February 8, 2010
The Medicare Secondary Payer Statute: In Search of Ariadne’s Thread
In Greek mythology, Daedalus built the Labyrinth for King Minos of Knossos to contain the awful half bull/half man Minotaur. Theseus eventually killed the Minotaur, but only found his way out of the Labyrinth because Ariadne had given him a magic thread to mark his way in and out of the maze. I’m beginning to think that American health care...December 14, 2009
Joint and Several Bust
Back in June we blogged the failure of several self-insurance groups (SIGs) in New York, all run by Compensation Risk Managers (CRM). There was bad news all around: participants in CRM SIGs were suddenly without coverage; and participants in other (non-CRM) SIGs were hit with a huge surcharge to make up the deficits created by CRM's deficient management. Now the...November 23, 2009
Massachusetts Premium Rates Redux
My blog post of last Thursday (19 November 2009) addressing why workers’ compensation costs in Massachusetts are the lowest in the nation, while benefits are among the highest drew a mild pushback from Mark Walls, who manages the excellent LinkedIn Workers’ Compensation Forum. Mark wrote: "Working for an excess carrier, I would never have expected Massachusetts to be considered a...October 6, 2009
Annals of Insurance: The Battered Need Not Apply?
I'm guessing that you never thought of domestic violence as a pre-existing condition. Well, you haven't tried to file a claim in one of the seven states that permit health insurers to deny coverage for the battered. The seven are Idaho, Mississippi, North Dakota, Oklahoma, South Carolina, South Dakota and Wyoming, plus the District of Columbia. The aptly named Ryan...September 14, 2009
Oklahoma: OK!
The Insider just returned from a speaking engagement in Stillwater, Oklahoma. The occasion was the annual workers comp conference sponsored by the judiciary that manages comp in the state. I was invited by fellow blogger Judge Tom Leonard, whose blog provides valuable information to comp practitioners in the state. As a relatively high-cost state, Oklahoma is experiencing rumblings in the...July 8, 2009
Spouse as Caregiver: To Pay or Not to Pay
Serious workplace injuries often turn spouses into caregivers. So the question becomes, are their services compensable under workers comp? As is so often the case, it depends upon where you live. The Supreme Court of Arizona recently decided a case in the spouse's favor (Sabino Carbajal v.Industrial Commission of Arizona). In 1999, Sabino, working for Phelps Dodge, suffered a serious...June 22, 2009
Risk Transfer without Risk
The Defense Base Act (DBA) was enacted in 1941, to cover the injuries to civilian employees - primarily a few hundred engineers - during the second world war. The act might have worked then, but it certainly is not working now, nearly 70 years later. As we have blogged in the past, the DBA is a boondoggle, generating huge profits...June 9, 2009
Will Health Care Reform Crush Workers Comp?
If health care reform is the proverbial 800 pound gorilla, then the medical portion of workers comp is a 15 pound Maine Coon cat: it might big for a cat, but compared to a giant gorilla, it is barely noticeable. Nonetheless, this cat is blessed with a very strong notion of what it needs. As the nation moves closer to...May 27, 2009
Aging America: A Looming Catastrophe?
Take 78 million Baby Boomers and their retirement plans, mix with a woebegone social security system and the global economic meltdown of 2008/2009. Add in rising health care costs and the insurance industry’s natural propensity to avoid troubling issues, and you have a recipe for a looming catastrophe of the first order. That's the premise that Lynch Ryan CEO Tom...January 13, 2009
Reducing the Conflict Between Bankruptcy and Workers' Compensation
Part two of a three-part guest post series on bankruptcy and workers compensation by Robert Aurbach, CEO of Uncommon Approach. The last posting introduced Joe, the injured employee of a self-insured employer, and discussed the ways the workers' compensation system failed him when the employer filed for Federal Bankruptcy protection. It's important to understand the reasons why this happens to...January 12, 2009
Bankruptcy and Workers' Compensation: Broken Promises, Broken Lives
With the difficult economy, the issue of "what happens to a workers' comp claim in the event of a bankruptcy" is on the minds of many of our readers. We’ve addressed the issue of bankruptcy in the past. Today, we are pleased to introduce a more detailed three-part guest post series on bankruptcy and workers compensation by Robert Aurbach, CEO...December 8, 2008
Maryland officials monitoring GM solvency related to workers compensation
With the Big 3 automakers discussing potential fallout if the federal government doesn't come through with a bailout package, there is one aspect of the fallout that would likely be a mere footnote in the wake of such a massive failure, but that would be of interest to thousands of workers: the issue of what happens to workers compensation claims....November 10, 2008
Insurance in the storm: buyers can expect the onset of a hard market
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...October 28, 2008
Disability Insurer Oversight: Just Ducky?
