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Florida Adjusters Win Free Speech Case Against 48-Hour Solicitation Rule

Author DavidMalloy , 7/9/2012
From http://www.insurancejournal.com

Insurance Journal - Property Casualty Industry NewsA 2008  Florida law establishing a 48-hour moratorium on public adjusters has been ruled unconstitutional by the Florida Supreme Court on grounds that it restricts commercial speech.

The decision was a blow to the insurance industry and Chief Financial Officer Jeff Atwater, who appealed a lower court ruling that was unanimously upheld by the state’s highest court. Public adjusters serve as advocates for policyholders while negotiating insurance claims. The overturned law had prevented them from getting involved in insurance cases for at least 48 hours after the occurrence of an event.

The association representing Florida public adjusters applauded the ruling.

“The ban on solicitation is a violation of public adjusters’ free speech rights — and more importantly, an unfair rule that put policyholders at a disadvantage,” said Harvey Wolfman, president of the Florida Association of Public Insurance Adjusters. “Thanks to this ruling, we can help more policyholders in those critical first hours when they need it most.”  

Atwater’s office, however, did not quibble with the ruling.

“The office respects the Supreme Court’s authority and its ruling in this case,” said Atwater spokeswoman Alexis Lambert, who added that Atwater’s role in the case was one intended to support consumers.

The insurance industry, however, sided with Atwater’s challenge largely because many commercial insurers provide their own adjusters to assist in claims.

“CFO Atwater and the Office of Insurance Regulation provide safeguards for hurricane victims that they will be treated fairly by the adjuster dispatched by their insurance company,” said Sam Miller, vice president of the Florida Insurance Council, an industry group. “There is no need for a public adjuster who must be paid by the policyholder. Unlike legal fees in lawsuits against insurers, fees for a public adjuster come from the insurance settlement.”

Public adjusters have been held to increased scrutiny in recent years, largely as a result of thousands of claims that drifted in over a five-year period in the aftermath of Hurricane Wilma in the fall of 2005. The scrutiny also has resulted from sinkhole claims in the greater Tampa Bay area that have slammed commercial carriers and the state-backed Citizens Property Insurance Corp.

The Florida Legislature passed the law four years ago to create the waiting period before property owners would be able to receive any information from public adjusters about potential damages in the aftermath of a storm.

“The statute unconstitutionally restricts the commercial speech of public adjusters because it is not narrowly tailored to serve the state’s interests in ensuring ethical conduct by public adjusters and protecting homeowners,” the court said.

The lawsuit was originally brought by in October 2009 by public adjuster Frederick W. Kortum against Atwater’s predecessor, former CFO Alex Sink. A trial court ruled in favor of the state, but that decision was then overturned by the 1st DCA and affirmed by the Supreme Court ruling.

Workers’ Comp Market Injured But Still Standing

Author DavidMalloy , 6/12/2012

From http://www.insurancejournal.com

Like the economy, the workers’ compensation market has suffered in recent years. Results for 2011 were no better than 2010. The good news: results for the workers’ comp market were not worse either.

The combined ratio held steady at 115 for the workers’ comp line of business, according to the NCCI Holding Inc.’s “State of the Line” report published in May. That’s the same as in 2010. While stable, the reported combined ratio stands as the highest combined ratio for all major commercial lines for the third straight year.

A number of factors contribute to the line’s challenging conditions, the experts say. The weak economy, high unemployment rates, rising claims frequency and unrelenting medical inflation all contribute to the market’s health.

Another reason for workers’ comp’s under-performance is rate inadequacy.

“The rate inadequacy is definitely an issue,” says Tom Koval, senior vice president, general counsel and government affairs, for FCCI Insurance Group based in Sarasota, Fla.

As the economy starts to rebound and payrolls jump, premiums will increase, leading to better results. However, Koval says the workers’ comp industry still needs relevant rate increases to come out ahead.

Chris Cunniff, senior vice president and product manager for workers’ compensation at Liberty Mutual, agrees rates fell behind, partly due to unexpected circumstances such as a rise in claim frequency in 2010.

“I think the bureau rates put forth by the NCCI and other bureaus did fall behind a little bit,” he says. “The NCCI has been filing for bureau rate increases to catch up. We’ve seen some other increases filed in other non-NCCI states as well.”

Cunniff believes other circumstances have contributed much more to the problem of rate inadequacy than bureau rate recommendations.

“If you look at the data, the biggest driver (of rate inadequacy) has been companies filing deviations or discounts below bureau loss cost levels in an attempt to retain or win business,” Cunniff says. That is the primary driver of rate inadequacy, he says.

Despite low rates in recent years, payrolls and premiums do appear to be trending up.

In its “State of the Line” report, the NCCI found that 2011 premiums for workers’ comp were up by $36.3 billion, or 7.4 percent from 2010 levels.

