This year, Beyond Benefits members experienced a 1.4% employee benefits rate decrease, while other life science companies outside of the trust are seeing double digit increases. To celebrate the program’s continued success, Beyond Benefits members joined MMA, Biocom and Anthem Blue Cross for a post-renewal celebration. Check out the video below for more information.
Happy New Year, everyone. As we begin 2017, let’s take a look at what’s going on in three specific areas of insurance: Workers’ Compensation, Cyber & Data Security, and Auto. Let’s also consider the impact of these trends and discuss some appropriate actions you might want to explore.
In California, workers’ compensation rates are declining and the California Department of Insurance has recommended over 10% rate reduction since this time last year. However, there are a few changes that could impact your business.
Effective January 1, 2017, The Workers' Compensation Insurance Rating Bureau of California (WCIRB) is calculating experience modification (ex-mod) using a different formula. Ex-mod provides employers with a financial incentive to reduce workers’ comp claims. The new formula was developed with hopes of leveling the playing field for small businesses by penalizing companies based on their size (total payroll) and their frequency of claims versus severity.
Takeaway: The net cost to the worker’s compensation system is neutral, but roughly 50% of our clients will see an increase in their ex-mod. Find out if your premiums will be going up this year by asking your insurance brokers to calculate your projected ex-mod using the new formula.
Beginning January 1, 2017, AB 2883 went into full effect in California, changing the exclusion requirements for directors and officers. Under this change to the labor law, an officer must own no less than 15% of the company to qualify for exclusion from workers’ compensation coverage.
At a time when employee benefits are rising at almost double-digit rates, how is it possible for rates to be dropping for some firms?
You just need to belong to Beyond Benefits.
The window of opportunity, however, is quickly closing. Deadline for enrollment in the trust and access to below market rates is September 30, 2016.
Founded by BIOCOM in partnership with Marsh & McLennan Agency, Beyond Benefits enables life science and biotech companies to pool their purchasing power and secure employee benefit rates similar to organizations with a large number of employees.
In 2017, the 198 members of Beyond Benefits will see a 1.4% rate reduction. Meanwhile, companies not participating in Beyond Benefits will likely face an average rate increase of 9.2%* in 2017.
Since 2012, Beyond Benefits has saved member companies more than $89 million in medical premiums, or about $6 million annually. More than 6,500 biotech and life sciences employees are covered by the program.
Beginning in September, companies across California will learn whether they will be paying more for workers’ compensation insurance next year.
For some doing business in the Golden State, it will be an unwelcome surprise. The increase could be significant.
The potential rate changes are due to a rule approved last year by California Insurance Commissioner David Jones. Beginning in 2017, the formula to determine an organization’s “experience modification,” the rate used to calculate workers’ comp pricing, will change.
The rationale for the change was to level the playing field for small businesses. Previously, the one-size-fits all formula had the potential to unfairly penalize smaller organizations. A few claims had a dramatic affect on their workers’ comp premiums, a consequence usually not seen with larger businesses.
For many, the new formula will likely result in little change in their workers’ comp premium. However, it’s likely that some large and small employers with a higher frequency of claims will see a dramatic impact.
The Delaware Supreme Court may have singled-handedly done what the market has been trying to do for years: Make Directors & Officers liability insurance more affordable.
In early May, the Delaware Supreme Court essentially instructed trial courts to throw out future lawsuits challenging corporate acquisitions or mergers that have been properly approved by shareholders. The implications in the Zales case are far-reaching and may discourage M&A litigation. The ruling should also continue to soften D&O rates for publicly traded companies.
A High Bar
The Delaware court’s decision spelled out the future hurdles necessary to oppose a merger or acquisition. If investors are fully informed and have the authority to turn down a takeover, a merger or acquisition cannot be challenged. That’s true even if there were significant mistakes made by directors in the process, so long as a majority of shares owned by disinterested stockholders voted in favor of the deal.
From the Nepal earthquake to the California wildfires destroying over 1,000 homes, 2015 was a year of extremes. Even so, the United States experienced a light loss year, with insured losses due to weather and storms down 36% in comparison to 2014, while, globally, the natural catastrophic losses kept pace with past years. For the insurance market as a whole, rates are continuing to trend downward, which has been the case since 2013.
