R&R Insurance Blog

The property and casualty insurance industry had more than $19 billion of reserve redundancy at the end of 2009—a majority of which will be released this year and the next, according to Morgan Stanley.

A recent report on the p&c market from Morgan Stanley Investment Research said most of these reserves are in the workers’ compensation, medical malpractice and personal auto liability lines, and could be a source of future earnings as they are released.

Morgan Stanley also said the current p&c soft market will not turn hard until the industry feels a reserve deficiency, negative operating profits and adverse development. Morgan Stanley predicted that this will likely not happen until 2013.

An industry-wide drop to negative operating profits “requires profitability to shrink by $50 billion from underwriting losses,” such as from a natural or man-made catastrophe, social inflation, unforeseen product losses or a combination of these factors.

Morgan Stanley analysts see pricing down about 1 percent in 2010 and 2011—a 4 percent decrease in commercial lines and a 3 percent increase in personal lines.

Right now the industry has plenty of capital, reserve redundancy and operating profits, Morgan Stanley said.

The outlook for investors puts p&c excess capital at more than $100 billion, using a metric of premiums to surplus ratio. The amount is at an all-time high, Morgan Stanley said.

R&R Insurance's Resource Center has put together a 2009 vs. 2010 class code rate comparison detailing the percentage increase or decrease.

Class code rates are determined by the amount of dollars spent on work-related injuries in a particular class code (typically by insurance carriers) which are then reported to the WCRB. All companies in Wisconsin contribute to the rate change of a particular class code. Therefore, if you and other businesses with the same class codes had a good safety record over the past few years, you all benefit by receiving a decreased class code rate per $100 of payroll. You can see that change in a class code like 3082 - Steel Foundries - Almost a $4 decrease per $100 of payroll.

We often comment that you can't control the rates in WI - they are what they are, and the only things that change the price of your work comp premium is the experience mod, and the workers compensation dividend (which have been ultra-aggressive this year). But, as an industry, you do impact the overall rate based on your individual performance and contribution to the "whole."

One more thought..
The WCRB sets the premium rate for each class with the approval of the Commissioner of Insurance. If you feel that your business is not properly classified or the premium charge is not proper, you can appeal to the WCRB for review of your situation. If you are still not satisfied with the WCRB’s decision, you may request, in writing, that the Commissioner of Insurance hold a hearing to review the WCRB’s decision.

Question: What do Suze Orman, Oprah Winfrey and Terry Savage have in common (besides being bazillionaires)?

Answer: They each own Long-Term Care insurance.

WOW! Why would someone so wealthy own long-term care insurance? They surely could afford to self insure their care for years to come couldn’t they?

Interestingly though, the nationally recognized and widely respected advisors such as Suze Orman and Terry Savage own LTCI themselves and are ardent proponents of the product, in fact, they’ve become wealthy by giving people this very advice.

Perhaps the super-affluent own LTCI because, in addition to wealth preservation, the money collected from LTCI benefits can provide them with dignity, and options that might not be available otherwise. LTCI can give people a track to run on and a way for others to know their wishes and desires, even if they are unable to express themselves. LTCI can also reduce or eliminate much family stress and conflict.

As Suze says: "I know, I know - you think , "I'll never end up in a nursing home". Well as with all insurance policies: I hope you'll never need to use any of them, but if you do, they sure are nice to have."

For more questions on long term care insurance, contact our Certified Long Term Care Specialist Jane Shevey at jane.shevey@rrins.com or call her - 262-953-7123.

A job safety analysis (JSA) is not always best left only to a safety supervisor. Your workers' experience in doing a job gives them superb knowledge of what can go wrong from a safety and health standpoint.

While some hazards can be obvious to everyone, many workers probably encounter situations that haven't been considered by others. Your workers' insights are vital.

Conducting a JSA is also valuable as a training guide for new employees, a "refresher" for existing employees and as a tool for determining why an incident happened.

