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April 2007

PCI Says New York Workers Compensation Reform Law Shows Promise

ALBANY, N.Y. – The Property Casualty Insurers Association of America (PCI) issued the following statement in response to today’s press conference announcing the signing of landmark workers compensation legislation in New York State. The statement can be attributed to Frank O’Brien, regional vice president for PCI.

“The Property Casualty Insurers Association of America (PCI) today congratulated New York Governor Eliot Spitzer and the Legislature for moving quickly to address the state’s escalating workers compensation crisis.

The comprehensive workers compensation reform package signed today shows promise and we are optimistic that the spirit of cooperation that was instrumental in achieving this legislative accomplishment can be carried over into other issues that will improve the insurance marketplace for all consumers.

Everyone agreed that the system was not working for injured workers, employers or insurers.  New York has among the highest workers compensation costs in the nation.  This new law contains several positive developments such as an increase in the maximum benefit for workers; a cap on permanent partial disabilities, which accounts for a large share of the cost in the system; the elimination of the Second Injury Fund for future cases and several anti-fraud provisions.

As with any reform legislation of this magnitude, the long-term success of the change will be judged by the results it provides.  However, with careful implementation, we can achieve appropriate benefit levels for workers and controlled costs for employers and insurers.

We look forward to working with the Superintendent of Insurance, legislators, representatives of business and labor and the Workers Compensation Board on implementation issues and other administrative matters related to making this reform effort work to everyone’s benefit.”

PCI is composed of more than 1,000 member companies, representing the broadest cross-section of insurers of any national trade association.  PCI members write over $194 billion in annual premium, 40.1 percent of the nation’s property/casualty insurance.  Member companies write 51.3 percent of the U.S. automobile insurance market, 39 percent of the homeowners market, 32.1 percent of the commercial property and liability market, and 38.7 percent of the private workers compensation market.

Source: InsuranceNewsNet

OSHA Identifies 14,000 Workplaces with High Injury and Illness Rates

WASHINGTON -- The Department of Labor's Occupational Safety and Health Administration (OSHA) announced today that approximately 14,000 employers have been notified that injury and illness rates at their worksites are higher than average and assistance is available to help them better protect their employees.

In a letter sent this month to those employers, OSHA explained the notification was a proactive step to motivate employers to take steps now to reduce those rates and improve the safety and health environment in their workplaces.

"This identification process is meant to raise awareness that injuries and illnesses are high at these facilities," said Assistant Secretary of Labor for OSHA Edwin G. Foulke, Jr. "Injuries and illnesses are costly to employers in both personal and financial terms. Our goal is to identify workplaces where injury and illness rates are high and to persuade employers to use resources at their disposal to address these hazards and reduce occupational injuries and illnesses."

Establishments with the nation's high workplace injury and illness rates were identified by OSHA through employer-reported data from a 2006 survey of 80,000 worksites (the survey collected data from calendar year 2005). The workplaces identified had 5.3 or more injuries or illnesses resulting in days away from work, restricted work activity, or job transfer (DART) for every 100 full-time workers. The national average during 2005 was 2.4 DART instances for every 100 workers.

Employers receiving the letters were also provided copies of their injury and illness data, along with a list of the most frequently violated OSHA standards for their specific industry. The letter also offered assistance in helping turn the numbers around by suggesting, among other things, the use of free OSHA safety and health consultation services provided through the states, state workers' compensation agencies, insurance carriers, or outside safety and health consultants.

The 14,000 sites are listed alphabetically, by state, on OSHA's Web site at: www.osha.gov/as/opa/foia/hot_13.html

The list does not designate those earmarked for any future inspections. An announcement of targeted inspections will be made later this year. Also, the worksites listed are establishments in states covered by federal OSHA; the list does not include employers in the 21 states and Puerto Rico, who operate OSHA-approved state plans covering the private sector.

OSHA's data collection initiative is conducted each year to provide the agency with a clearer picture of those establishments with higher than average injury and illness rates. Information obtained from the survey gives OSHA the opportunity to place inspection resources where they're needed most and also helps the agency plan outreach and compliance assistance programs where they will be most beneficial.

Under the Occupational Safety and Health Act of 1970, employers are responsible for providing a safe and healthful workplace for their employees. OSHA's role is to assure the safety and health of America's working men and women by setting and enforcing standards; providing training, outreach, and education; establishing partnerships; and encouraging continual process improvement in workplace safety and health. For more information, visit www.osha.gov

Source: OSHA

AIG Fined by Oklahoma for not Providing Accurate Workers' Compensation Data

The Oklahoma Insurance Department levied a $400,000 fine against several American International Group Inc. insurance companies across the state for not providing accurate workers' compensation data, officials said Tuesday.

