Posts Tagged ‘Robert Hartwig’

Cavalcade of Risk, debt downgrades & other news briefs

Wednesday, August 10th, 2011

Jason Shafrin, our favorite Healthcare Economist, is hosting this week’s digest of risk-related posts Cavalcade of Risk #137: Risk Grabs the Headlines. Check it out!
S&P Downgrade Robert Hartwig of the Insurance Information Institute weighs in: Understanding the U.S. Debt Downgrade: No Significant Impact on Insurers: “The nation’s property/casualty insurers have very limited direct exposure to the U.S. government bond market and have collectively set aside hundreds of billions of dollars to pay unanticipated claims,” said Dr. Robert Hartwig, president of the I.I.I. and an economist. “Both of these factors will enable the industry to operate effectively despite the recent downgrade of long-term U.S. bonds.” Consequently, Hartwig added, “Existing policyholders, people and businesses filing claims and those seeking to purchase insurance will not experience any difficulties arising from the downgrade.”
Related:

Lingering effects10 Years and a Diagnosis Later, 9/11 Demons Haunt Thousands – “One measure of the psychological impact of 9/11 is this: At least 10,000 firefighters, police officers and civilians exposed to the terrorist attack on the World Trade Center have been found to have post-traumatic stress disorder, and in a kind of mass grieving, many of them have yet to recover, according to figures compiled by New York City’s three 9/11 health programs.”
One year ago… – Last week marked the anniversary of the shooting Hartford Distributors in Manchester, Connecticut. Here is a link to our post about the event, in which we discussed some of the comp-related aspects of the case and whether employer’s can take measures to inoculate against such events.
Not-so-friendly reminders department – Employers should be aware that workers’ comp related retaliation can get expensive. But that is chicken scratch next to the penalties that might be imposed for things like failure to carry work comp insurance, misclassifying employees, and violating stop work orders.
OSHA toolPlanning Ahead for Hot Weather: Employer Checklist.

NCCI suggests a “precarious outlook prevails” for the workers comp market

Monday, April 18th, 2011

The NCCI Annual Issues Report is out and it is available as an online flipbook, you can download each article in PDF, or you can request a hard copy.
Most who work in the industry realize the significance of these reports but for employers, a brief side note is in order. NCCI stands for the National Council on Compensation Insurance, Inc., a rating and data collection bureau specializing in workers’ compensation. because NCCI manages the nation’s largest database of workers compensation insurance information, it is in authoritative position to analyze industry trends and upcoming legislation, to offer insurance rate recommendations, and to provide a variety of services and tools to a variety of constituencies, including state insurance bureaus, insurers, insureds, the media and others with an interest in workers comp.
The Issues Report provides an industry snapshot of where we’ve been, along with some trending and analysis that point to where we are likely heading. While all the articles have merit, for industry financial trending we point you to these three cornerstone documents:

While the property casualty market is generally positive and has performed better than most other sectors during the economic downturn, the same cannot be said for the segment of the market that is workers compensation.
The workers compensation combined ratio continues in an upward direction. This is never good. The combined ratio is a barometer of an insurer’s profitability. It indicates how much an insurer pays out for each dollar it takes in (incurred losses + expenses ÷ earned premium). For most businesses, it’s a problem if you pay out more than you have coming in, but for insurers, investment income on reserves (money held for claims costs) is also a significant component in overall profitability. So an insurer can still realize a profit even if it pays out more in losses than it takes in when investment income is factored in.
Hartwig says that in 2010, the combined ratio is approaching 115. To put this in some historical perspective, the combined ratio at the peak of the crisis in 2001 was 122% percent, and the historic low in recent years was 93% in 2005. In 2009, we saw about 110%, the the worst combined ratio since 2003.
Other significant issues:

  • Investment gains associated with workers compensation have seen some improvements, but are still on the low side.
  • Workers comp written premium eroded significantly as jobs were shed, and although the employment situation is leveling off, it is hardly booming. It’s expected that employment may be fairly flat through 2011.
  • Medical inflation has slowed but medical costs are still on the increase.
  • Uncertainty abounds: about the economy, about the direction of healthcare, about bank & housing market, about financial reform. Plus, there is a broader regulatory environment with OSHA and DOL, and there is policy uncertainty given the volatile political environment.