Last month we blogged the emerging scandal involving the Long Island Railroad, where over 90 percent of employees (management included) retire on disability. Walt Bodanich and Duff Wilson of the New York Times have a follow up article that goes into some of the deails. It's not surprising to find that workers were coached in the best way to apply...July 28, 2008
Real Injuries, Phony Claims
When it comes to fraud in workers comp, we usually look to employers, doctors and lawyers. They go after the big bucks. While there are opportunities for ordinary workers to exploit the system, most decline to do it. Today we examine two claims, both involving real injuries and both involving fraud. Coincidentally, it's a bi-coastal story. Let's begin in the...June 17, 2008
New York Trusts, Revisited: Comp Board Channels Willie Sutton
Yesterday we blogged the New York Workers Comp Board's unusual solution to a cash flow problem: when a dozen trust funds collapsed, the Board decided to hit up the remaining, solvent funds with an assessment: they raised assessments from the routine total of $500,000 to a staggering $12 million. The Board is using the logic of notorious bank robber Willie...June 16, 2008
Risky Risk Management in New York
Compensation Risk Management (CRM) is a third party administrator for eight workers comp trusts in New York. These trusts offer comp coverage to affinity groups in the areas of health care, wholesale/retail and transportation. As we read in the New York Times in an article by Steven Greenhouse, there is good news and bad news about CRM: the good news...May 14, 2008
Workers compensation and recessions
Are we in or headed to a recession? Each of us might have our own opinions based on the industry we work in, the number of times we have to fill our gas tank during the week, and the area of the country where we live. According to the economic cognoscenti, the jury is still out - some industry insiders...May 12, 2008
Workers Comp and Wellness: Partners at a Distance
Bill Thorness has written an interesting article for NCCI on the relationship of wellness programs to workers comp costs. In some respects, it involves a "duh" thesis: wellness programs can significantly lower comp costs, because healthy workers are less prone to injury and, once injured, recover more quickly than their out-of-shape co-workers. Conversely, obese and out-of-shape workers are more at...April 25, 2008
Why Wait? New Brunswick Debates the Waiting Period
A labor group in our neighbor to the North, New Brunswick, Canada, is seeking an end to the three day waiting period for workers comp benefits. "We really believe it is unfair," said Michel Boudreau, president of the New Brunswick Federation of Labour. The federation has pitched the idea of scrapping the three-day waiting period, during which employees receive no...April 22, 2008
Workers Comp: An Obligation to Get Better?
In conventional medicine, people are generally free to choose their care, up to the limits of their coverage. They can opt for certain procedures or decide to forego them. For the most part, adults are independent players in the medical system, acting in accord with their own wishes. In the final analysis, our health is an individual concern, factoring in,...April 16, 2008
"Tracks of My Tiers": Health Care Rationing Comes to America
Gina Kolata writes in the New York Times that health insurance companies are adopting a new pricing system for some of the most expensive drugs, pushing more of the cost onto consumers. It goes by the innocent sounding name of "Tier 4." It might as well be called "bankruptcy for the seriously ill." All insurers require a co-pay on prescriptions,...March 17, 2008
The Best Health Care in the World - Part Three: What Do We Get for the Money?
In Part One of this series, we began looking at some of the many cost disparities between group health and workers' compensation. In Part Two, we compared US health care costs with costs in the other 29 member-countries of the Organization for Economic Cooperation and Development (OECD). OECD countries, all democracies, are considered the most economically advanced in the world....March 13, 2008
The Best Health Care in the World: Part Two - What does it cost?
In 1992 I became a Trustee of a major, tertiary care, teaching hospital in Massachusetts. For Trustee indoctrination, new Trustees spent a week in a classroom learning about every facet of hospital life. One morning we were briefed by the hospital's CFO. I was astonished to learn that the hospital had 27 different billing systems, one for each insurer and...March 11, 2008
The best health care plan in America
In 1986, US workers' compensation medical costs were 44% of total incurred loss dollars. Ten years later, the percentage had grown to 48%. By 2006, medical costs amounted to 58% of total loss costs. And today, nearly a third of the way through 2008, they hover around 60%. The annual workers' comp medical cost rate of growth is nearly double...March 5, 2008
Bullshit as Science: A Test for Malingerers
Paul Lees-Haley, PhD, is a psychologist who has come up with a 43 question test to separate the truly disabled from malingerers. Lees-Haley is either a genius or a pompous fraud right out of Mark Twain. Read on and decide for yourself. (This posting is based upon an article by David Armstrong in the Wall Street Journal, which limits access...February 27, 2008
White Collar Crimes: Marsh & McClennan, AIG & GenRe
A few days ago we blogged insurance crime for amateurs: the saga of Regency Insurance, which was an insurance operation in name only. Today we deal with three big Kahunas: Marsh & McClennan, AIG and GenRe. When it comes to insurance crime, it just doesn't get any bigger than these folks. Before we get to the particulars of the Marsh...February 20, 2008
TPAs, PEOs and Sham Insurance
Insurance companies handle a lot of cash: a lot of money flows in (insurance premiums); a lot of money flows out (insured losses, administrative expenses, the cost of reinsurance). For legitimate carriers, a good year results when the premium dollars collected exceed total losses combined with total expenses. By prudently investing premium dollars, you can even make money when total...February 14, 2008
Pro Football and Workers Comp: A Violent Collision?