John Brengosz, loss prevention specialist at R&R, is a resource I consistently offer to my clients as he has extensive experience in conducting JSA's. The other piece is that John has a real talent for getting supervisors to "buy into" the process, which can often times be half the battle. Currently, I have a client doing JSA's department by department and the response by the supervisors and the employees has been terrific. Now, evaluating the work station at the beginning of a worker's shift has simply become a natural "step one" before work begins - It's just a part of the culture!

If you would like to know more about how we help our clients conduct JSA's, keep their employees more safe, and ultimately, make them more profitable, please contact me.

A loading dock worker was loading drywall onto a flatbed truck when a forklift being operated by a co-worker surged forward, fatally pinning him against the truck.

At another workplace, a textile plant supervisor was operating a forklift truck when another forklift fell from a loading dock, causing the supervisor's forklift to flip over. He was crushed under the roll cage and died.

And elsewhere, a warehouse worker died after he was crushed between a reversing semi-trailer and a loading dock. Investigators believe that he was likely paying more attention to the contents of the trailer than to where he was standing.

Loading docks are busy places where machine operators and truck drivers must perform a delicate dance around workers on foot. Along with being congested, loading docks may also be poorly lit, slippery, cramped, crowded with debris, riddled with blind spots and crisscrossed with ramps, stairways and uneven surfaces.

Here are just 5 of the possible hazards:

1. Slips, trips and falls;
2. The possibility of workers on foot being struck by vehicles;
3. Being crushed by unstable loads that shift suddenly;
4. The possibility of a forklift driving over the edge of the dock and having it or its load land on workers below; and
5. The possibility of a trailer whose wheels aren't properly chocked creeping forward or backward into workers.

Loading docks are a hub of activity. Workers need to be trained on how they can protect themselves. If you would like to know more about how R&R is helping keep its clients more safe in this particular area, please contact a knowledge broker.

Many people still believe they will be successful at divesting their estates to their heirs so they can receive “free” skilled care. It's still possible, with a few tricky maneuvers. Advance planning can be key if it is expected that a person might need Medicaid assistance to pay for long-term care.

If you divested any financial resources within 60 months of applying for Medicaid, you may face penalties thanks to the Deficit Reduction Act. Every $100,000 divested equals nearly 16 months of ineligibility ~~ OUCH!

Deficit Reduction Act

The Deficit Reduction Act (DRA) made several important changes to the Medicaid asset-transfer rules. The look-back period for asset transfers was extended from 3 years to 5 years (60 months) and the start of the penalty period or ineligibility period for transferred assets was changed from the date of the transfer of assets to the date when the elderly person applies for Medicaid and is otherwise qualified for Medicaid, generally at the time he or she enters a nursing home. Simply put, one of the key requirements for Medicaid eligibility is that the elderly person lacks assets, meaning he or she cannot afford to pay for nursing home care. However, Medicaid will look back 5 years to see if the elderly person transferred any assets for less than fair market value, and if so, will deny Medicaid benefits for a period of time (the ineligibility period) based on the amount of assets transferred.

The DRA took effect on February 8, 2006, but, because Medicaid is a joint federal and state program, the states are required to apply the DRA to their state programs. Some states will have to change their Medicaid rules, and many of those states are not yet operating under the DRA. Therefore, be sure to find out the law in your state before making any decisions.

Look-Back Period

The look-back period is a balancing act between the government's need to be able to afford providing Medicaid and a person's desire to be able to leave their property to their heirs when they die. An elderly person cannot simply give their property away and begin receiving Medicaid. The look-back period is the time preceding the person's application for Medicaid during which asset transfers will be scrutinized. The look-back period simply means that after a certain amount of time has passed, Medicaid does not inquire whether the elderly person gave away property. However, a transfer within the look-back period will be questioned and, if something of equal value was not received in return, a penalty will be applied, which will prevent the person from receiving Medicaid long-term care benefits until that penalty period expires. The look-back period is 60 months (5 years) for transfers under the DRA. In states that have not yet implemented the DRA, it may be only 36 months for transfers (except if funds are transferred to a trust).