Eleven companies controlled by AIG -- including two of the largest private workers' comp insurers in the state -- failed to report data needed to calculate workers' comp premiums, the department said.

Insurance Commissioner Kim Holland said lapses in data could have resulted in Oklahoma consumers paying too much -- or not enough -- for workers' comp insurance policies.

"These reporting irregularities not only impact the rates of AIG companies, but those of every insurance company writing workers' compensation products in the state," Holland said.

According to the department's consent order, the AIG companies in Oklahoma didn't report accurate information required either by the state or the National Council on Compensation Insurance Inc. between 1998 and 2004. NCCI collects financial data from insurance companies on behalf of Oklahoma and other states to help determine loss costs, which are then used to calculate workers' comp premium rates.

The department found several discrepancies in AIG's Oklahoma data, including a more than $13 million difference in premiums reported. Holland said NCCI could not use the companies' financial data for 2005 loss costs because of late filing and data quality issues.

Holland said AIG stalled on responding to the department's requests to fix the data. She hoped the fine would send a message to AIG and other companies.

"The message that is sent is that we are going to work with you, but we have expectations," Holland said. "If you don't perform, there will be consequences, as there should be."

Holland said AIG wrote a check for the $400,000 fine, which will go to the department's revolving fund for general operations.

AIG spokesman Joe Norton said the company continues to "work with NCCI and the Oklahoma (Insurance) Department to fully comply with current and future data calls."

AIG has completed the first phase of a data remediation plan for states using NCCI data, the company said.

Source: InsuranceNewsNet

Most Workers Underestimate Chances, Impact of Disability, Survey Shows

PORTLAND, Maine, March 7 /PRNewswire-USNewswire/ -- A growing number of American workers are forecasted to experience a disability -- an accident or illness that will keep them out of work at least three months -- during their career. But the majority of workers in a new survey said they were not concerned about the possibility of becoming disabled. In fact, more than 80 percent of workers said they believe their chances of becoming disabled are far lower than actual statistics report, according to the 2007 Disability Awareness Survey, released today by the Council for Disability Awareness (CDA).

Data from the survey underscores the critical need to better inform America's workforce about the likelihood of experiencing a disability, as well as the potential financial consequences that may accompany a disability. And CDA is embarking on an outreach effort to increase public dialogue about disability awareness.

"Preparing for an unexpected disability has never been more important for America's workforce -- especially as more American workers are suffering from income-limiting disabilities that can leave them and their families vulnerable to severe financial hardship," explained Robert Taylor, executive director of CDA. "It's important that workers recognize the growing threat that disability can pose to their financial security. And with this survey, CDA aims to expand the public dialogue that will raise the necessary awareness level on this critical issue."

A bleaker financial outlook for those unprepared

Since 2000, the number of disabled workers in America has increased by 35 percent according to recent Social Security Administration data. At the same time, the financial health of many American workers has declined. Workers are not only spending their earnings, but also are dipping deeper into their savings and going into debt to make ends meet. The overall 2006 U.S. savings rate was negative 1 percent -- the worst since the Great Depression. These statistics are distressing, considering two-thirds of respondents with a 401k or IRA plan are unaware of what would happen to their retirement savings should they become disabled and unable to earn an income.

Given this unsteady financial situation, it's alarming that nearly 60 percent of workers surveyed said they haven't discussed how they would manage an income-limiting disability. In fact, almost half of these workers haven't thought at all about the need to plan for the financial impact of a disability.

On the other hand, of those workers who have planned financially for a disability, more than 80 percent are confident about their ability to cover living expenses if a disability strikes.

The CDA survey also showed that: -- The majority of workers (56 percent) didn't realize that their chances of becoming disabled had risen over the past five years. -- Nine out of ten (90 percent) workers underestimated their own chances of becoming disabled. -- More than one-third (35 percent) of workers with 401k or IRA plans said they haven't thought about or don't know what would happen to their contributions if they were unable to earn an income for a period of time.

"As responsibility for long-term financial security continues to shift to the American worker, the need to incorporate disability planning into each person's financial security plan has become more critical," Taylor said. "Fortunately, with good planning, American workers can dramatically improve their chances of financial stability should a disability strike."

About the Council for Disability Awareness

The Council for Disability Awareness (CDA) is a non-profit group dedicated to helping the American workforce become aware of the growing likelihood of disability and its financial consequences. The CDA engages in communications, research and educational activities that provide information and helpful resources to wage earners, their families, the media, employers and others who are concerned about disability and the impact it can have on wage earners and their families.

For more information about the CDA, visit: http://www.disabilitycanhappen.org.