Chad Hennings spent nine years as a lineman for the Dallas Cowboys. He accounted for 28 sacks, 6 fumble recoveries, 4 return yards and 1 touchdown in 107 games before retiring after the 2000 season. He also suffered permanent damage to his back. The question is whether or not his work-related back injury is compensable under the Texas workers comp...January 17, 2008
Heartburn in Tennessee
The Tennessee Restaurant Association (TRA), as you might expect, is a lobbying group for restaurants. One of the benefits of membership is access to special insurance programs. Around 500 members participated in a workers comp program run since its 1993 inception by the TRA's charismatic director, Ronnie Hart. Unfortunately, as we read in the Tennessean, Mr. Hart had no experience...January 7, 2008
Surgical Implant/Ethical Bypass: The Story of Dr. Chan
The Insider has often speculated about the thought process of medical providers, so we are very interested in case of Dr. Patrick Chan, a neurosurgeon working out of Searcy, Arkansas. The Canadian trained doctor has pleaded guilty to charges of demanding and accepting kickbacks from surgical implant maker Blackstone Medical of Springfield MA, a subsidiary of Orthofix International. Dr. Chan...November 20, 2007
A Turkey for Walmart
My favorite retailer is in the news again. (The source is an article in the Wall Street Journal by Vanessa Fuhrmans, so you need a paid subscription to read it, at least until Rupert Murdoch decides otherwise.) The story concerns Deborah Shank, a 52 year old woman who stocked shelves in the Cape Girardieu, Missouri store. She worked the night...November 14, 2007
Mental Health Parity: Not in Workers Comp
There is a bill pending in the US Congress to require parity between mental and physical health benefits. The bill is a follow up to similar legislation passed in 1996, which was severely limited in scope: Employers did not have to provide any mental-health benefits. Copays and deductibles could be higher for mental-health expenses. Visits could be limited. And small...October 30, 2007
Risk Transfer and Furniture: Betting Against the Red Sox
Jordan's Furniture is a legendary Boston area retailer of furniture. They generate a carnival atmosphere in their theme-based stores. One involves a replication of Bourbon Street in New Orleans, complete with piped in Jazz. They will do anything - anything! - to get you to buy furniture. Back in March, they tantalized Red Sox fans with a unique proposition: buy...September 20, 2007
House votes to extend Terrorism Act ... presidential veto expected
We have a fight brewing over the Terrorism Risk Insurance Revision and Extension Act (TRIEA), which the House just voted to extend for 15 years. We live in unusual times when the white knight for the insurance industry is Barney Frank and the opponent is George Bush. The House measure not only extended the bill, but also strengthened it: "It...September 19, 2007
NY Reforms: Chaos for Carriers?
When you have a problem, you pass a law to fix it. That's the theory, anyway. Sometimes, the legislative solution creates big, new problems. Take New York - please! In trying to solve the very real issue of rampant under-insurance and premium avoidance in the construction industry, the state has crafted an innovative solution. But the solution creates very big...September 12, 2007
Why We Blog
As we approach the fourth anniversary of the Workers Comp Insider (September 17, 2003), it's a good time to step back and ask a fundamental question: Why are we doing this? Four years ago Tom, Julie and I observed that there were a lot of bloggers tackling a lot of issues, but they mostly involved isolated individuals pursuing a particular...September 11, 2007
New York Update: CIRB Kicked to the Curb?
That reverberant thud we hear coming out of Albany, NY, is the sound of the other shoe landing. And it's dropped straight on top of the New York Compensation Insurance Rating Board (CIRB). In early March of this year, New York Governor Eliot Spitzer signed into law a major and much needed workers' compensation legislative reform. In February we had...September 4, 2007
Sole Proprietors: A Comp Welcome Mat in Massachusetts
What better way to herald the end of summer by returning to the issue that just won't go away: workers comp coverage for sole proprietors and independent contractors. Massachusetts has just taken an extraordinary step that provides a strong incentive for sole proprietors to "opt in" to the comp system. Under the old rules, any sole proprietor seeking comp coverage...August 27, 2007
An Ill Wind Blows: Insuring for Hurricane Risk
Jay Fishman, CEO of The Travelers, offers an interesting perspective on the current state of hurricane risk. (As the piece appears in the Wall Street Journal, availability is limited to subscribers.) The article is entitled, "Before the Next "Big One" Hits." That's ironic, of course, because nothing meaningful will be done until well after the next big one hits. Nonetheless,...August 21, 2007
Justice for Judge Joyce?
For unadulterated audacity and out and out gall, Michael Joyce, a Pennsylvania Superior Court Judge, may currently hold the lead in this year's gold medal competition. Scanning Insurance Journal Online today, we learned that last Wednesday, federal prosecutors indicted Judge Joyce for mail fraud and money laundering, claiming that he cheated the Erie Insurance Group and State Farm Insurance out...May 29, 2007
Ashes to Ashes, Dust to Compensability?