Even with that increase, rates have not kept up with overall workers’ comp cost drivers, the experts say.

“Workers compensation, because of its direct connection to employment and the labor markets, has been the property/casualty line most significantly impacted by the continued difficult economic environment,” said NCCI Chief Actuary Dennis Mealy. “Combined ratios remain at unsustainably high levels, and investment returns are not sufficiently high to generate operating returns near the cost of capital.”

Since 2006, NCCI loss costs have declined but so far in 2012, loss costs have generally increased, with NCCI loss costs up 2.5 percent on average and countrywide bureau loss costs up 7.8 percent.

The increase in 2012 is due to a large increase in bureau loss costs in California, the NCCI stated.

Dave Bellucsi, chief actuary for the Workers’ Compensation Insurance Rating Bureau of California, says loss adjustment expenses, which were high to start with in his state, have continued to rise. Some of the factors driving that trend are medical liens, he says.

In the Golden State’s workers’ compensation system, a lien is a direct claim against the defendant for a benefit which is not otherwise payable to the injured worker. Medical liens — a California phenomenon — are jamming up the administrative system, Bellucsi says.

“I’ve heard as high as a half a million liens are being filed for mostly medical services,” he says. Liens must be resolved by a workers’ comp judge, so the overall cost on the system is burdensome even if the lien amount is small.

Other factors behind loss cost increases in NCCI states — 38 states in total — include longer claim durations and upward pressure on claim frequency.

Bellucsi says claim frequency has also been an issue for California.

“For the last 40 years, with the occasional exception, frequency declined,” he said. “In 2010, that reversed. We saw a healthy spike of close to a 10 percent increase in 2010. In 2011, it didn’t get any worse, but it didn’t get any better, basically stayed at the same level.”

The spike in claim frequency in California stems from a sharp rise in cumulative injury claims, according to Bellusci. “Those are claims that occur over a longer period. They’re not tied to a specific event. It may be a carpal tunnel syndrome or cumulative back. It’s not one lifting, but the worker’s been lifting stuff for many years and that’s caused problems.” Most end up in litigation as well, he says. GET THE REST


Home health care is one of the most profitable franchises

Author DavidMalloy , 5/18/2012

From http://www.usatoday.com/

WASHINGTON – A new report lists home health care as one of the top five most profitable franchises in the U.S., even as the industry fights new Department of Labor rules calling for mandatory overtime and minimum wage requirements for home health employees.

Franchise Business Review, a market research firm, found that the median amount paid for a new franchise in 2012 was about $66,000, and the "potential return on investment is significantly higher than many other franchise businesses."

The company surveyed home care owners two years ago and found the fairly new industry was growing fast, but this report, company President Michelle Rowan said, shows it's not just a trend. "It's a very strong business," she said. "It was neat to come back two years later and see that they're still performing well."

The surveys also showed owner satisfaction was high.

"In senior care, they're more involved in the day-to-day operations," Rowan said. "That's opposed to someone who owns a fast-food franchise who might be dealing with lower-end employees who make $10 an hour. Many home care givers are "doing what they want to do for the rest of their lives."

The survey, released last week, showed top franchises grossed $1 million or more, with gross margins at 30% to 40%. As a comparison, opening a food or retail franchise can cost $500,000 in initial investments while operating with slim margins.

The report found owners kept their costs low by operating out of their homes, and that the economy did not affect the industry as much as others because the number of seniors needing care continues to grow. Rowan said more families have adults who both are employed, so there's no one to stay home with an aging parent.

Home care representatives have appeared before Congress to argue that overtime pay would force them to charge seniors more — and that home care workers already make minimum wage and above.

One of the industry's leading companies, Home Instead Senior Care, spent at least $362,000 in 2011 fighting the proposal.

Sheila McMackin, president of the National Private Duty Association, said her group has asked the Labor Department to consider that home care often includes overnight care, and seniors won't be able to afford that if workers receive overtime.

And, she said, industry numbers have shown revenue growth has gone down overall since 2009.

Net profits, she said, typically average 12% to 15%. New companies average first year revenue of $248,000, she said.

But Dorie Seavey, director of policy research at the Paraprofessional Healthcare Institute, an employee training and advocacy group, said that 15 states already require overtime payment and minimum wage for home health workers, and that the businesses in those states are still making a profit.

And, according to a 2009 National Private Duty Association survey, businesses charge clients twice as much as they pay employees. She said there's not enough overhead to justify not paying employees more.

"I find it really hard to reconcile that one of the most profitable sectors is pinching pennies when it comes to workers," Seavey said.

The Department of Labor received 26,000 comments about the proposed rules, three-quarters of them positive, she said. The department now will decide if any changes need to be made and then send the rules to the Office of Management and Budget, where the rules will be made official. Seavey said she hopes that will happen by the end of summer.


