies as we continue to grow our business throughout the six-state region. The underwriting team has been researching and getting to know agencies with which we want to build partnerships, particularly in geographic areas where we currently don’t have as strong a presence but where we see opportunities for potential success. Mike McKeon says the Charlotte region is eager to see the submission flow increase from these new appointments during the latter half of 2015.
In last quarter’s UH Pulse, LMC Insurance and Risk Management was recognized as the recipient of our inaugural Agency of the Year award. This quarter, UH would like to recognize three high-performing agencies in our other regions – Charlotte, Kansas City and Milwaukee. (LMC is based in the Chicago region.) These agencies are valued partners and have helped extol the virtues of the United Heartland brand to their customers. We are pleased to honor them as this year’s Regional Agencies of the Year.
Charlotte Region Agency of the Year:
2014 Written Premium: $7.64 million
2014 Premium Retention: 93.34%
2014 Cumulative Loss Ratio: 45.58%
Comments on Scott Insurance from Regional Director Mike McKeon: Scott Insurance has been a very meaningful agency relationship for United Heartland as we’ve established ourselves in the Charlotte region. Scott is approaching nearly $8 million in written premium for us and they are excited about the opportunity that our Risk Management Services unit will mean for our ongoing relationship. Our relationship is built on our shared philosophy surrounding the high-touch service model and Scott plays an active role in our regional and national councils. We have a great rapport with the agency team that allows us be open, honest and respectful of each other and our needs. Scott Insurance is highly worthy of this honor.
Kansas City Region Agency of the Year:
2014 Written Premium: $1.77 million
2014 Premium Retention: 100%
2014 Cumulative Loss Ratio: 39.95%
Comments on Fee Insurance from Regional Director Adam Gildemeister: With 142% written premium growth from 2013, Fee Insurance has demonstrated their true partnership with United Heartland. Allen Fee and his team understand the UH philosophy and only send us accounts that are viable opportunities. As a result, our hit-to-quote ratio with Fee was 55% in 2014. Their staff is a pleasure to work with and show respect and professionalism to our underwriting team.
Milwaukee Region Agency of the Year:
Marsh & McLennan Agency Inc./RJF, a Marsh & McLennan Agency
2014 Written Premium: $9.9 million
2014 Premium Retention: 83.8%
2014 Cumulative Loss Ratio: 51.59%
Comments on Marsh & McLennan Agency Inc./RJF From Regional Director Tracy Bain: Marsh & McLennan Agency Inc./RJF is a key business partner for the Milwaukee region with their offices in both Wisconsin and Minnesota. They have remained committed to selling the “United Heartland Difference” even when faced with aggressive pricing in the marketplace. As a result, they experienced a hit-to-quote ratio of 66.7% for new business last year. The agency appreciates the importance of selling service over price and their team aligns extremely well with our high-touch service model.
Because of our manufacturing expertise, United Heartland understands the importance of communicating best practices and safety procedures to workers in these areas. The Bureau of Labor Statistics reports that manufacturing was second only to the health care industry in 2013 when it came to reported cases of injury and illness with 434,000 cases. While this was a decline from 2012, these are still significant figures that merit attention.
To help these numbers decline even further, UH recently launched our newManufacturing Loss Control Campaign. Similar to last year’s Health Care and Long-Term Care Wellness Campaign, this campaign will focus on hazards that can arise in the manufacturing sector and how to prevent them.
Topics will include:
- Ergonomics and Job Safety Analysis
- Machine Safeguarding, Lockout/Tagout and Electrical Safety
- Slip and Fall Prevention
- Chemical Safety
- Injury Management
With each topic, you will have access to downloadable collateral that we’re confident you’ll find useful to share with your manufacturing customers as you help guide them to safer work practices. If you have additional questions, please contact your loss control representative directly or call United Heartland at 1-800-258-2667.
Do you have customers who have implemented loss control recommendations and built sophisticated risk management programs to protect their workers, but are still searching for ways to control their cost of risk? Risk Management Services (RMS) provides a comprehensive workers’ compensation product specifically created for retrospective and large deductible buyers who want some “skin in the game” when it comes to controlling insurance costs.
- Proactive claim and medical management services built to mitigate claim costs.
- Loss control experts who develop individual loss control strategies to address your customer’s specific loss drivers.
