Posts Tagged ‘market conditions’

Cavalcade of Risk, Linkedin, AIG, fraud, Station Nightclub fire, & strip searches

Wednesday, December 2nd, 2009

Nancy Germond is hosting Cavalcade of Risk #93 – check it out. And while you’re at it, check out Nancy’s regular insurance column on AllBusiness.
Mark Wall’s excellent WC forum on LinkedIn – While recently attending the National Workers Compensation & Disability Conference in Chicago, I had the opportunity to meet Mark Walls who is the founder of LinkedIn’s excellent Workers’ Compensation Forum. Mark, who is a genuinely nice person as well as a commensurate professional, has created an impressive network of more than 2,400 members, which includes employers, claims adjusters, insurance carriers, third party administrators (TPAs), brokers, attorneys, risk managers, regulators, EH&S professionals, and vendors that provide service to the workers’ comp industry. The group illustrates some of the best advantages and features of social media: industry networking, active discussion boards, and news feeds to blogs and alternative media sources. Members can pose questions or topics and get feedback from other members. Plus, Mark does a great job of ensuring that posts are on-topic and he is strict about disallowing spam. To join, you need to first be a member of LinkedIn, and then you can register to join the Workers’ Compensation Forum. Hope to see you there!
The soft market and AIG – if you are wondering why the soft workers comp market persists, read Joe Paduda’s post on the implications of AIG’s price cutting – it certainly offers some clues. Of course, AIG’s pricing isn’t the only factor, but when you have an elephant in the room, it certainly can’t be ignored.
Fraud surveillance – Roberto Ceniceros talks about cuts in fraud surveillance in both the public and the private sector. He’s looking for feedback from others who are experiencing a similar trend. We’ve also heard talk about cuts in safety and loss control services offered by insurers as part of work comp policies. Any feedback on these issues? It would seem shortsighted to relax on either of these important services.
RI nightclub fire settlementsInsurance Journal covers a recent report on settlement details in the 2003 Rhode Island nightclub fire that killed 100 people and injured 200 others. More than 300 survivors and victims’ relatives sued after the fire. You can also follow some of our past coverage related to workers’ comp, or the lack of it, in this sad case: Workers’ Comp and the Station Nightclub; Avoid Comp Premiums and Pay the Price; Station Nightclub: Who Pays?; Stone Walls and Steel Bars for Business Decisions
Strip search not covered by comp – For nearly a decade, fast food chains throughout the nation were plagued by a cruel and bizarre telephonic hoax, the so-called strip search hoax. The “pranksters” who posed as detectives called fast food restaurants and retail chains and somehow convinced store managers to detain hapless employees. The managers were then guided through a series of progressively questionable and invasive actions such as strip searches of the alleged criminal employees, supposedly on behalf of the police. Sounds weird? It certainly was. In recent developments, Louise Ogborn, a McDonald’s employee and the victim in one of these cases, was awarded $6 million in damages for her humiliating ordeal. McDonald’s attorneys appealed the ruling, invoking the exclusive remedy of workers’ compensation. The Kentucky Court of Appeals disagreed, stating that “We do not find manifest injustice in the trial court’s ruling that Ogborn was not acting in the course and scope of her employment while she was held in the manager’s office.”

Halloween edition of Health Wonk Review; other news notes from the blogs

Thursday, October 29th, 2009

Our local neighbor Tinker Ready of Boston Health News has done a most excellent job in her illustrated Halloween edition of Health Wonk Review – she even included photos from her local haunted house. Go visit now: Health Wonk Review: Killer viruses and the undead public option – lots of good posts in an entertaining format.
Other news from the blogosphere
Is the party over in workers comp? – Joe Paduda of Managed Care Matters sees a lot of similarities between market conditions today and back in the dread late 1990s – lengthy soft market, premium rates that have dropped by two-thirds over five years, continued increase in medical severity … he doesn’t see a soft landing as likely.
FDA issues list of fraudulent H1N1 flu products and websites – “This list is intended to alert consumers about Web sites that are or were illegally marketing unapproved, uncleared, or unauthorized products in relation to the 2009 H1N1 Flu Virus (sometimes referred to as the “swine flu” virus). Note that until evidence to the contrary is presented to FDA, the owner of the listed Web site is considered responsible for promoting the unapproved, uncleared, or unauthorized products. The uses related to the 2009 H1N1 Flu Virus are not necessarily being promoted by the manufacturers of the products.” (Thanks to Gooznews for the pointer.
Could integrating comp medical care into group health could save big bucks? That’s a question that Roberto Ceniceros examines at CompTime in light of a recent California study that says savings could be achieved.
Judge Robert Vonada has been frequently updating Pennsylvannia Workers’ Compensation Journal of late. We particularly enjoyed a recent post entitled an entertaining primer on mediation, in which he points to and comments on a list of thirty things to say in mediation – or as he puts it, a list of things you will hear yourself say and wish you hadn’t.
CDC NIOSH Science Blog offers workplace safety & health tips for tattooists and piercers – a group of workers who are at hgh risk for exposure to bloodborne pathogens. They’ve created a Body Art Topic Page for more information.
We’ve recently been discussing the issue of injuries inflicted by animals and workers comp in the light of the chimp that attacked a CT woman. Risk Monitor features a posting called when circus animals kill that focuses on risks related to wild animals in the entertainment industry.
BLR’s Safety Daily Advisor reminds us that OSHA gives your employees 14 specific workplace rights. See OSHA’s 14-Point Employee Bill of Rights
Quickies

