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Latest Labor Stats
In October 2007, the Indiana Department of Labor reported a 5.2 percent drop in the number of workplace injuries and illnesses in 2006 compared to 2005, as recorded in a survey compiled by the Federal Bureau of Labor Statistics.1
The 5.2 percent drop reflects a decrease from nearly 117,400 injuries and illnesses in Indiana private industries in 2005 to less than 111,300 in 2006, despite an overall increase of just under 8,800 employed workers.
The latest survey indicated the greatest improvement was in manufacturing overall, which had a drop from 8.3 injuries or illnesses per 100 workers in 2005 to 7.3 in 2006.
Throughout all workplace classifications the countrywide incident rate is 4.4, compared to 5.4 in Indiana in 2006 which represents the lowest case rate of nonfatal incidents in private industry since the Bureau of Labor Statistics began reporting in the early 1970s.
The Bureau of Labor Statistics released more detailed numbers for particular occupations, industries, and types of work in October 2007 reporting the highest incidence rates of nonfatal occupational injury and illness cases in private industry in 2006.
Among those cited that play a significant role in our local economy are motor home manufacturing at a rate of 16.8 incidents per 100 full-time workers and manufactured home industry at a rate of 13.2. Travel trailer and camper manufacturing was also among the highest at a rate of 13.1, but this rate has improved from 2005's rate of 14.1.
While many of our local businesses present a higher rate of incidents because of the heavy industry which supports our economy, the news of a significant overall improvement reflects the impact that our collective focus on workplace safety can have.
1BLS "Workplace Injuries and Illnesses in 2006" Tables 1 & 2, US Dept of Labor, 10/16/07
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2008 Market Outlook
Catastrophe losses continued to decline in 2007, resulting in almost no premium growth for the Property and Casualty Insurance Industry, but strong profitability and a combined ratio of losses and expenses to premiums under 95% (very low by historical standards).
The rate of growth in overall premium has been steadily declining since 2002, with the exception of hurricane exposed property, but competition for market share coupled with strong underwriting performance led to industry growth that was below even conservative expectations for 2007. This will most likely continue throughout 2008, and some industry analysts are predicting the first negative growth in premium in well over 50 years with combined ratios increasing and profitability decreasing.
In the Health Insurance Industry, the buzzword for 2008 is Consumerism with a capital "C". Large health insurance carriers have made significant investments in new technology in order to a) help their customers embrace wellness, b) get them closer to their health care via on-line tools, resources and incentives to make better health care decisions, and c) create a healthier workforce. Consumer Driven Health Plans such as HRAs, HSAs, and FSAs also helped to limit cost increases to a national average of 7% in 2007, and we expect a similar trend in 2008.
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On Target with Driver Safety
The new year brings new initiatives to make your organization more focused on safety. As insurance costs are on the rise, Gibson Risk Management Services, LLC (GRMS) is aiming for the bullseye by presenting services that address efficiency and ultimate premium savings. Hit the target with the right DARRT - specifically, with a Driver Administration Risk Reduction Tactics (DARRT) Program.
Motor vehicle crashes cost employers $60 billion annually in medical care, legal expenses, property damage, and $4.6 billion in lost productivity.(1) With over 90% of motor vehicle crashes caused by human error, employers with high roadway exposure are at risk for a serious crash resulting in a lawsuit against their organization with a settlement of $1 million or more.
Auto insurance savings for your organization begins with an insurable driver. An MVR is only useful if its results are applied to a program aimed toward overall driver safety and insurability. Through the DARRT Program, GRMS manages the administration of your driver MVRs by evaluating them through a tailored insurance rating matrix. The DARRT Administrator categorizes your drivers' insurability which identifies the type of risk represented when they are on the road on your company's behalf. Embedded features also include compliance for CDL/DOT regulatory issues and managing Fair Credit Reporting Act exposures.
The targeted benefits include identifying safer drivers and following a customized safety program that contains the leverage for potential insurance premium reduction. The program itself becomes a price negotiating tool. The DARRT Administrator will identify those employees most likely to be safer drivers, yield fewer accidents, and have fewer claims. The Gibson Risk Management Services DARRT Program can be your tool to pinpoint the risk and ultimately help drive your insurance premiums down.
(1) According to the National Highway Traffic Safety Administration.