About the survey

In January and February of 2007, CDA worked with the research firm StrategyOne to conduct a 15-minute telephone survey of 1000 working American adults ages 18 to 65 nationwide. The margin of error for the sample size was +/-3.1 percentage points at the 95% level of confidence.

SOURCE Council for Disability Awareness

CONTACT: Christine Countryman of Edelman, +1-202-415-0137, christine.countryman@edelman.com, for Council for Disability Awareness

Source: InsuranceNewsNet

Mass. Workers' Comp Insurers File for 13.4% Rate Drop

The Workers' Compensation Rating and Inspection Bureau of Massachusetts (WCRIB) today submitted to the state Division of Insurance a proposed average rate decrease of 13.4 percent for workers' compensation insurance effective September 1, 2007.

If the WCRIB's filing is approved, workers' compensation rates in Massachusetts would be 64 percent less than they were in 1991 when the state's workers' compensation reform law was passed, according to WCRIB, which is the licensed rating organization that files rates with the Division of Insurance on behalf of insurers writing workers' compensation coverage in Massachusetts.

Rates can go down because workplace injury claims have, according to Paul Meagher, president of the WCRIB. "From the combined efforts of insurers, employers, workers and regulators, the frequency of workplace injuries has continued to decline in Massachusetts. As a result, overall costs for both indemnity and medical claims in Massachusetts have declined in spite of continual increases in average claim severity and medical cost inflation."

Meagher credited insurers for contributing to the decrease in claim frequency "by working with employers to provide safe work environments for employees."

However, Meagher cautioned that while the proposed decrease is good news, unchecked rising medical and pharmaceutical costs could erode the gains and lead to future rate inadequacy.

He cited another market concern. Currently the Assigned Risk Pool, which underwrites employers who cannot obtain voluntary coverage, is the second largest insurer in the state with 15 percent of the market.

Meagher also noted that the future of the federal Terrorism Risk Insurance Extension Act of 2005 (TRIEA), which is scheduled to expire on December 31, 2007, is critical to maintaining stability in the workers' compensation voluntary market.

Source: Insurance Journal

Four Indicted in Texas on Workers' Comp Fraud Charges

Workers' compensation insurer Texas Mutual Insurance Company reported that four people were indicted, in separate cases, in Texas, on charges of workers' compensation fraud. The company's announcement said the individuals allegedly collected a combined $13,672 in fraudulent workers' comp benefits.

All four cases involved alleged scams in which the claimants collected benefits for being too injured to work when they were, in fact, gainfully employed.

The amount of benefits those indicted were reported to have collected, was: $4,630; $4,112; $3,403; and $1,527.

The company noted that a grand jury indictment is a formal accusation not a conviction of criminal conduct.

Source: Insurance Journal

Insurer to Pay $17.5 Million in Conn. I-84 Faulty Construction Claim

The insurer behind the performance bond for part of the troubled Interstate-84 construction in Connecticut will pay $17.5 million to settle claims involving installation of defective drains, according to an agreement worked out with state officials.

The payment from United States Fidelity & Guaranty on behalf of the insured allows the state to begin repairing the defective drains along a three-mile stretch of I-84 in Cheshire and Waterbury.

Under the agreement, the state retains the right to sue the insured for additional funds.

Conn. Governor M. Jodi Rell, Attorney General Richard Blumenthal and Department of Transportation Commissioner Ralph J. Carpenter announced the $17.5 million settlement.

"This money will help finish the job, redoing and repairing incompetent or possibly corrupt work, but we will aggressively act against anyone who should be held accountable for this construction debacle," Blumenthal said. "Only the insurer is paying today. Others responsible will be targeted and pursued for recovery.

In early 2006, after DOT uncovered defects in the project's drainage system, the primary contractor for the project, walked off the job. The contract with the firm hired by DOT to inspect the project and ensure contract compliance was subsequently terminated.

State officials said that the DOT will now craft a contract to repair the drains so work can begin as quickly as possible. The majority of the repairs are expected to be completed this year.

While the state says it may bring future lawsuits, USF&G has itself already sued the contractor. In a lawsuit filed in U.S. District Court, the insurer has accused officials from the contractor of transferring money to other family-controlled interests and even buying luxury cars with company resources.

An attorney for the contractor denied the accusations and maintained all of its financial transactions complied with the law, in a statement to The Associated Press.

USF&G says it bonded the insured’s projects, including a $54 million widening of I-84 in Cheshire and Waterbury, with the understanding that it would be reimbursed by the contractor for any claims.

Many of the defective drains lead nowhere, some are clogged with debris and others were apparently connected with substandard, cracked and leaking pipes. Original estimates by the state said it would cost $27 million to repair them.

Source: Insurance Journal

"The highest reward for a person’s toil is not what they get for it, but what the y become by it."
– John Ruskin