Ineligibility Period

The ineligibility period is a period of time during which Medicaid looks forward. The ineligibility period is triggered by transfers of assets during the look-back period and looks forward to determine a date when the person may become eligible for Medicaid. The ineligibility period begins after the elderly person applies for Medicaid and is seeking long-term care benefits. The length of the ineligibility period is calculated by dividing the total, cumulative, uncompensated value of the transferred assets by the average monthly cost to a private pay patient of nursing home care in the applicant's geographic area as of the date of the application for Medicaid. The best-case scenario is for the elderly person to transfer assets and remain healthy and out of a nursing home until the look-back period has been exceeded. That way, in the eyes of Medicaid, the person has the minimal amount assets that will allow him or her to qualify for Medicaid.

For questions on Medicaid eligibility, long-term care, look0back periods or anything regarding your plans to include some type of long-tern care within your retirement plan, please contact our Long-Term Care Specialists.

For more questions on long term care insurance, contact our Certified Long Term Care Specialist Jane Shevey at jane.shevey@rrins.com or call her - 262-953-7123.

“Jamie, on behalf of New Berlin Grading, Inc., thank you for the service you and R&R Insurance have given our account. Through your professional and personal attention to our needs and challenges we have been able to lower our EMR from a .99 to a .65. We attribute this success to the direct efforts of you and the resource team.”

Dennis Schmit
New Berlin Grading, Inc.

Like many young companies in the construction industry Squared Away Builders, Inc. concentrated on working hard, staying busy and taking care of their customers. This left little or no time to manage other things like workman’s compensation insurance premiums. In the case of Squared Away, learning how to manage workers compensation insurance was one key to lowering costs, making the company more safe and enabling the company to become proactive instead of reactive when it came to workman’s comp.

A feeling of helplessness…
“When it came to work comp there was an inherent feeling of helplessness” says Brett Wittig, President of Squared Away Builders, Inc. “As a small business you try to do the best you can managing your employees while managing your business for profit at the same time and when the WC premium rolled around it felt like a slap in the face. We had been working hard all year, concentrating on the basics of running a business and it felt like we were helpless and couldn’t do anything about this large premium.”

We didn’t know what was coming…

“After our third year in business, we knew our modifier was 1.71 but we had no idea where this number came from, how it was determined or how it affected our premiums directly. We did know however after three years of large premiums that we had to do something to lower our costs if we wanted to stay competitive.”

The search for knowledge…
“Frustrated about work comp but still trying to concentrate on making a profit and taking care of our employees Bill Katzfey caught our attention. His philosophy of creating a knowledge based culture change in our organization in order to help manage work comp costs was something that Squared Away needed. What’s more important was that Bill was able to give us the knowledge, specifically in regards to the construction industry, which we needed as a company in order to make that culture change. R&R Insurance Services has given us and continues to give us a solid understanding of what it truly costs to have an injured worker”, states Dan Wittig, Operations Manager.

The difference it has made…
“We have had the program we designed with the knowledge and techniques provided by R&R for three years now and we finally are seeing the benefits. We have used the premium savings to invest in our employees and in the future of our company. There is no doubt in my mind that we would not be in the position we are in today without the help and knowledge of R&R Insurance Services has provided us.”

“Since 2001 we have been applying the concepts that R&R teaches in their WC seminar. It took a lot of hard work, consistent communication of a solid message and a little patience.”

Brett & Dan Wittig
Squared Away Builders

“The insurance team at R&R insurance helped me to put in place a safety program that will reduce my Workers’ Comp premium by $30,000 in the coming policy year. R&R tracks our claims and their accuracy. They found additional savings of $14,000 this policy year… R&R Insurance is a necessary tool for Merit Asphalt Inc.”

Bob Pederson
Merit Asphalt, Inc.

"R&R Insurance Services has provided insurance coverage to us for many years. Brad Stehno and Nancy McMurry are both knowledgeable and professional. They have been very helpful in updating our Safety Program and providing help with our Safety Meetings. We have implemented a return-to-work program with their help and have seen the results of employees returning to work sooner and lowering Workman’s Compensation costs. Our Experience Modification has also continued to go down since we have been with R&R. We appreciate their availability when we have questions or concerns. Working with Brad and Nancy has been a great experience.”

Larry Schlueter
D.F. Tomasini