Cavalcade of Risk, dereriorating market, breast cancer, labor unions, and more

Thursday, September 10th, 2009

Cavalcade of Risk #87 is brought to you from the land down under – Andrew of Australia’s OzRisk is this week’s host – check it out!
Deterioration in Work Comp market – In his blog Comp Time, Roberto Ceniceros discusses a grim recent A.M. Best report pointing to deteriorating conditions in the workers comp industry. “According to Best’s composite, consisting of 103 insurers, net premiums written plunged 30% from a high of $20.9 billion in 2004. Insurers also experienced underwriting losses of $1.2 billion in 2007 and $1.5 billion in 2008. Best expects challenging conditions for insurers to continue well into 2010.” Ceniceros also cites other recent reports and economic indicators in his post. Related: Joe Paduda of Managed Care Matters offers his thoughts on the workers comp industry’s fading fortunes. He notes a few positives in the offing: some brokers and agents are expecting the pricing war to taper off, investment returns look to be recovering somewhat, and health reform might relieve cost-shifting.
NIOSH – HHS Secretary Kathleen Sebelius recently announced that John Howard, M.D. has been named new Director of National Institute for Occupational Safety and Health (NIOSH). Dr. Howard served as NIOSH director from 2002 through 2008. He also served as coordinator of HHS’ World Trade Center Health Programs from 2006 to 2008. Laura Walter of EHS Today talks about the ASSE and AIHA favorable reaction to Howard’s reappointment.
Night shift work linked to breast cancer – The BBC reports that the Danish government has begun paying compensation to women who have developed breast cancer after long spells working nights. Authorities acted in response to a study by the International Agency for Research on Cancer (IARC), an arm of the UN’s World Health Organisation. The IARC, which studies and ranks cancer risks, ranks night shift work just below asbestos as a probable cause of cancer. This ranking was based on various studies and reports linking cancer to night shift work hours, including a study published in the Journal of the National Cancer Institute which showed a 36% greater risk of breast cancer for women who had worked night shifts for more than 30 years, compared with women who had never worked nights.
Labor unions and the economy – In response to a recent Gallup poll on labor unions showing support at an all time low, Paul Secunda of Workplace Prog Blog and some of his readers offer thoughts on why a rise in unemployment correlates negatively with support for unions.
Health & Safety Briefs

Health Wonk Review and other news briefs

Thursday, September 3rd, 2009

Jared Rhoads has posted a fresh Health Wonk Review at The Lucidicus Project. There are many interesting posts running the gamut: healthcare reform, home birth, hospice, hypertension and a variety of other topics that the health bloggers found noteworthy in the last two weeks.
Other news notes
Bad Manager of the Month Club – Scott Polston, an employee of Foster Farms Dairy in California, suddenly began getting a series bizarre phone calls and dozens of strangers coming to his home with unusual requests. The callers and visitors were responding to bogus ads that had been placed on craigslist, ads that were subsequently traced back to his supervisor, Michael Odell Simpson. At the time of this report, Simpson was no longer employed by the Dairy and was facing criminal complaints. Polston filed a worker’s compensation claim over stress.
Experts Detail Perils To Comp Insurers – “Unconventional threats to the workers’ compensation system, ranging from Medicare system red tape to recession problems to employers liability difficulties,” – these are all perils for employers and threats to the doctrine of exclusive remedy discussed by panelists at the recent at the Workers Compensation Educational Conference presented by the Florida Workers’ Compensation Institute in partnership with The National Underwriter Company.
Survey: Consumers Would Support TWD Ban – In light of our recent posts on texting while driving this week, we were interested to learn that a recent Harris Interactive survey revealed that 80% of Americans favor a ban on texting while driving, while two thirds favor a ban on cell phone calls, and more than half say they would support a ban on cell phone use altogether.
Labor DayAs the Industrial Revolution took hold of the nation, the average American in the late 1800s worked 12-hour days, seven days a week in order to make a basic living. Children were also working, as they provided cheap labor to employers and laws against child labor were not strongly enforced. With the long hours and terrible working conditions, American unions became more prominent and voiced their demands for a better way of life. On Tuesday September 5, 1882, 10,000 workers marched from city hall to Union Square in New York City, holding the first-ever Labor Day parade. – More at Labor Day History.
Workplace safety – We started the week with a texting-while-driving shock video that has been making the rounds on the Web. Today, we found a more uplifting video highlighting the importance of workplace safety from the Washington Department State Department of Labor & Industries:

Insurance in the storm: buyers can expect the onset of a hard market

Monday, November 10th, 2008

Because AIG has been at the epicenter of the economic earthquake, many non-industry observers point to insurance as one of the villains and the industry is getting a black eye that may not be warranted. AIG’s problems did not surface in its insurance operations, which remained sound, but with their dubious investment portfolio which rocked the entire organization.
Not that insurance companies mightn’t have gotten in more trouble if left to their own devices, but the nature of the beast is that the industry operates in a highly regulated environment, both a blessing and a curse. In this case, more of the former.
In a recent gathering of its agency members, our partner and client Renaissance Alliance featured Robert Hartwig as a speaker. For those who don’t know Bob, as president of the Insurance Information Institute, he is the foremost public spokesperson for our industry. In his detailed presentation, he outlined 6 reasons why property-casualty insurers are better risk managers than banks and should therefore better weather the storm – reasons that I paraphrase here:

  • Risk management is based on underwriting discipline, pricing accuracy, and management of loss exposure
  • Low leverage – insurers don’t rely on borrowed money
  • Conservative investment philosophy
  • Strong relationship between underwriting and risk bearing
  • Strict regulation by state and federal authorities – more so than banks
  • More transparency to regulators and the public

That being said, just as a rising tide raises all boats, a lowering tide will affect all boats, too. One of the anticipated after-effects of the financial crisis will be an increase in regulation. Another is that the current economic downturn likely signals the bottom of a soft market. Buyers can expect a hardening of prices. Insurers depend on investment income. Currently, investment returns are going down as claim costs are going up due to inflationary pressure – that leaves only one place for prices to go.
Despite the fact that many brokers report that they see no end in sight to the current soft market, many industry insiders are predicting the onset of a hard market in the not-too-distant future. Here are a few opinions on the matter:
Market Scout: “The financial markets have experienced a meltdown, several major insurers are in serious trouble, underwriting results are slipping and investment income is anemic at best. As a result, the soft market is winding down.” – see the accompanying charts.
Joe Paduda notes that although workers comp rates are still dropping, there are two major factors that presage a hardening: First: “Medical trend in the group world is approaching double digits. Historically the work comp medical trend rate has been somewhat higher than group trend.” Second: “The investment market has imploded, likely driving down the value of the funds held for reserves and surplus. While most investments are in what used to be thought were ‘safe’ instruments, it may well be that regulators and rating agencies, newly sensitized to the potential problems with even ‘safe’ vehicles, will require carriers to take down the value of funds held in reserve.”
During recent earnings conference calls, Evan Greenberg, chairman and CEO of ACE Limited and AXIS CEO John Charman both agreed that a hard market is in the making.
Reinsurers are predicting rising prices: “The world’s No. 1 and No. 4 reinsurers, Munich Reinsurance Co. and Hannover Re Group, on Monday predicted some business lines would see price increases of 10% or more in talks over the coming weeks to renew reinsurance contracts for 2009.”
Ken A. Crerar, Council of Insurance Agents & Brokers president: “We won’t know until January 2008 renewals what toll the economic crisis has taken on the industry in general … What we do know is that investment income is down dramatically, carrier profitability is being eroded, net underwriting losses are higher and combined ratios are inching up over 100. How long carriers can maintain price cuts without damage to their financial health is anybody’s guess. These are very uncertain times.”
OK, what can a buyer do when faced with likely price increases? Some of the same things that a homeowner does in anticipation of foul weather: Tighten things up and go back to the basics. Be aggressive about preventing all workplace injuries and about managing any injuries that do occur. Strengthen your provider relationships. Tighten up your return-to-work programs. It’s our experience that when rates are low, workers comp can slip as a priority and get moved to the back burner. If it isn’t there already, it’s time to move workers comp back to the front burner.