Tag: Workers Comp

The property insurance market will remain tight for the rest of the year and will get even more challenging for buyers in 2023 as reinsurers increase rates at Jan. 1 renewals in the wake of losses from Hurricane Ian, brokerage Risk Strategies Co. said in a report Wednesday.

Many casualty lines will also see rate increases, the Boston-based broker said in its “State of the Market” report, which predicts pricing trends for the fourth quarter of this year and the first quarter of 2023.

“Businesses with an unfavorable loss history and those in cat zones will continue to see price increases. Weather and climate change are significantly impacting areas of the country, Florida and California in particular,” John Mina, CEO of Risk Strategies,  said in the report.

Rates for policyholders with an unfavorable loss history or with properties in high-risk areas will see rate hikes of 50% or more, the report said. Average property risks will see increases of 20% or more and high-quality risks will renew at flat or 5% rate increases.

In casualty lines, auto insurance rates are expected to rise 5% to 10%, general liability rates will rise 2% to 5%, umbrella rates will rise 5% to 10%, and workers compensation rates will be flat, the report said.

Cyber liability insurance rates are expected to rise 30% to 40%.

The management liability market, which has seen a surge of new entrants over the past year, is expected to be easier on buyers.

Public company management liability rates are expected to be flat to 20% down for primary layers and 10% to 30% lower for excess coverage. Private company management liability rates are expected to be flat to 5% up for primary coverage and flat to 5% down for excess layers.

Chubb Ltd.’s net income more than halved in the third quarter, reflecting Hurricane Ian claims and realized losses, and the insurer’s top executive said Wednesday that additional commercial rate increases are necessary to keep pace with loss costs and inflation.

“Casualty rate in most classes will need to rise at an accelerated rate or else the industry will fail to keep pace,” given loss cost inflation and what will be slowing growth and exposure in the future, Chubb Chairman and CEO Evan G. Greenberg said during an earnings call with analysts.

Chubb reported third-quarter net income of $812 million, down 55.7% from $1.83 billion in the prior-year period, according to an earnings statement released after Tuesday’s market close.

Net income in the quarter was adversely impacted by realized losses of $502 million after tax, “principally due to the mark-to-market impact on derivatives and private equities as well as from sales in fixed-income securities,” Chubb said in the statement.

Pre-tax catastrophe losses, net of reinsurance and including reinstatement premiums, were $1.16 billion in the quarter, of which $975 million was from Hurricane Ian. Some 77% of Chubb’s Ian-related loss was incurred in commercial lines.

Chubb’s property/casualty combined ratio improved to 93.1% in the quarter, compared with 93.4% in the year-earlier period.

Catastrophe pricing is inadequate in many portfolios, and property pricing will continue to adjust to the realities of the nat cat environment, and to the increased cost of reinsurance and lack of availability, Mr. Greenberg said.

Chubb is fully prepared to take catastrophe risk and the associated volatility, as long as it is adequately compensated, he said.

Total net premiums written rose 14.4% from the third quarter of 2021 to $12.0 billion.

Chubb’s property/casualty net premiums written increased 8.5% to $10.747 billion. North America property/casualty net premiums written were up 10.6% to $7.837 billion, with growth of 11.4% in commercial lines.

In North America, growth in commercial lines was led by Chubb’s major accounts and specialty division, which grew 9.7%, Mr. Greenberg said. Its middle-market and small commercial business grew 5.7%.

Overall rates in North America commercial lines were up 5%, excluding workers compensation, while total pricing including rates and exposure increased 8.5%, he said.

“We are staying on top of inflation in terms of pricing and reserving,” he said.

In major accounts, rates increased 5.3%, with total pricing up 8.6%. General casualty rates were up 8.7%, property rates climbed 9.7%, and financial lines rates were up 4.3%, he said. In its excess and surplus wholesale business rates were up 9%, with total pricing up nearly 13%.

Pre-tax net investment income was a record $979 million, up from $866 million in the prior-year period. “With rising interest rates and widening spreads, investment income is and will continue to rise,” Mr. Greenberg said.

Chubb closed its $5.4 billion acquisition of Cigna Corp.’s business in Asia in the third quarter, which more than doubled its life insurance premiums.

It expects to announce regulatory approval of its additional stake in Chinese insurer Huatai Insurance Group Co. Ltd. imminently, Mr. Greenberg said.