The pressure is on and the challenge for insurers is clear: the only way to make money under current conditions is through rigorous underwriting and tight expense control. Employers with marginal records may have limited options come renewal time. It’s always a good idea for employers to control losses, but never as important as in a tight underwriting climate.
Hartwig offers some positives about the employment scenario:

” Last year’s stubbornly high unemployment gives the misimpression that no progress has been made in reducing joblessness. In reality, as shown in Exhibit 2, private sector jobs were created every month in 2010, for a total of 1.3 million net new jobs. While job creation so far is at a pace too slow to bring down the overall jobless rate, it remains an extraordinary reversal from the hemorrhaging of jobs and associated payrolls in the two prior years. At the height of the crisis in early 2009, private employers were shedding more than 700,000 jobs per month. Private employers eliminated a staggering 4.7 million jobs in 2009 and 3.8 million in 2007. The unemployment rate remains high today in part because workers, sensing improving labor market conditions, are streaming back into the labor force.”

And on payrolls, the basis for premium:

“… The latest data indicates that aggregate wage and salary disbursements have recouped about half of what was lost during the recession. It is quite likely that those losses will be fully recouped by the second half of 2011.”

He also offers some perspective on other factors beyond payroll that are eroding written premium:

“The economy will clearly exert a major influence on workers compensation insurers’ growth opportunities in 2011 and beyond.Exhibit 3 suggests that other factors are playing an important, if not dominant, role when it comes to explaining the precipitous 29% drop in premium written over the past several years. Workers compensation premium began to fall in early 2006, long before the start of the Great Recession in December 2007. Aggressive pricing, along with the increased popularity of large deductible programs, captives, and self-insurance alternatives have all taken their toll, as have a surge in return premium. The loss of exposure due to the economy was actually one of the more recent contributors to the fall. On net, pricing is likely responsible for about half the decline.”

All in all, the NCCI reports reflect negatives that many of us have been seeing or living through, and while the patient is still in guarded condition, there are reasons for cautious optimism.
And don’t skip the other articles in the Issues Report just because we did not address them here – there is always good information in these reports!

Cavalcade of Risk & workers comp news briefs

Wednesday, January 12th, 2011

It’s Cavalcade of Risk week and issue #122 is hosted by our friend David Williams at Health Business Blog – check it out!
Industry pulse – Good news. Robert Hartwig of the Insurance Information Institute takes the pulse of the property casualty industry and sees signs of life: Insurance Industry On The Mend. “Mr. Hartwig said in comparison to all of 2009, the industry’s 2010 third-quarter results are close to all of the prior years. While the industry is not back to where it was prior to the economic downturn in 2007 when it reported property and casualty net income of $62.5 billion, it is performing significantly better than the worst of the downturn in 2008 when p&c income came in at slightly more than $3 billion.”
That’s good news, but it’s not time to break out the champagne yet. A.M. Best forecasts downward rating pressure for the commercial market and two new reports indicate that reinsurance prices should remain soft in 2011.
Physician dispensed drugs – If you are an employer or an insurer and this topic isn’t yet on your radar, it needs to be. Joe Paduda posts about recent NCCI report on physician-dispensed drugs in workers comp, a significant growth area that NCCI says is putting upward pressure on WC costs. California took steps to regulate the practice a few years ago after learning that repackaged costs were two to twelve times higher than the fee schedule.
Labor – The New York Times reports that cash-strapped states are looking to curb labor unions. Expect a flurry of legislative initiatives to limit the power of labor unions representing government employees. While both parties are wrestling with ways to keep state budgets in line, the article notes:
“But in some cases — mostly in states with Republican governors and Republican statehouse majorities — officials are seeking more far-reaching, structural changes that would weaken the bargaining power and political influence of unions, including private sector ones.”
Prevention works – A concerted campaign to reduce textile service worker injuries is working, according to the recently released annual TRSA Textile Services Industry Safety Report. Recordable injuries and illnesses dropped by 17 percent from 2008 to the 2009, and have dropped by 50% since 2005. Sandy Smith reports on SafeTRSA, an industry-wide safety initiative to improve worker safety through awareness, education and training.
Breast cancer & comp – At Comp Time, Roberto Ceniceros discusses City of Las Vegas v. Lawson. The Nevada Supreme Court ruled that a firefighter is entitled to a presumption that her breast cancer arose from her on-the-job exposure to benzene. His post also discusses male breast cancer.
Dramatic Australia flood footage – Office workers catch footage of a modest creek turning into a raging torrent sweeping cars away. More news and dramatic videos of the cataclysmic Australian flooding is available on MSNBC. At least 16 people are reported dead and more than 90 missing in what has been likened to an inland tsunami. Brisbane is under siege. You can follow breaking news on Twitter at #Brisbane.