Felicia Dunn-Jones was a civil rights lawyer who worked one block away from the World Trade Center. She fled the office on 9/11, inhaling dust from the falling towers. She was covered with ash laced with asbestos and other hazardous material as she ran for safety. Now, nearly six years later, over five years after her death, New York City...May 22, 2007
Workers compensation state of the market: great! (but cross your fingers)
NCCI has recently released its its annual State of the Line workers compensation market analysis which is really what all the numbers geeks in our industry wait for with some anticipation. You can read the summary in the press release - NCCI Reiterates “Optimistic but Cautious” Outlook for Workers Compensation Insurance Market - or read the full report (PDF). There's...April 6, 2007
New York Labor Law: No Such Thing as a Free Fall
When you talk to insurers doing business in New York, they are quick to point to New York Labor Law as a very big problem. The law, going back to 1885, holds employers absolutely and completely liable for any injuries resulting from a fall. This liability is over and above workers compensation. Injured workers can (and often do) sue for...April 3, 2007
Risk Management for Dummies
Restless modern minds have developed some new approaches to risk. These examples of thinking "out of the box" will eventually end up back in the box - as case studies in business schools across the country: "Risk Management For Dummies - and we really mean dummies!" NINJA Mortgages Let's begin at the micro level: the collapse of the sub-prime home...April 2, 2007
NY Second Injury Fund: the clock is ticking for recovery opportunities
Employers and insurers in NY take note: if you have claims with potential for second injury fund reimbursement, your window of opportunity for recouping recovery dollars has narrowed significantly. New York just passed legislation which includes provisions to phase out their fund. Also in the works, South Carolina legislators are discussing a schedule to close their fund as well, bringing...March 12, 2007
Workers' compensation reform in a New York minute
Well, that didn't take long. Only 19 days ago we wrote about the profound need for top to bottom reform of New York's worker' compensation statute, arguing that the election of Governor Eliot Spitzer provided the best opportunity in more than a decade to accomplish meaningful reform in the state that needed it the most. Lo and behold, if a...March 5, 2007
Massachusetts: Once more into the rate filing breach
In what continues to be perhaps the nation's biggest workers' compensation turnaround success story, the Massachusetts Workers' Compensation Rating and Inspection Bureau (WCRIB) on Friday filed a proposed average rate decrease of 13.4% to become effective 1 September 2007. If the state's newly appointed insurance Commissioner, former Superior Court Justice Nonnie Burns, approves the filing, rates in Massachusetts would be...January 24, 2007
State Farm is (finally) There
We read in the New York Times that State Farm has suddenly agreed to accept liability for many of the claims it had previously denied in Katrina-ravaged Mississippi. The giant insurer has set aside a minimum of $80 million to settle 640 lawsuits. They have also agreed to re-open 35,000 denied claims. In most cases, home owners will collect half...January 17, 2007
Independent contractors, Iraq, and insurance: more light on the matter
In his recent article, Contractors in Iraq are a taxpayers' nightmare, Joseph Neff of The (Raleigh) News Observer presents the most detailed accounting of workers compensation as it relates to Iraqi contractors as I've managed to find. We've discussed the issue of Iraq contractors and their workers compensation coverage before, but Neff's investigative journalism kicks things up to the next...December 21, 2006
Conventional Health and Workers Comp, Part Two: Why Health Care Under Comp Costs More
We recently blogged the beginning of a national dialogue on universal healthcare. Because we focus our attention on the workers comp perspective, we pointed out that any national health plan will come up against - and in some ways run contrary to - the long-established, state-based workers compensation systems. The National Council on Compensation Insurance (NCCI) recently published a study...November 29, 2006
Judge Opens Floodgates for Katrina Victims
Judge Stanwood R. Duval Jr of the Federal District Court in New Orleans has opened the door to payments for homeowners whose homes were destroyed by Katrina. Or has he? We read in the New York Times that some insurers must pay for damage because the flooding in New Orleans was due to human error - specifically, the failure of...November 28, 2006
The End of Insurance?
Peter Gosselin, a staff writer for the LA Times, has written a provocative piece on the future of insurance. It's a must read for anyone interested in risk. We all know that insurers want to sell insurance to people who are not likely to use it. In the rapidly disappearing "old days" of risk transfer, insurer actions were premised on...November 6, 2006
Workers comp costs and benefits - Current state rankings
Here’s a question for you: If you were to ask any employer in America how his or her workers’ compensation costs compare to similar employers in other states, what do you think the answer would be? Well, I’ve been doing that with employers I meet for a long time, and I have yet to meet one who thinks his or...October 23, 2006
Homeowner's Insurance After Katrina: Of Winds, Waters and Agents
Judge L. T. Senter Jr. of the Federal District Court in Gulfport has ruled on the first of thousands of claims by Gulf Coast homeowners against their insurers. The judge addressed several issues related to the catastrophe: did the home owner's policy cover flooding? He ruled it did not. Did the policy cover a combination of wind and water damage?...October 17, 2006
Actuarial Aging
The Insider is partial to actuary jokes. Perhaps it's because so much depends upon the actuarial viewpoint. These are the people who drive the insurance bus. Those of us seated in the bus often feel a bit queasy, as the driver has the vehicle pointed backwards and attempts to drive while looking through the rear view mirror. They drive in...September 12, 2006
Workers Comp Reform: Who Pays?
When it comes to workers comp reform, it's always a good idea to follow the money. Too often, reforms focus on dollars saved, as opposed to measuring the quality of services provided. Too often, reform comes at someone's expense: often conscientious medical providers, and almost always, injured workers. Here are a couple of recent examples: Ohio: Managing Care or Managing...August 15, 2006
Employer fraud: a $30 billion price tag?