 

U.S. commercial insurance rates rose 5% in the third quarter, down from 10% in the second quarter, but there was considerable variation by line, with property insurance increases accelerating, casualty rate hikes slowing and financial lines rates falling, according to Marsh LLC’s quarterly pricing report released Wednesday.

Cyber liability rate hikes, which have soared over the past year, moderated but still saw nearly 50% average increases.

Property insurance rates in the United States rose 8% in the third quarter, compared with 6% in the second quarter. Total insured values increased 8% in the quarter, and the rate increases were driven by higher reinsurance costs, the report said.

U.S. casualty insurance prices rose 3% in the quarter, compared with 6% in the prior quarter. The easing in casualty pricing reflects soft workers compensation rates — excluding workers comp, rates rose 5% — and moderation in increases for umbrella and excess liability, Marsh said. Excess liability rates rose 7% in the quarter, compared with 16% in the prior quarter.

Financial and professional lines pricing fell 6% in the quarter, compared with an increase of 21% in the second quarter, as new capacity came into the market. Insurers and brokers have previously said more than 20 new directors and officers liability insurers entered the market over the past year.

D&O rates in the U.S. fell 9% for publicly traded companies, following a 6% decline in the second quarter. Cyber insurance prices rose 48% in the third quarter, compared with 79% in the second quarter.

“Increased competition is due to many factors, including: improved cybersecurity controls, the effect of retention level increases and rate adjustments in 2021, reduction in claims frequency over the past six months despite no change in severity, according to many insurers, and higher interest rates leading to insurers seeking top-line growth,” the report said.

Globally, insurance rates rose an average of 6% in the third quarter, compared with 9% in the second quarter and 11% in the first quarter, the report said.

The United Kingdom saw the highest average increase at 7%. Rates in continental Europe rose 6%; Latin America and the Caribbean and the Pacific region both saw 5% rate increases; and rates in Asia rose 2%.

By major product line, average property rates increased 6% globally, casualty rates rose 4%, and financial lines fell 1%.

A New York Supreme Court judge Tuesday ruled in favor of 16 terminated New York City public employees in holding that the “vaccination mandate for City employees was not just about safety and public health; it was about compliance.”

The fired employees in July sued the city, along with public health and safety officials, over a 2021 order requiring that all public workers be vaccinated against COVID-19 or lose their jobs.

Writing that “being vaccinated does not prevent an individual from contracting or transmitting COVID-19,” the judge ordered that the fired workers be reinstated and receive back pay. The case is George Garvey, et. al. v. The City of New York, et. al.

According to media reports, 2,000 city workers were fired for refusing to be vaccinated. All but one of the plaintiffs in the lawsuit requested exemptions and were given “generalized and vague denials,” according to the ruling.

The judge also ruled against New York Mayor Eric Adams’s executive order allowing exemptions for private employees such as performers and athletes — who were required to get vaccinated in a separate 2021 order by the health commissioner. The ruling stated that the mayor “made a different decision for similarly situated people based on identical facts.”

The record failed to “support the rationality of keeping a vaccination mandate for public employees, while vacating the mandate for private sector employees or creating a carveout for certain professions, like athletes, artists, and performers,” the ruling said.

“This is clearly an arbitrary and capricious action because we are dealing with identical unvaccinated people being treated differently by the same administrative agency,” the ruling said.

 

Connecticut Gov. Ned Lamont on Monday announced that state businesses will see another rate decrease in workers compensation insurance beginning Jan. 1, 2023.

The Connecticut Insurance Department approved an annual filing with decreases of 3% to workers comp pure premium loss costs.

This marks the ninth consecutive year the department has approved rate decreases for workers compensation insurance, saving Connecticut businesses more than $300 million, according to a statement from the governor’s office, which cited safer workplaces as the reason behind the steady reductions.

“The loss costs and assigned risk rates have steadily gone down over the last nine years, helping businesses better control workers’ compensation insurance costs – one of their critical operating expenses,” Andrew N. Mais, state insurance commissioner, said in the statement. “This reflects an ongoing decrease in the number of workplace injuries and claims filed.”

 

 

 

 

A New York appellate court upheld the temporary suspension of benefits for an injured truck driver who failed to disclose his authorship and self-publication of several books while collecting workers compensation benefits.

