Workers compensation insurer Omaha National Group Inc. announced Wednesday it acquired Sutter Insurance Co., a California-domiciled insurer, and renamed it Omaha National Casualty Co.
Terms of the deal were not disclosed.
Omaha, Nebraska-based Omaha National said it is licensed to issue policies in 37 states with the recent addition.
Insurance rate increases slowed in the first quarter in several major lines, and prices fell for some specialty coverages, executives at Marsh & McLennan Cos. Inc. said Thursday, as the brokerage reported higher revenue and profit for the quarter.
The reinsurance market is also improving for cedents, the executives said.
Meanwhile, the brokerage is stepping up its direct involvement in the wholesale brokerage market through its recently launched Victor Access unit, they said.
Marsh McLennan reported $6.47 billion in revenue for the first quarter, a 9.3% increase from the same period last year.
The company’s revenue increased a similar amount on an underlying basis, which excludes the effect of foreign exchange fluctuations, and acquisitions and dispositions.
In its risk and insurance services division, Marsh reported revenue of $3 billion for the quarter, a 9.4% increase over the same period last year and up 8% on an underlying basis. Guy Carpenter, its reinsurance brokerage unit, reported revenue of $1.15 billion, a 7.2% increase and up 8% on an underlying basis.
In its consulting business, Mercer reported $1.43 billion in revenue, a 6% increase, and Oliver Wyman reported revenue of $789 million, up 14.8%.
Net income increased to $1.4 billion, a 13.4% increase over last year’s first quarter.
Marsh’s global insurance rate index increased 1% in the first quarter, compared with 2% in the fourth quarter, Marsh McLennan President and CEO John Doyle said on an earnings call with analysts Thursday morning.
He noted the index skews toward large account business and that middle-market rates are generally renewing higher.
In individual lines, global property rates increased 3%, compared with 6% in the prior quarter, casualty rates rose 3%, similar to the fourth quarter, and workers compensation rates declined in the mid-single digits, he said.
In specialty lines, financial and professional liability rates were down 7%, and cyber liability rates fell 6%, Mr. Doyle said.
Reinsurance pricing remained stable, he said.
“In the April renewal period, U.S. property cat reinsurance rates were flat, with some decreases for accounts without losses. Loss-impacted accounts averaged increases in the 10% to 20% range,” Mr. Doyle said.
And cedents will likely see improved market conditions for June 1 Florida property cat renewals, he said.
Cedents are looking to buy more property catastrophe reinsurance coverage, said Dean Klisura, president and CEO of Guy Carpenter.
“Reinsurer appetite has increased for property cat. There’s an inflow of capital and capacity, competition at the top end of programs; it’s been good for both buyers and sellers,” he said.
Meanwhile, Marsh, which signaled last year that it was looking to develop more wholesale capabilities for the excess and surplus lines market, recently launched Victor Access, a wholesale brokerage unit of Victor, its managing general underwriter unit.
“We’re not looking to build a third-party wholesale business,” Mr. Doyle said. “We actually access most of our E&S market solutions directly today, but we want to continue to press and make sure that we can access as much of that market directly. … We’ll continue to use wholesalers for niche expertise.”
The U.S. Occupational Safety and Health Administration said Tuesday that it cited an automotive supply company after a worker was killed in October 2023.
OSHA cited Faurecia Emissions Control Systems NA LLC, a subsidiary of Auburn Hills, Michigan-based Faurecia North America, for 10 instance-by-instance violations after the employee, who was on the job for about a year, was crushed by a machine that bends vehicle exhaust pipes at a plant in Franklin, Ohio.
The agency proposed $314,555 in penalties.
OSHA said it had previously cited the company for similar violations at the Franklin plant.
Investigators said the company failed to train employees in proper lockout/tagout procedures and failed to implement proper machine guarding.
Faurecia has 15 business days to contest the citation and proposed penalties.
Travelers Cos. Inc. said Wednesday that commercial insurance rates continued to rise in most lines during the first quarter as it reported growth in net income and revenue.
While the insurer reported higher catastrophe losses during the quarter and a slight increase in general liability reserves for prior-year losses, sustained quarterly renewal rate increases helped drive improved profitability, Travelers executives said on its earning call with analysts.
Travelers, usually the first major property/casualty insurer to report quarterly results, is often seen as a bellwether for the industry.
In business insurance, its main commercial segment, Travelers saw 7% average renewal premium increases, which include rate and exposure changes, said Greg Toczydlowski, president of business insurance.
“It was also up almost two and a half points from the first quarter of 2023,” he said. “Umbrella, property and auto led the way, all with renewal rate change in or very close to double digits.”
Management liability renewal rates increased 2.8%, down from the 5.6% increase in the same period last year but up from the 2.1% increase in the fourth quarter, and workers compensation renewals increased in the low single digits.
There was no net prior-year reserve development in the quarter in its business insurance segment, primarily because better-than-expected loss experience for workers compensation was offset by higher-than-expected loss experience in general liability, Travelers said.