When the talk turns to workers comp fraud, the default assumption is that the employee is the culprit. In reality, employer fraud is a huge problem, of a scope that many in the industry would say dwarfs claimant fraud. According to Loretta Worters of the Insurance Information Institute in a recent article in the San Antonio Business Journal, premium fraud...June 30, 2006
Thinking about the Weather
Maybe it's because we've seen so little sun this summer, or maybe because Josh, my lawyer friend, was stuck in upstate New York when 100 miles of interstate near Syracuse was closed due to flooding, or more likely it's because I saw Al Gore's compelling lecture/movie "An Inconvenient Truth." But as I prepare with everyone else to celebrate this July...June 27, 2006
Comp Insurers Go to the End of the Line
When is an employee benefit not a benefit? When it's workers comp. Andrew Simpson, Jr outlines in the Insurance Journal a recent case before the US Supreme Court, which ruled in June that premiums for workers comp insurance, unlike those for health insurance, are not bargained benefits and therefore, comp insurers are out of luck when a company goes bankrupt....June 7, 2006
Refreshing and Progressive Proposals from New York Agents
New York's workers' compensation system is expensive, adversarial, administratively cumbersome and, in many ways, harmful to the very people it is supposed to serve, employers and injured employees. Now, the Professional Insurance Agents of New York State (PIANY) have authored an insightful, forward-thinking and very intelligent Legislative Position paper that addresses the state's serious workers' compensation problems. It should be...May 31, 2006
Deep Vein Thrombosis: Immobility in the Age of Travel
One of the ironies of modern life is that we can go anywhere in the world, but we often find ourselves immobilized in the process. There are a number of circumstances that render us immobile: long haul air travel - 4 plus hours (on a bad day, that might be just runway time!). Sitting in a traffic jam or driving...May 15, 2006
State Farm is Where?
All major businesses carefully construct a public image. Sometimes reality bumps up against the image with gale force winds. Insurance giant State Farm likes to present itself as a "good neighbor, someone you can count on." For nearly 700 homeowners whose homes were destroyed by hurricane Katrina, the good neighbor is beginning to look a bit like Jack Nicholson in...May 10, 2006
Accommodating a Mental Disability
Let's say you run a large insurance company. You sell through your own agents, one of whom has been a marginal performer for many years. You place the employee on probation several times, but he seems to be trying hard, so you continue his employment. This individual suffers from bi-polar disorder. Over the course of a decade, he goes out...May 5, 2006
Disability in Baseball: Bagwell's Long Goodbye
It's a sunny, mild Friday and the mind wanders away from work, to the ballpark. The Insider has been thinking about Jeff Bagwell. For Red Sox fans, Bagwell will always be the one who got away, traded in 1990 to the Houston Astros in an ill-advised deal of legendary proportions. The Sox acquired the services of an aging relief pitcher...April 30, 2006
Beacon Mutual - Back to the Brink
Public sector institutions, created in response to crisis, often outlive their usefulness. A case in point seems to be Beacon Mutual Insurance Company of Rhode Island. Most Insider readers are probably aware of the currently escalating catastrophe triggered by the audit report delivered April 14th by the committee headed by former Governor Lincoln Almond. Since I’ve observed the saga from...March 31, 2006
When Normal Life becomes "Mission Impossible"
Last June during the filming of Mission Impossible 3, Steven Scott Wheatley, a Hollywood stuntman, was standing near a Chevy Suburban that was supposed to be blown up by a missile. The device planted in the vehicle detonated prematurely and Wheatley was burned over 60% of his body. He is now suing Paramount Pictures, Tom Cruise's production company (Cruise/Wagner) and...February 28, 2006
The Feds and the Phantom Miners
Today the Insider looks at seemingly divergent issues which converge in a striking manner: federal involvement in mine safety (MSHA enforcement), federal prosecution for workers comp fraud, and the ongoing saga of work in the mines. It's a complex picture, but one which resolves into a single focus: the exploitation of the people who work in mines. MSHA and the...February 22, 2006
The $263 million question: Can Montana cap benefits at 65?
Montana courts are examining the issue of whether the state can terminate workers compensation benefits to workers at age 65, and if the court finds in favor of the plaintiff, the Montana State Found could be forced to retroactively pay benefits to those over 65. Grocery store worker Catherine Satterlee (PDF) has challenged the constitutionality of Montana's law on the...January 26, 2006
Back to the basics: Assigned risk pools and the residual market
One plaintive plea we often hear from employers is "help me get out of the pool!" If you're wondering what the heck a pool is and why being in one is viewed as a negative, you aren't alone. Workers comp is rife with nooks and crannies. Unless you're an insurance wonk or you suddenly find yourself in one, pools may...January 9, 2006
Sago mining disaster and workers comp: newly formed insurer to pay benefits
For many years, West Virginia was one of a handful of monopolistic states in which all workers compensation was handled by a state compensation fund. After years of punishing losses, the state legislature moved to privatize the fund. The first phase of this privatization began on January 1 when the state compensation fund passed the baton to BrickStreet Mutual Insurance...October 11, 2005
Genetic Testing And Workers Comp
In yesterday's New York Times (the free section, registration required), we learn that IBM has a Chief Privacy Officer, which tells you something about the current state of affairs in corporate America. We also learn that IBM has issued a policy asserting that it will not use genetic information in hiring or in determining eligibility for health care and other...October 4, 2005
Catastrophe and Risk Management
Garrison Keilor, host of the Prairie Home Companion on Public Radio, recently responded to the debate over teaching evolution in high school by stating that he has seen little evidence of evolution or of intelligent design in the way the affairs of this country are being managed. Which brings us to the convergence of two obliquely related items: the aftermath...September 28, 2005
Retroactive Insurance: Homeowner's Dream and Actuary's Nightmare?