As we begin 2016, let’s take a look at what’s going on in five specific areas of insurance: Property & Casualty, Executive Risk, Cyber & Data Security, Terrorism and Workers’ Compensation.
Property & Casualty
Overall, 85% of our clients are expected to receive a decrease in premium, with an average rate reduction of 4.1% across all lines of coverage, dependent on claims history. However, there is one exception to this trend: automobile coverage. Modern cars are equipped with technology features that are very expensive to repair, so auto insurance premiums are currently increasing by 5-10% across the board.
Another trend in the Property & Casualty area is social engineering, a sophisticated form of “phishing” where a hacker convinces employees to send money to a criminal source. To be covered for an attack, social engineering needs to be added to a Crime Policy, as it is not automatically included.
2016 Takeaway: Insurance carriers are hungry for business and are willing to drop rates to keep clients with low claims history. Companies can take advantage of this by negotiating renewals early to lock in low rates.
It’s a bit of a mouthful and may not sound as familiar as “hacker” or “data breach,” but social engineering fraud is just as insidious and can be just as costly to a business. This growing threat does not discriminate and is affecting businesses of all sizes. If you have employees, then your business faces a potential loss due to social engineering fraud.
Social Engineering Explained
Social engineering fraud is a sophisticated “phishing” attack that attempts to intentionally mislead employees, convincing them to send money or divert a payment to a source that turns out to be a criminal. The contact can attack via phone or letter, but most often invades your system by email.
Unlike a normal phishing attack, social engineering fraudsters take a much more targeted approach. They pretend to be a vendor, client, or even another employee by attempting to make their communications look as official and routine as possible. On the surface, the communication appears entirely legitimate, and if the imposter has rudimentary hacking skills, he can even make these emails seem as if they are part of an existing thread.
The targeted employee, often bombarded by emails, may not think twice about the request and follow through, especially if it’s somewhat in line with standard operating procedures.
5 Steps to Prevent an Attack
Wage and Hour lawsuits are common employment-related disputes, and most often include allegations involving overtime pay and misclassification of employees. The following is a brief update on the Management Liability marketplace, specific to California Employment Practices Liability (EPL) and Wage and Hour trends.
Advisen, a leader in aggregating a wide variety of information relevant to the business insurance industry, aggregating information relevant to the business insurance industry aggregating information relevant to the business insurance industry published an article in March of this year outlining some staggering statistics for California EPL losses compared with those of other US states.
- Wage and Hour claims account for 40% of all California EPL losses compared to an average of 28% for other states (these figures include both Public and Private companies).
- In many cases, settlement values of EPL claims in California can be up to 4 times the settlement values of other states.
- The average settlement for California Wage and Hour claims is more than $6M versus $1.5M in other states.
- The average settlement for California age discrimination is almost $8M versus $2M elsewhere in the United States.
With employment related claims statistically higher in California, it’s important to ensure your company is taking appropriate measures to reduce risk of a claim. Here are a few practices that employers can implement to reduce EPL claims, specifically wage and hour claims.
Between the Ebola epidemic, the disappearance of flight 370, ISSA declaring war on the world and a massive cyber attack on Sony Pictures, 2014 was a pretty scary year. However, when we look at the insurance market, we had the lowest year of insurable losses since 2009. Driven by good losses, the market is transitioning from premium rate increases to a gradual decline in rates. We can expect a lag in the reduction of rates, as it usually takes a couple years to see big changes.
As we begin 2015, let’s take a look at what’s going on in five specific areas of insurance: Property, Casualty/Excess Coverages, Employment Practices Liability, Workers’ Compensation and Data Security.
As health care costs continue to escalate, employers are faced with a strategic challenge: How do they offer employee benefits without costing themselves a fortune?
To plan properly, mid-sized employers need alternative solutions to manage their health care costs, while attracting and retaining talent. In our view, two of the most effective approaches in achieving those objectives are self-funding or a private exchange.
Download our latest white paper on controlling healthcare costs.
The Self-funding Option
For companies with a healthy employee demographic, a growing or stable workforce, and favorable claims experience, self-funding can be an excellent long-term solution to control costs. Self-funding provides potential savings through reduced administrative and regulatory fees, decreased taxes, and improved cash flow. With a self-funded model, the employer assumes direct risk for the payment of claims, rather than contracting with an insurance company to cover claims costs.