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Employment Practices Alert
Jannuary 2nd saw the largest single deployment of Indiana National Guard troops since World War II. One hundred members of Warsaw-based Company A are among the 3,400 heading to Iraq. Seeing them and the 10,000 family and friends that packed the RCA Dome for their sendoff reminds us of the sacrifices made not just by our troops but their families as well.
A new Indiana law requires employers to give unpaid leave to the family members of military personnel on active duty. Indiana Governor Mitch Daniels signed the law known as The Military Family Leave Act that took effect on July 1, 2007. The MFLA supplements the federal Uniformed Services Rights and Reemployment Rights Act, which gives service persons, but not their families, a right to unpaid leave for military duty.
Under the new Military Family Leave Act, employees may take up to 10 days of unpaid leave per year during one or more of the following periods:
- Within the 30-day period before a family member begins active duty;
- During the leave period of a family member on active duty; or
- During the 30-day period following a family member's return from active duty.
To qualify as a member, the employee must be the spouse, parent, grandparent, or sibling of the service person. The MFLA will apply to all employers that employ at least 50 employees for each working day during at least 20 calendar work weeks. Employees seeking leave must have been employed by the employer for at least 12 months, and have worked at least 1,500 hours during the 12-month period immediately preceding the day the leave begins. At the option of either the employee or the employer, the paid leave may be used to substitute for any part of the military family leave. The law requires the employee to give the employer written notice of a request for leave at least 30 days prior to the requested leave, unless the service person's active duty orders are issued less than 30 days prior to the requested leave.
During the leave, the employee must be permitted to continue healthcare benefits at the employee's expense. Upon return to work the employer may place the employee in a different position only if the employer can prove that the move was unrelated to the employee's use of MFLA. Employers with a collective bargaining agreement that may conflict with or differ from the statute should consult with labor counsel.
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TRIA Reauthorization
In December 26, 2007 President Bush signed into law the Terrorism Risk Insurance Program Reauthorization Act (TRIA) of 2007. Highlights are:
Duration: This bill extends the TRIA program for seven years, through December 31, 2014.
Triggering Event: The size of an event needed to trigger TRIA is maintained at $100 million.
Lines of Coverage: The extension bill retains all of the lines covered by the current program.
Make Available: The requirement that insurers make coverage available to policyholders in all lines covered by the program is retained.
Individual Retention: The amount of terrorism losses that an individual insurance company must pay before federal assistance becomes available is maintained at 20% of such premiums.
Co-pays: Insurers must pay a share of losses above their individual retentions, known as co-pays. Current co-pay levels of 85% federal/15% insurer are retained.
Industry Retention: The insurance industry as a whole must cover a certain amount of recoupment losses before federal assistance is available. This cost may be spread among policyholders by a policy surcharge not to exceed 3% of premiums annually. This industry-wide retention amount of $27.5 billion is retained, but the timeframe for collecting from industry is accelerated.
Definitions: The term "act of terrorism" is amended to include domestic acts of terrorism.
Our research coordinator, Diane Davidson, has provided the following analysis of the TRIA Extension:
- The original Terrorism Risk Insurance Act applied only to foreign acts of terrorism. The extension expands TRIA to apply to domestic acts.It does this by removing the words "acting on behalf of any foreign person or foreign interest" from the qualifications of a certified act of terrorism. Thus, if something meets the threshold and other requirements, it will now be considered a certified act of terrorism whether it was carried out by a foreign interest or a domestic one.
- What this means: Since TRIA did not previously apply to domestic acts of terrorism, carriers were free to exclude it if they so desired. There was no governmental mandate that they offer the coverage. There are many ISO endorsements relating to Terrorism, some that exclude both domestic and foreign, and some that exclude only "certified acts" (which used to mean foreign only). Thus, for those policyholders that reject Terrorism coverage, some carriers are currently excluding all terrorism, and others are only excluding certified. For those policyholders that purchase coverage under TRIA, they are only purchasing certified coverage - some carriers may exclude domestic, and others may include it at no charge.
Bottom line, this will be beneficial to our clients because in the past there was never a requirement to offer coverage for domestic acts of terrorism so carriers could exclude it at will. Common sense says that if carriers were willing to offer domestic coverage before at no additional charge, they will continue to offer it at no charge even if foreign acts are excluded. But, common sense does not always rule in this industry, so this detail should be examined by all clients.
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