There are a lot of solutions floating around with all the debris from Katrina and Rita. Here's one: take all the people without flood insurance whose homes were destroyed and offer them retroactive coverage. They pay ten year's worth of retroactive premiums (paid for out of the settlement) and they collect up to the policy maximum of $250,000. They use...September 26, 2005
Are TRIA renewal prospects getting a boost?
The Hill is reporting that insurance lobbyists have been working overtime since Katrina to extend passage of the Terrorism Risk & Insurance Act (TRIA), the federal backstop for insurers that is scheduled to expire on December 31. Many lawmakers think that the voluntary market should be developing alternatives to cover any terrorism risk, but the hard hit that the reinsurance...September 16, 2005
Katrina: Who Pays? (part 2)
We've been tracking the saga of who is going to pay for Katrina's havoc. If Jim Hood, the attorney general of Mississippi, has his way, insurance companies will be on the hook for all the homeowner losses, even those caused by flooding -- despite the fact that floods are excluded from homeowner's policies. Hood has filed a lawsuit against five...September 15, 2005
Workers Comp Conundrum: Permanently Disabled but Still Working
Steven Trucinski, an employee of International Paper Co. in Ohio, was injured in a chemical explosion on October 15, 1998. He sustained severe trauma to his left lower extremity, as well as burns over large portions of his chest, back, and right upper extremity. His leg was amputated above the knee. Under Ohio law, loss of two body parts automatically...September 8, 2005
Katrina: Who Pays?
As the water levels finally begin to recede in New Orleans and the astonishing scale of the property damage throughout the region becomes clearer, the question for many people is painfully simple: who is going to pay for the damage? Thousands of homeowners are facing an enormous problem of coverage. If hurricane winds destroyed the house, they are covered. If,...September 1, 2005
Katrina
With my mind reeling from images of devastation in the aftermath of Katrina, I try to focus for a moment just on the implications for workers compensation. The hurricane hit on a weekend, so most people were not working. But some were -- working for companies that may have been obliterated: no payroll records, no employment records, nothing left. How...August 9, 2005
Insurance industry scandal watch
Joe Paduda has been doing so much heavy lifting in his diligent tracking of the many investigations into insurance wrongdoing that we are thinking he may need to change his blog name to "Scandal Central." It's almost like one of those whack-a-mole carnival games - new developments seem to keep popping to the surface daily. Today, Joe reports on a...July 12, 2005
Blowing the Roof Off Workers Comp
If you were to guess where you would find the most demand for roofing services, you might start with Florida. After all, the state was hit by four hurricanes last year and has already suffered from Hurricane Dennis this year. Big winds blow off the roof, right? So you might assume that Florida is great place to be a roofer....July 7, 2005
TRIA: Terror and Risk Transfer
This morning's alarming news about terror attacks in London triggers some melancholy reflections on the way public policy evolves and the way society tries to cope with the unprecedented risks of the new milennium. At this time it appears that about 40 people have been killed and well over 300 have been injured in coordinated attacks on the London transport...July 1, 2005
Insurance Fraud: A is for Arson
High school chemistry teacher Tramesha Lashon Fox, 32, had a problem. Her 2003 Chevrolet Malibu was a bummer to drive, so she went out and bought a 2005 Toyota Corolla. Unfortunately, she still owed $20,000 on the Malibu. So she concocted a plan to get rid of the unwanted car: she recruited two of the worst students in her class...June 13, 2005
Workers' Comp in Iraq
A fascinating article by staff writer T. Christian Miller in today's Los Angeles Times (registration required) focuses on the cost of providing workers comp insurance to non-military employees in Iraq. Under a WW II era program called the Defense Base Act, private insurers charge the government for comp premiums. These private carriers are at risk only for the non-combat related...June 5, 2005
So you want to be an actuary...
Actuary.net points to an amusing survey on Actuarial Outpost about career choices: Machinist or Actuary? Perhaps I should qualify that to say that it's amusing if you work in insurance ;-) It brought to mind an actuarial jokes website that I chanced on some years ago when there was precious little in the way of insurance posted on the web....June 2, 2005
The Lot That Isn't There...