- Client relation consultants who are a single point of contact for customers.
- A risk management information system that allows you to generate customized reports, analyze loss trends, see daily adjuster updates and a multitude of other functions.
As RMS approaches its one-year anniversary in September, it’s exciting to report what has been achieved:
- For 2015, we’ve written $7.4 million in new RMS business.
- United Heartland has written $5.7 million in new guaranteed cost premium after RMS prospects ultimately decided to choose a guaranteed cost program over a loss sensitive option.
- The RMS team continues to grow with RMS Director Tim Greifenkamp leading the way. In addition to Tim, current team members include:
We encourage agents who have customers seeking high-touch, loss-sensitive solutions to reach out to any RMS team member, or emailRMS@UnitedHeartland.com and see how RMS can bring rewards worth the risk.
Legislative Update is a brief synopsis of relevant legislative activity currently taking place in United Heartland core and accommodation states. For more details or further documentation on any of these legislative activities, contact your business development consultant.
Terrorism Risk Insurance Program Reauthorization Act of 2015
According to the Terrorism Risk Insurance Program Reauthorization Act of 2015 enacted in January, the U.S. Treasury and the Federal Insurance Office are required to collect insurance industry terrorism data beginning in 2016. Creating a duplicate or new data reporting process for the federal government could be cumbersome and costly for the industry. Accident Fund Holdings remains engaged with the National Council on Compensation Insurance (NCCI) and our National trade the American Insurance Association (AIA) as they work with NAIC, Treasury and the Federal Insurance Office to identify a solution to the data reporting requirements.
New House Bill in Colorado – New Requirements for Employers
Effective April 1, 2015, House Bill 14-1383 was passed into law. This change in the Colorado Workers’ Compensation Act will require employers in Colorado to provide injured workers the choice of four physicians for treatment. Prior to the new law, the requirement was to provide two physicians. At least one of the four physicians must be at a separate and distinct location from the others.
If the employer location is in a rural area, and there are at least three but fewer than nine physicians within a 30-mile radius of the employer’s location, the employer is exempt from this ruling. In these instances, however, the employer must provide two physicians with separate and distinct addresses and without common ownership.
Please share this with any United Heartland policyholders with Colorado exposure and direct them to UH for assistance in locating providers.
Gov. Rauner Proposes Work Comp Reforms
Gov. Bruce Rauner’s “Turnaround Agenda,” which includes several positive workers’ compensation proposals, has been receiving an increased amount of discussion as of late. The Chamber of Commerce recently communicated that Rauner is really pushing for work comp reform. Rauner has told legislators that if they want any increases in taxes, etc., they need to support his economic reform first. With Democrats possessing a supermajority in the Illinois legislature, if any of the perceived positive comp legislation is to gain momentum, the governor will have to engage in serious horse trading. We intend to monitor this situation closely.
New Law Impacts Sole Proprietors, Partners and Limited Liability Company Members
The Iowa Legislature passed a new law that will impact sole proprietors, partners and limited liability company members doing business in Iowa. The Iowa Legislature passed House File 259 to clarify sole proprietors’ intent to be covered or not be covered by a workers’ compensation policy. Iowa Workforce Development’s Division of Workers’ Compensation recently released a revised non-election of Workers’ Compensation or Employers’ Liability Coverage Form, 14-0174 (5-15).Click here for the form.
The revised form should be used for proprietors, LLC members and partners to clarify their intent to not be covered by workers’ compensation. The current workers’ compensation law has not changed. These persons are still not considered employees and are automatically excluded from coverage unless they elect inclusion. This form must now be signed to clarify their intent to not be covered. The Division has released no further instructions or information in regards to this issue only that the form has been revised. Should additional information be released, we will communicate appropriately.
Workers’ Compensation Medical Fee Schedule Proposal Introduced
The Minnesota Legislature is considering a bill to adopt a hospital fee schedule that would cap fees at 200% of the Medicare rate. The legislation is the product of the Minnesota Workers’ Compensation Advisory Council (WCAC) and is also strongly supported by the Department of Labor and Industry (DOLI). Rep. Tony Albright, R-Prior Lake, has introduced House File 2193 and an identical proposal, Senate File 2056 was introduced the same day. The bills would cap reimbursement for most hospital services provided to workers’ compensation claimants at 200% of Medicare’s Medical Severity-Diagnostic Related Group (MS-DRG) payment system, effective Jan. 1, 2016.
