ANTITRUST DISCLAIMER
The purpose of this meeting is discuss the matters outline in
the agenda. Antitrust apply to the discussions held at this
meeting. Therefore, it is imperative that the participants stay
within the formal meeting agenda and avoid any discussions,
including informal conversations, which may violate antitrust
laws. Participants should avoid discussion of pricing
promotional policies, market allocation, supplier costs,
conduct that could be construed as a boycott, and any
company-specific trends, expenses or profit. You should
consult your legal counsel if you have any questions
regarding antitrust laws or appropriate meeting discussions.
AGENDA
• State of the Workers’ Compensation Market
• Renewal perspectives from
• Broker
• Underwriting/Insurance Carrier
• Customer
• Questions and Discussion
STATE OF THE WC MARKET
THE GOOD NEWS
• According to NCCI and other sources, combined ratios
continue to improve countrywide
Almost at an Underwriting Profit!
• NCCI projects a 101% combined ratio for 2013
• 108% in 2012
• 115% in 2011
• 115% in 2010
• Rate increase moderation
STATE OF THE WC MARKET
THE BAD NEWS
• Rate Increase (Moderation)
• Medical Cost Increases
• Pharmacy
• Terrorism Concerns
• Marijuana Uncertainty
• Ebola, etc.
• Shrinking Excess WC Market
STATE OF THE MARKET
INSURANCE COMPANY REACTION
• Insurers will likely differentiate themselves on relationships
and flexibility (LOC flexibility, plan flexibility)
• Insurers are still focused on Underwriting Profit because
interest rates remain low
• Volatility in the market remains in states such as California
and New York, where negative trends continue
STATE OF THE MARKET
CURRENT LEGISLATION
•
Legislation around the country in 2014 focused on:
•
Medical Cost Containment
•
•
•
•
Now 60% of WC Cost (40% in 1980’s)
Physician Fees
Pill Mills
Opiate Drug Abuse
Will the legislation work to control costs?
tell
Only time will
BROKER
Timing: “Start Early”
120 Days Out (at least)
Broker/Carrier/TPA Meetings
90 Days Out
Submission to Carriers
BROKER
Basic Renewal Information Needed
•
Audited Financials + Interim
•
Updated Payroll by Class by Location
•
Organizational Chart / Named Insured Schedule
•
Operation Changes
•
Industry Considerations
•
Location Schedule w/ Entity Name
•
Employee Concentration
BROKER
What type of plan:
•
First Dollar / Guaranteed Cost
•
Retro
•
Dividend
•
Deductible / Self-Insured Retention (SIR)
•
Captive
•
Corridor Deductible
•
Clash Coverage
•
Aggregate Stop Loss
BROKER
Other Renewal Considerations to Communicate:
•
Payment Terms
•
Claim Services (Bundled / Unbundled)
•
Loss Control Services
•
Rating Basis
•
Collateral Requirements
•
Letters of Credit
•
Pre-funded Deductibles
•
Hybrid
•
Cash
•
Surety Bond (limited and partial)
•
Audit Frequency
•
Broker Fee / Commission
BROKER
Loss Control Information Needed
• Level of Controls in Place
• Training
• Hiring Processes
• Vehicle/Machinery Use/PPE
• Return to Work/Lost Time
• Management Commitment
• Industrial Hygiene (IH) Needs
BROKER
Claim Information Needed
• Current Year + Previous 5 to 10 Years
• Currently Valued
• One Year Prior Evaluation Date
• Data:
• Analytics
• Predictive Modeling
• Mining
• Identify Root Causes
BROKER
TPA/Carrier Claim Review
General Information
 Key Accomplishments/Overall Program Status
 Action Items
 Modeling Capabilities
 Benchmarks/Trending
 Analytics/Scorecards
 Predictive
 Data Mining
 Loss Control Partners
BROKER
TPA/Carrier Claim Review
Claim Reporting Abilities
 24/7 Reporting Capabilities
 U.S. vs. International Capabilities
 Internet/Email/Tele/Fax Reporting
 Electronic Data Sharing
BROKER
TPA/Carrier Claim Review
Claim Management Considerations
 Geographic Locations
 East vs West Coast Considerations
 After-Hours/Emergency Contacts