We ordinarily focus on the world of commercial insurance, but I cannot help but wonder what property insurers are going to do about the multi-million dollar homes that recently slid down a cliff in Laguna Beach, California. The LA Times has a summary of the event, which links to a compelling set of photographs. Fortunately, no deaths or serious injuries...May 24, 2005
Pre-existing conditions and second injuries
Over the weekend, one of our regular readers left a comment in another post asking for information about work injuries that are aggravated by a pre-existing condition. At one time, most state laws had Second or Subsequent Injury Funds (SIFs) that offered some measure of recovery to employers/insurers for injuries that were exacerbated by a pre-existing condition, whether that condition...May 17, 2005
New York Rates: Follow the Bouncing Ball
New York is famous for being a high cost state for workers compensation. By any reasonable measure, New York falls within the top four states for high comp cost, sharing the dubious spotlight with California, Texas and Florida. With its unique paternalistic approach, the state requires multiple hearings during the course of a routine claim. While attorneys in most states...April 25, 2005
RIMS report: notes from Philly
I spent last week at the annual Risk & Insurance Management Society annual meeting in Philadelphia last week. This is one of the single largest events in the property and casualty industry, attracting thousands of attendees and exhibitors. A quick snapshot of the show reflects an industry in turmoil. When I reflect the first RIMS I attended in Orlando more...April 20, 2005
"Exclusive Remedy" - Bends but does not Break
"Exclusive remedy" lies at the heart of workers compensation. In exchange for the protection of workers compensation benefits, employees give up their right to any other remedy for workplace injury. This generally works out pretty well for both parties, but as with so many issues, the action at the margins is intense. There are two areas where challenges to exclusive...April 15, 2005
Maximizing recovery: Second injury funds
One of the nooks and crannies of workers comp that often gets short shrift is the issue of recovery. Many employers and insurers can recoup claim expenditures through second injury funds or subrogation, for example. Since this is a large area, today we'll briefly discuss second injury funds, and return to subrogation at another juncture. Second injury funds were designed...April 6, 2005
NCCI 2005 Issues Report - a look back, a look ahead
Every spring, NCCI publishes a series of reports that paint a portrait of the workers compensation industry's health. These include an annual "Issues Report," followed later by a "State of the Line" report. For those of us who work in the industry, these reports offer a quick look of where we've been and provide a cookie trail for where we...March 8, 2005
The long tail of insolvencies: Colorado, New York employers face potential assessments
Some employers in Colorado and New York are learning that the so-called long tail of workers comp has more than one meaning. In the wake of a multitude of insurer insolvencies in recent years, many state guaranty funds are buckling under the burden, and turning to employers to help pick up the pieces. Like many other states, Colorado has been...March 4, 2005
Avoid Comp Premiums...and Pay the Price
We have been following the aftermath of the tragic Station night club fire that took place just over a year ago in Rhode Island. The Providence Journal (registration required) has done a terrific job of tracking the many legal cases emerging from the fire. One hundred people died, including a number of nightclub employees. There are many unresolved liability issues...March 2, 2005
2004 Workers Compensation Premium Rate State Ranking Summary
A reader put our "google-fu' to a serious test with this question: "I am very interested to know if there is a free website or publication that will show a side-by-side cost comparison showing all 50 states' workers' comp insurance rates for the employer. I want to see which states have less expensive rates." After some searching, we found a...March 1, 2005
Are Unhappy Workers at Increased Risk for Prolonged Disability?
The Conference Board, a New York-based business research group, recently issued the findings of a job satisfaction survey of American workers. The findings were picked up in newspapers around the country, including the Boston Globe. The results should be of interest -- and concern -- to workers compensation and disability carriers alike. The survey of 5,000 households found that only...February 28, 2005
Independent Contractor or Employee?
One of the most problematic areas of workers compensation coverage involves independent contractors. It is indeed ironic that tradesmen in high risk occupations (construction, landscaping, mechanical trades, trucking) often find themselves without workers compensation coverage because of their independence. In many (but not all) states, independent contractors are precluded from securing workers comp insurance. When these people are seriously injured,...February 23, 2005
The Cost of Volunteers
In case you haven't noticed, the Insider cannot resist conundrums. We like to explore the ragged edges where conflicting views of reality play out their destinies. Which leads today to the interesting topic of volunteers. Are volunteers ever considered employees for the purposes of workers compensation? Are employers liable for the actions of their volunteers, just as they are for...February 18, 2005
A proliferation of premium fraud?
You know that workers comp is a problem when the so-called mainstream media begin to take note. Normally, workers comp is a topic relegated to the trade journals or the deepest nooks and crannies of the business pages in the daily news. Contrast this with the early 1990s, when headlines screamed about runaway costs and story after story included tales...February 16, 2005
Underwriting for Dummies?
Well, not really. But have you ever really examined how your company is viewed by an insurance underwriter? Conventional underwriting is primarily a look in the rearview mirror: the assumption is that companies with low historical losses will have low losses going forward. I don't think it's quite that simple. In an article written for the Journal of Workers Compensation,...February 14, 2005
A Few Thoughts on Disability Insurance
There's been a lot of publicity lately about private disability insurance. Most of it's negative, stories about insurance companies denying coverage or making claimants wait a long time to collect benefits. A typical article recently appeared in the New York Times (available by subscription only). As I think about it, writing disability insurance -- especially "own occupation" policies which cover...February 1, 2005
SEC reserve inquiry of Interstate Bakeries intensifies
Roberto Ceniceros of Business Insurance reports that the SEC intensified its probe of Interstate Bakeries, moving from an informal to a formal investigation of its workers comp reserves. The company employs more than 30,000 workers and is the nation's largest wholesale baker. Think Twinkies, Hostess, Drakes, and Wonderbread. According to Columbus Business First, the inquiry began last July when the...January 27, 2005
Really Risky Business
The world of insurance is built upon the concept of risk transfer: instead of taking on the full cost of risk, we buy insurance. For a fraction of the cost of what we might lose, we pay premiums to transfer the (relatively) remote risk to someone else. But what if the activity involves enormous risk? And what if the people...January 4, 2005
The Basics of Experience Rating, Part Two: When Do Losses Really Count?