Cavalcade of Risk & other workers’ comp news briefs

Thursday, November 5th, 2009

Debbie Dragon or Wise Bread hosts this week’s Cavalcade of Risk, which she dubs the “the How Much Assurance Does Your Insurance Offer edition.” As usual, a good source of some of the best biweekly risk-related posts in the blogosphere!
OSHA – frequent citations – OSHA recently announced its Top 10 Enforcement Citations. For a more generic, non-company specific view, see the top 10 lists for the most frequently cited standards and the standards with the highest penalties. To narrow down to information to an industry SIC code, a state, or a size of employer, see the interactive frequently cited OSHA standards page.
Montana Supreme CourtMontana’s Supreme Court ruled that workers’ compensation benefits for permanently and totally disabled workers are meant to assist them for their “work life,” and not into retirement. Writing for the 5-2 majority, Justice William Leaphart stated that, “By acting to terminate benefits as it does, (the law) rationally advances the governmental purpose of providing wage-loss benefits that bear a reasonable relationship to actual wages lost.”
Chronic illness – This week, Roberto Ceniceros has featured a pair of posts related to chronic illness on his Comp Time blog. The first highlights a research report from the Integrated Benefits Institute in which nine in ten workers reported one or more chronic health problems. The report is based on 27,000 employee surveys. In his second post, Ceniceros explores the issue of wellness programs as they relate to chronic illness and workers comp. He makes the point that an increasing number of employees may be getting better health care attention after reporting a comp injury, but that is likely true mostly for employees of large, sophisticated employers.
Related to this issue, Peter Rousmaniere writes about “the elephant in the room” in his column in Risk and Insurance, noting that co-morbidities — such as obesity, depression, diabetes, sexual trauma, smoking, and drug addiction — derail the recovery of injured workers and pose challenges for claims adjusters and case managers. He makes the point that the the workers’ compensation courts are more inclined today to rule that insurers “own” the comorbidity that impedes recovery, as evidenced by the recent weight-loss surgery rulings.
Long road to recovery – the Pocono Record features the story of John Capanna’s long, slow recovery from a severe industrial injury. John was severely burned and disfigured in a flash explosion at an oil refinery some 30 years ago. It’s a story of courage and strength. Thanks to SafetynewsAlert for pointing us to this story.
Saving lives through safety – Robert Hartwig, president of the Insurance Information Institute, makes the case that insurers don’t get enough credit for saving lives with safety research in this month’s National Underwriter. Among the points that he makes: “Today, workers’ comp insurers are a primary source of loss control expertise for millions of American businesses – with tangible results. Consider that in 1926, an employee working in a manufacturing setting had a 25 percent chance of being injured on the job. In other words, one-in-four workers suffered injuries each year. In 2008, the odds were only about 5 percent, or just one-in-20.”
Ferreting out fraud through social networking – Attorney Molly DiBianca discusses risks entailed in using Facebook to investigate employee fraud, suggesting guidelines to ensure employer protection.
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What’s keeping insurance CEOs up at night?

Wednesday, September 24th, 2003

Robert Hartwig of the Insurance Information Institute says that worries about “anemic profits, dreadful underwriting results, the state of the stock market, solvency concerns and a tort system run amok” are still keeping property/casualty CEOs awake at night despite the hard market being in its third year. Read his analysis in an article appearing in NCCI’s 2003 Issues Report. (this link is a pdf file)