ARTICLE
Audio (MP3) Listen in New Window Presentation (PDF) Open in new window State of the P&C Market • P&C Insurance is a cyclical industry • Currently in early stages of an softening “buyers” Property/Casualty market • WC is worst performing line with a 109% combined ratio • WC market is improving, but not for accounts with poor loss experience and more difficult classes. Social Service MC • Difficult class to underwrite profitably • Limited market players • One of biggest classes in the Indiana state WC pool Carrier Options • Standard carriers universally avoid Social Service classes although some will “consider” the best risks in the class • Specialty Carriers and Social Service Program Managers dominate the marketplace • Pool - market of last resort Why do Carriers Avoid the Class? • Wide range of consumer care and activities • High staff turnover creates numerous WC challenges • Transportation / vehicle exposure • 24 hour group home exposure with limited employee supervision • Consumer mobility and behavior issues • Ingress and Egress issues slip falls Underlying Issues The Underlying Issues for Social Service WC ? • Rate Adequacy > Not within your control • Exposure and Culture Control >Can be influenced by You ICRB Advisory Rates for Social Services Classification: Social Service All Employees, Sales, and Drivers 8864 2010: 1.65 2011: 1.68 2012: 1.75 2013: 1.86 2014: 1.71 Classification: Group Home All Employees, Sales, and Drivers 8842 2010: 1.65 2011: 2.11 2012: 2.53 2013: 2.99 2014: 2.84 Classification: Clerical Employees 8810 2010: .20 2011: .18 2012: .20 2013: .21 2014: .19 After steady increases since 2010 for the main Social Services classes, the January 2014 rates saw a marginal decrease. So...What Can You Control? Payroll: Controllable • You determine, but is what it is Rate: No Control • ICRB establishes advisory rates based on actual experience of the class. Individual carriers adopt advisory rates or file their own rates based on their results and preference by class. Experience Mod: Controllable • A rate modification factor adjusting the premium to reflect an individual insured's loss results. • Based on 3 years loss and payroll history. • Formula puts weighted value on indemnity claims. • Medical only claims are discounted 70% to not discourage reporting of medical only claims. Schedule Rating: Influenced by insured • A discretionary factor based on the underwriters judgment of the correct premium for each risk. Factor typically ranges + /- 40%. Impact of Indemnity Claims on Your Experience Mod Hypothetical analysis using mod modeling software. Example assumes $2,500,000 in annual group home payroll and $500,000 in clerical payroll for three years. Loss Scenario: 10 “Medical only” claims per year with $10,000 total claims per year Mod: .65 Loss Scenario: 10 “Medical only” claims per year with $20,000 total claims per year Mod: .69 Loss Scenario: 10 “Medical only” claims per year with $50,000 total claims per year Mod: .81 Loss Scenario: 5 “Medical only” claims per year with $50,000 total claims per year Mod: .84 Loss Scenario: 5 “Indemnity” claims per year with $50,000 total claims per year Mod: 1.01 Basic Cost Reduction Strategies • Hiring Practices New employee orientation with emphasis on safety and loss prevention • Prompt claim reporting is a key factor in reducing claims cost. Company policy should mandate claims are to be reported same day. • Make Your Return to Work Program part of your culture > Written program and policy statement > Pre identification light duty tasks > Part time light duty is better than no light duty to keep the employee engaged and in a routine • Active involvement in claim management. Don’t hesitate to push the WC adjusters and get your broker involved if carrier is not handling a claim the way you feel they should. • Partner with medical providers who demonstrate a willingness to work closely with you and understand the importance of getting injured workers back to work on light duty ASAP. • Make it known your organization is on high alert for WC fraud. Include a WC fraud statement in your employee handbook and post WC fraud warnings. • Slip and Fall Program > Acceptable footwear should be defined > Snow removal process – who, when, how > Routine Winter weather cautionary reminder to all employees > Deicing process – use of door level salt pails > Drainage mechanisms for rain water considering freeze thaw cycles > Careful attention to floor transitions • Client Positioning and Moving Programs > Use of gait belts, walking belts, lifts, friction reducing devices, lifting for bathing and toileting > Ensure best possible layout of facilities and bathrooms to allow access • Accident Investigation Program > Who investigates incidents? > When are investigations completed? > Does your accident investigation process really seek to identify cause and corrective actions or is it really a report to document incident? • Fleet Safety > Driver policies and expectations > Implement a mobile device usage policy > MVR’s and proof of insurance for non-owned vehicles > Driver point system established and enforced > Defensive driver training for all employees Transformative Cost Reduction Strategies • Mindset Shift - Renewal dates are Fools Gold. The renewal shouldn’t be the main event. Why? issues, problems, client costs do not revolve around expiration dates. You and your broker should focus on the big picture goals of risk management. • View Risk Management holistically – Insurance is a subset of risk management. When viewed holistically risk management efforts are integral to providing quality care and services to consumers. It’s about creating a culture of Health, Wellness , and Safety. It all ties together. • Management commitment to making safety and loss prevention cultural. Everyone owns safety and loss prevention. Everyone is looking out for each other. Let us know if we can assist in any way – Thank you! Arden Coher, CPCU, AAI MJ Insurance, Inc. 317-805-7510 arden.coher@mjinsurance.com Aaron Shields MJ Insurance, Inc. 317-805-7594 aaron.shields@mjinsurance.com