John Koratzanis was working for U.S. Concrete Inc. as a truck driver in 2017 when he injured his knees, foot and ankle. After his comp claim was accepted, his employer raised the issue of whether he had violated law after making false statements over income he collected as a self-published author of books he allegedly wrote while he was out of work and collecting comp benefits.

A workers compensation law judge found Mr. Koratzanis’ failure to disclose his post-accident publishing activities broke the law, and imposed a mandatory penalty of no compensable lost time from the date of the first post-accident publication to the date of the hearing, but declined to impose a discretionary penalty. His employer appealed.

Both the Workers’ Compensation Appeal Board and a state appeals court affirmed, noting that Mr. Koratzanis made no effort to disguise his publishing endeavors, and he was readily forthcoming about his activities when questioned. Given this record, the court said it had no reason to disturb the board’s decision to impose only the mandatory penalty for the designated period.

 

 

A study released Thursday exploring the availability of personal protective equipment in workplaces found 72% of workers who forgo protocols do so because they “just didn’t want to wear it.”

J.J. Keller Center for Market Insights, the research arm of safety supplies provider J.J. Keller and Associates Inc., surveyed 172 people from more than 10 industries, with transportation, manufacturing and construction making up 70% of respondents. The study examined such gear as vests, hard hats, and protective eyewear.

The survey found that 50% of companies said their workers didn’t think the protective gear was necessary, another 50% said the gear “make the job more difficult,” and 21% said workers forgo safety gear because they “didn’t know it was required,” according to results that allowed respondents to provide more than one answer.

The survey also found the top three barriers to providing gear. The first issue is sizing, as 55% of workers needed larger sizes while 41% said they needed a smaller size, and 35% of companies said they struggled to find gear for female workers.

Heat was another challenge, as the issue was raised several times in the open-ended portion of the survey, where respondents lamented on workers protesting that hot weather made it difficult to wear hard hats and other wearable gear.

Supply chain disruptions was listed as the third barrier to ensuring workers are protected, as 71% of respondents said they sometimes or often had issues securing personal protective equipment.

 

 

 

 

The California Division of Workers’ Compensation on Wednesday announced an extension of emergency rules allowing remote medical-legal evaluations intended to give qualified medical evaluators and injured workers more flexibility to schedule exams during the pandemic.

The rules set to expire Tuesday were extended through Jan. 18, 2023, in what is the last time the regulations can be readopted on an emergency basis.

DWC said in a statement that the emergency regulations help injured workers and employers continue to move their workers compensation claims toward a resolution and avoid additional and undue delay by addressing how medical-legal evaluations may proceed during this emergency period.

DWC has also launched the process of adopting permanent rules allowing remote med-legal exams and is holding a public hearing in November.

WorkCompCentral is a sister publication of Business Insurance. More stories here.

 

 

A New Jersey real estate developer and two contractors are facing a total of $518,037 in fines after allegedly and willfully exposing workers to dangerously energized power lines at a worksite in Paterson, New Jersey, the U.S. Department of Labor said Tuesday.

On April 15, the local power utility alerted the department’s Occupational Safety and Health Administration about workers constructing a five-story apartment building too close to nearby power lines. After arriving at the site, OSHA inspectors found employees at risk of electrocution as they worked from a metal scaffold erected within five feet of high-voltage power lines.

OSHA informed the project’s developer, Litana Development Inc. of Wayne and two subcontractors, Prata Construction LLC of Denville, a carpentry contractor, and Elite Brothers Construction LLC of Paterson, a stucco contractor, of the dangers and told them work must not continue. The agency subsequently posted an Imminent Danger Notice in English and Spanish to warn workers at the site about the extreme danger.

On June 23, the department’s Regional Office of the Solicitor secured a temporary restraining order in U.S. District Court for the District of New Jersey in Newark to enforce OSHA’s Imminent Danger Notice. Attorneys for the department and Litana negotiated a consent injunction, entered on July 5, to resume work as long as workers remained 11 feet from the power lines.

Less than a month later, OSHA found that work had once again been performed dangerously close to the power lines. On Aug. 2, the court entered a more restrictive Modified Consent Injunction that provided for third-party monitoring and physical barriers to ensure that workers would be kept safe.

OSHA said that “despite repeatedly being told of the danger involved with this construction project, the companies ignored warnings and even a court order.”

As a result, Litana Development is facing a $425,081 fine and Prata Construction and Elite Brothers Construction are both facing $41,478 fines. The companies have 15 days to contest.