 Supervisor Intervention
 Adjuster Case Loads
 Adjuster/Industry Experience
 Special Handling Requirements
 Investigations/Subrogation/Litigation
 Reserving Philosophy
 Medical Management
BROKER
TPA/Carrier Claim Review
Telephonic & Field Case Management
 Managed Care
 Report Generation
 Cost Containment
 Outsourced Services
 Return to Work / Transitional Duty Support
BROKER
TPA/Carrier Claim Review
Claim/Risk Management Systems
 Cost
 Real Time Access
 Report Generation
 Customization Capabilities
 Allocation Capabilities
 OSHA Recordkeeping
 Training Abilities/Technical Assistance
 Data Transfer Capabilities
Account Management
Pricing & General Administration
UNDERWRITING/INSURANCE CARRIER
• Start renewal process six months ahead for large
accounts
• Smaller accounts will need less lead time
• Preliminary data analysis, including loss ratios, trending of
indemnity/medical claims
• Have marketing/underwriting approach broker on
upcoming renewal plans
120 to 90 days ahead - begin earnest evaluation of renewal
UNDERWRITING/INSURANCE CARRIER
• Modeling: Majority of Insurance Carriers use
modeling on both large and small accounts to aid in
pricing business
• Large Business would generate a formal “loss pick”
using industry standards and the account’s own
loss experience
UNDERWRITING/CARRIER
• Modeling is proprietary
• However, loss picks are generally shared
• Using the loss pick, the insurance carrier will
generate a renewal price that includes
• Ultimate losses
• Expenses
• Reasonable Insurance Carrier profit.
UNDERWRITER/INSURANCE CARRIER
• For larger accounts, an Insurance Carrier’s
Marketing/Underwriting may use underwriting
judgment to set deductible amounts on a loss limit,
and aggregate deductible amounts
• The goal would for the Insurance Carrier is to find
an Underwriting Plan that fits the insured’s needs
and the needs of carrier
UNDERWRITING/INSURANCE CARRIER
• Very early in the process Insurance Carrier will ask
Broker:
• “What kind of Underwriting Plan do you want?”
• “What is important to the insured?” (i.e., loss control
services, TPA services, cash flow plans, dislike of letter
of credit.).
• The answers to these questions will drive the renewal
plan underwriting
• Brokers: Speak up early and often!
• Let the insurance carrier help solve pain points for the
insured.
CUSTOMER
• Brokers – Talk to the customer before the renewal
process begins
• Understand the company
• Philosophy / strategic plan
• Risk tolerance
• Financial situation
• Recent changes within the company
• Customer knowledge of workers’ comp
• Ask what the customer wants to change or keep the
same
CUSTOMER
As the renewal process starts
• Tell the customer about the current market conditions
and how it affects them
• Suggest program changes to consider
• Listen to the customer’s response
• Discuss marketing strategy
• Estimate a rate range
• Provide a list of necessary information the insured must
provide, and a timeline
CUSTOMER
Broker / Underwriters
• Provide the renewal both in detail and summary
• Highlight program changes
• If the program was marketed, compare options,
summarize and provide feedback
• Quote your best price
• Think of the broker, underwriter and customer as
part of the same team
QUESTIONS / DISCUSSION
Meegan Williams, JD, CPCU
CL Underwriting Consultant, Liberty Mutual Insurance—Northwest Region
(503) 736-8775 Email: Meegan.Williams@Libertymutual.com
Steve Miller
Senior Vie President, Brown & Brown Northwest Insurance
(503) 219-3250 Email: smiller@bbnw.com
Eva LaBonte, MS, ARM
Workers’ Compensation Program Manager, Nike, Inc.
(503) 532-5046 Email: eva.labonte@nike.com
SOURCES
Top 10 Casualty insurance Trends for 2015: Marsh
NCCI: State of the Line, October 2014
Marketplace Realities 2015: Edge of a Cliff: Willis