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Ask the Workers’ Comp Expert: NCCI to Change Experience Modification Formula

Author DavidMalloy , 5/8/2012
Ask the Workers’ Comp Expert: NCCI to Change Experience Modification Formula
by Robert G. Jones, Vice President, PMC Insurance Group

Typically, business owners paying $5,000 or more annually in workers’ compensation insurance premium qualify to be experience rated (some variations by state). The result is an insurance premium modification factor will be calculated annually for such businesses based upon individual three prior years’ payroll and loss history. This data is reported to the appropriate rating bureaus by the individual business owner’s past insurance companies.

In general, historical loss data for a particular business is compared to the average loss data for all similar businesses in its state of domicile. This comparison results in a debit or credit experience modification factor that is used to adjust the business owner’s annual workers’ compensation insurance premium. Most states use the National Council on Compensation Insurance to calculate experience modification factors for individual businesses. A few states, including New York, have their own separate workers’ compensation rating bureaus.

Effective January 2013, NCCI will implement a new formula for calculating experience modification factors. The key change in the formula is the increase in the loss per claim, from $5,000 currently to $15,000 in the new formula. Thus the size of losses per claim will have significantly greater impact on driving up the experience modification factors for business owners with large individual claims. (More information to come in the months ahead.)

PMC Insurance Group is IIABNY’s endorsed workers’ compensation specialist. Our insurance professionals have extensive experience helping IIABNY members expand their marketing capabilities by providing workers’ compensation solutions for their clients. Give Bob Jones a call at (440) 313-5002.  


 Operating in the Continental US!
 Phone: 1-877-PMC-COMP| (781)-449-7744
Email PMC | Visit our website

See What Michael Had To Say About PMC!

Author DavidMalloy , 4/30/2012
Michael S. Murphy, Scott, Danahy, Naylon, Amherst, NY
“Our agency has been working with PMC Insurance for about five years. PMC Insurance has had the ability to make us feel like their most valued client. Not only are they experts in placing tough exposures, but they un
derstand their markets. This market expertise makes them one of the few consistent outlets for New York State Workers Compensation. For example, we recently placed a large commercial roofer with their firm. This roofer, with premium in excess of $400,000 had a high debit experience modification. PMC identified the proper market early in the quotation process and released an account winning quotation within three days.”

NY Lawmakers To Consider Raising Minimum Wage To 8.50 An Hour

Author DavidMalloy , 3/28/2012
PMC Insurance Group NEW YORK – Hundreds of thousands of workers making minimum wage in New York could soon be getting a big raise.
Minimum wage workers haven’t seen a pay increase in three years. That could soon change, since State Assembly Speaker Sheldon Silver reportedly plans to introduce a bill today, raising the state’s minimum wage from $7.25 an hour to $8.50. That’s a 17 percent increase. The bill would also require the rate to be adjusted annually for inflation. Nationwide, 18 states already have a higher minimum wage rate. Earlier this month, Silver spoke about the need to bring New York up to par. He said the current minimum wage is unrealistically low. “It’s absurd to expect anyone, let alone a working family, to afford the cost of living today,” he said. It’s an issue both Governor Andrew Cuomo and Mayor Michael Bloomberg have championed recently. “The cost of living in New York City, like nearly everywhere else, has gone up,” Bloomberg said during his annual State of the City address. “And not just housing, but food, transit and all the key parts of a family’s budget. But there’s one thing that, in all fairness, hasn’t gone up: The ability of those at the bottom of the economic ladder to pay for those essential needs.”  

To keep a hold of your finances, contact your local insurance agent today!
This article courtesy of CBSNewYork  

Call us today and put our expertise to work for you!

PMC Insurance Group (P) 877-PMC-COMP (P) 781-449-7744 (F) 781-449-7889
www.pmcinsurance.com info@pmcinsurance.com

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To contact us, and for more information, please visit our CompleteMarkets storefront.


Satisfaction Guaranteed

Author DavidMalloy , 2/27/2012
PMC Insurance Michael Murphy of Amherst NY says- "Our agency has been working with PMC Insurance for about five years. PMC Insurance has had the ability to make us feel like their most valued client. Not only are they experts in placing tough exposures, but they understand their markets. This market expertise makes them one of the few consistent outlets for New York State Workers Compensation. For example, we recently placed a large commercial roofer with their firm. This roofer, with premium in excess of $400,000 had a high debit experience modification. PMC identified the proper market early in the quotation process and released an account winning quotation within three days.”  

Call us today and put our expertise to work for you!

PMC Insurance Group (P) 877-PMC-COMP (P) 781-449-7744 (F) 781-449-7889

www.pmcinsurance.com info@pmcinsurance.com

1


To contact us, and for more information, please visit our CompleteMarkets storefront.