House Bill Would Allow Large Employers to Get Work Comp Coverage from Private Carriers
House Bill 205 was recently introduced and proposes to allow large employers (those with 1,000 or more employees) and “groups” to forgo obtaining workers’ compensation insurance from the Ohio Bureau of Workers’ Compensation (BWC) and instead utilize coverage from private carriers. According to the legislation, a group is defined as: An association that 1) has been organized and maintained for at least one year in good faith for purposes other than obtaining private market workers’ compensation coverage and 2) maintains a minimum enrollment of 300 employees in this state of two or more employers whose businesses are substantially similar such that the risks which are grouped are substantially homogeneous. Similar initiatives have failed in the past. We’ll continue to monitor this initiative.
House Legislation Would Provide Work Comp Opt-Out Provisions
House Bill 4197, the “S.C. employee injury benefit plan alternative,” would provide workers’ compensation opt-out provisions for eligible employers. This proposal is nearly identical to House Bill 4171, which was introduced back in May, with the only notable difference between the two bills being the committee to which they were referred. We anticipate this initiative will receive consideration in 2016.
Both bills were initiated by the Association for Responsible Alternatives to Workers’ Compensation (ARAWC). ARAWC’s website claims they are an organization that focuses on ensuring that employees receive the best possible care and employers have the choice to provide what is best for their employees. Similar law is in place in Oklahoma and Texas, and this year legislation was introduced in Tennessee to promote a similar initiative.
Opt-Out Legislation Stalls
Proposed Tennessee Opt-Out legislation, Senate Bill 721, has stalled at this time. We have confirmed the House will not address the initiative this year. The Senate sponsor and primary advocate has communicated he will continue to pursue a floor vote in the Senate. Although the legislative effort will not progress this year, we anticipate Senate Bill 721 to receive increased debate in 2016.
NCCI Named Residual Market Plan Administrator
The Tennessee Department of Commerce and Insurance (TDCI) has chosen the National Council on Compensation Insurance (NCCI) as the new plan administrator for the Tennessee Workers’ Compensation Insurance Plan (TWCIP). Beginning with policies effective July 1, 2015, NCCI will administer the plan, which will be renamed the Workers’ Compensation Insurance Plan (WCIP). NCCI will establish the infrastructure necessary to provide workers’ compensation residual market services, such as application processing and administration of the plan rules, and access to coverage in certain other states, among other services. Tennessee will join 22 other states in utilizing this national workers’ compensation residual market system. TDCI Commissioner Julie Mix McPeak welcomes the new administrator and looks forward to working with NCCI.
Proposals for Work Comp Agreed Bill Discussed
The Workers’ Compensation Advisory Council met this month to unveil and discuss proposals from both Labor and Management on items potentially to be included in the Work Comp Agreed Bill. The final Agreed Bill proposal is anticipated to be non-controversial this year. Serious cost containment measures, including a medical fee schedule, will likely have to wait until a future date. The Advisory Council is expected to forward the Legislature a final Agreed bill proposal later this year.
Governor Vetoes Bill to Create Workplace Safety Grant Program
On June 20, Gov. Greg Abbott vetoed a bill that would have created grant programs for workplace safety. House Bill 2466 would have given safety grants up to $5,000 for reimbursements to employers with two to 50 employees that incurred expenses while creating safer workplaces. Allowable expenses would have included physical modifications to worksites, safety equipment and safety training for employees. In his veto statement, Abbott said: “Texas has been doing pretty well without a safety reimbursement program run by the Department of Insurance. To stay strong, we should resist the needless growth of government even in small ways.”
Information Sources – American Insurance Association, Insurance Institute of Michigan, MIRS, Workcompcentral, Illinois Chamber of Commerce
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This document is provided for informational purposes only and does not constitute legal advice. This information is subject to change. Every effort is made to provide accurate and complete information in Accident Fund Holding’s Legislative Update. However, Accident Fund Holdings makes no claims, promises or guarantees about the accuracy, completeness, or adequacy of the contents of the Update and expressly disclaims liability for errors and omissions in the contents of this newsletter.
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