In our previous blog on experience rating, we discussed the disproportionate impact that frequency has on an employer's workers' compensation premiums. The first $5,000 of each claim (primary losses) are counted dollar for dollar in the calculation of the "mod." Losses above $5,000 are discounted substantially. Therefore, a lot of small claims can raise your premiums faster than a single...December 31, 2004
A Note at Year�s End
There is an image from this past week that has troubled my sleep: a huge wave, some 20 feet high, barrels toward a coastline. People stand in the shallow waters of the shore, paralyzed by what they see coming. The tsunami roars across the beach and a way of life comes to an end. Those of us involved in insurance-related...December 22, 2004
The Basics of Experience Rating, Part One: What drives costs up the most?
Back in September, we promised to provide a strategic look at experience rating, the calculation unique to workers' compensation insurance that aligns every insured's premium with that company's historic losses. For a basic primer on experience rating, we recommend going to the source: The National Council on Compensation Insurance website provides a well-written document (PDF) that will walk you through...December 14, 2004
KY SIG members owe $51 million
Members of a self-insurance group (SIG) in Kentucky are learning a harsh lesson in joint and several liability. More than 4,000 employers who are or were members of AIK Comp, a plan promoted by Associated Industries of Kentucky, face some $51 million in unfunded claims. Apparently, AIK reserves were insufficient to cover claims, and now all current members -- and...October 25, 2004
Insurer insolvencies, guaranty funds, and joint and several liabilities between temp staffing agencies & contracting employers
Roberto Ceniceros of Businss Insurance points to a recent interesting decision by California's 2nd District Court of Appeals in Los Angeles dealing with general and special employers. The case involved a claim by an employee of RemedyTemp, a temporary staffing firm, considered the general employer; the employee was injured while on assignment at Jacuzzi Inc, the contracting or special employer....September 27, 2004
Congress considering Terrorism Risk Insurance Act (TRIA) renewal
Business Insurance reports that the outlook for extending the Terrorism Risk Insurance Act (TRIA) looks positive. The bill was enacted to provide a $100 million federal backstop for insurers but it is set to expire at the end of next year. As we approach one of the primary policy renewal cycles, insurers are getting edgy about the idea of TRIA...September 11, 2004
9/11 news roundup: health, insurance, and disability-related issues
Most Ground Zero Volunteers Still Waiting For Workers' Comp From Adjuster.com: "A study of workers' compensation claims from the cleanup at the World Trade Center site after the Sept. 11 attacks found that about 90 percent of the 10,182 claims for workers' comp have been resolved. In contrast, less than a third, or 31 percent, of the 588 volunteer claims...June 7, 2004
Terrorism Risk Insurance Act (TRIA) to expire
The three-year Terrorism Risk Insurance Act (TRIA) is set to expire December 31, 2005 unless Congress acts to extend it. This is of great concern to insurers who will soon be negotiating and writing business insurance policies for 2005 and beyond. Any policies that are written after 1/1/05 will not be fully protected by federal backstop insurance. An industry coalition...May 27, 2004
The workers' compensation crisis: a labor viewpoint
Labor Research Association (LRA) is "a non-profit research and advocacy organization that provides research and educational services for trade unions." We'll be adding it to the tools in our sidebar - we try to strike a good balance of resources from both management and labor perspectives, as well as from the bell jar that is the insurance industry itself. We...May 11, 2004
Workers' Compensation Industry Results For 2003
The National Council on Compensation Insurance today announced 2003 workers' compensation results. In "The State of the Line: Analysis of Workers Compensation Results," the NCCI struck a cautionary note. Frankly, we find the data are both interesting and confounding. For the sixth straight year, claim frequency, the total number of claims, has declined. Many industry people take great comfort in...April 15, 2004
Terrorism risk and workers compensation
Business Insurance covers the controversy over the method AIG uses to calculate terrorism rates for workers compensation policyholders. Tennessee and Texas are among the states taking issue with the company's rate calculations, which deviate from the methodology used by NCCI. "The Terrorism Risk Insurance Act required commercial lines insurers to offer coverage for acts of foreign terrorism. To expedite their...March 9, 2004
Number of uninsured workers at large employers growing
Human Resource Executive's Workindex reports that the ranks of uninsured workers at large firms - companies with 500+ workers - have been growing at a rapid rate. According to a recent report - The Growing Share of Uninsured Workers Employed by Large Firms (PDF file) - issued by the Commonwealth Fund, the proportion of uninsured workers at large firms increased...January 23, 2004
Exclusive remedy, "bad faith" claims, and the $12 million lawsuit
Exclusive remedy generally protects an employer from a lawsuit. If an employee suffers a work related injury, the employer provides a state-regulated schedule of benefits to cover medical care and lost wages during recovery. In exchange for these benefits, the employee forfeits the right to sue. Workers compensation becomes the sole or exclusive legal remedy. Often, this protection is extended...December 17, 2003
Everything you ever wanted to know about captives...
As the property and casualty insurance industry continues to consolidate, more and more large employers are considering alternative risk financing arrangements for their workers' compensation programs. One of the increasingly popular alternatives is forming a captive. For many, there's a lot of mystery around exactly what a captive is or isn't. Captive.com provides an excellent round up of articles, white...October 15, 2003
A cautionary tale
More than 1,000 small employers in Ohio were left in the lurch for workers compensation and health care coverage when Team America Inc., a Professional Employer Organization (PEO), filed bankruptcy last week. Employers take note: engaging a PEO does not release you from your responsibility to cover workers by a valid workers' compensation policy. Check these useful tips from the...September 24, 2003