The increase in general liability reserves did not indicate any significant new developments, said Travelers Chairman and CEO Alan Schnitzer.
“When you look at the overall reserves we have for these lines, these are very small adjustments,” he said.
Travelers reported a profit of $1.12 billion for the quarter, a 15.2% increase from the same period last year.
Catastrophe losses for the quarter were $712 million, compared with $535 million in last year’s first quarter, primarily from losses in the central and eastern United States, Travelers said in its earnings statement.
Net written premium increased 8.4% to $10.18 billion. By sector, business insurance net written premium increased 8.5% to $5.6 billion, bond and specialty rose 6.4% to $943 million, and personal insurance increased 8.6% to $3.64 billion.
Travelers’ combined ratio for the quarter improved to 93.9% compared with 95.4% in the same period last year.
Net investment income for the quarter was $846 million, a 27.6% increase over the 2023 period.
It remains to be seen how California’s $20-an-hour minimum wage for fast-food workers will affect the workers compensation industry, as the nearly 25% hike could drive up premiums in the near term due to higher payrolls but also could lead to more automation, experts say.
Impacts to workers compensation insurers could be minimal to the “extent the fast-food entities don’t make other changes to offset the increases in their overall payroll costs,” a spokesman for the California Workers Compensation Institute wrote in an email. He said that replacing employees through automation, such as kiosks for ordering or robotic food preparation, reducing hours, eliminating overtime shifts and delivery, or closing restaurants will hurt insurers.
“We have already heard that some of this is occurring, but we will have to wait to see the extent to which such changes impact overall payroll and premium within this sector,” he wrote of an industry that has higher-than-average injury rates due to the nature of the work — with abrasions, burns, slips, trips and falls among the top risks — and the typically younger age of the workers, who are statistically more likely to be injured.
The National Council on Compensation Insurance, which does not set rates for California but has been monitoring minimum wage increases across 22 states this year alone, said increases typically even out for insurers.
“The idea with our exposure base being payroll is that you don’t have to change rates as payroll goes up because the benefits go up, and payroll goes hand in hand. They should offset each other,” said Kirk Bitu, a Boca Raton, Florida-based actuary with NCCI.
However, the large increases, such as that which went into effect in California on April 1, are “something that’s going to be worth watching out for,” said Stephen Cooper, Hartford, Connecticut-based executive director and senior economist at NCCI, who noted that small minimum wage increases going back to the 1990s had minimal effects on comp insurance premium.
“Things could definitely be different this time around because of artificial intelligence, because of automation, because of a lot of these impacts, especially at the fast-food level,” he said.
“We’re dealing with an environment now with very high inflation, and consumer budgets are starting to feel pinched … and there’s concern as to how much (consumers are) actually going to be able to spend on certain types of goods. You can’t just raise prices to offset” the increases in payroll.
A spokeswoman with the California Restaurant Association said many fast-food restaurants were already moving toward automation following the pandemic, and that the increase in payroll “gives them another reason to continue to move in that direction.”
A former California chiropractor was sentenced Friday to 54 years in state prison and ordered to pay more than $23 million in fines for his role in a $150 million workers compensation fraud scheme, authorities announced Monday.
Peyman Heidary, who was convicted during a January jury trial of 68 counts of insurance fraud, conspiracy, money laundering and other charges, had exaggerated claimant injuries and ordered employees to provide unnecessary medical treatments, which resulted in inflated billings to insurers, according to the Riverside County District Attorney’s Office.
Mr. Heidary controlled several sham law firms and a network of sham health clinics between 2009 and 2014, prosecutors said. He used the sham law firm to recruit injured workers and then referred the individuals to his clinics for treatment resulting in fraudulent billing.
Prosecutors said Mr. Heidary was initially charged with $98 million in fraud but calculated damages rose to $150 million after additional evidence was presented at trial.
The Texas Department of Insurance’s Division of Workers’ Compensation on Tuesday announced changes to its rules that it says eliminates “overly burdensome administrative regulations that (insurance) companies must adhere to in order to demonstrate the sufficiency of their (Accident Prevention Services).”
The changes, which the department says concern submissions for insurance companies and are in line with the state’s labor code, will allow the division “to direct our attention and resources to services that have proven to be more effective in providing occupational assistance to Texas employees and employers,” according to the department.
Some of the changes include the maintenance of written procedures and that an insurer must evaluate a policyholder’s needs according to those procedures, the filing of annual reports on accident prevention services, minimizing what is required to that which is in state law, and certain company inspection requirements.
The changes go into effect on July 1.
The U.S. Department of Labor said Tuesday that its Mine Safety and Health Administration has issued a final rule designed to better protect miners from hazards associated with exposure to respirable crystalline silica, a known carcinogen.
The final rule lowers permissible exposure limits of respirable crystalline silica, also known as silica dust and quartz dust, to 50 micrograms per cubic meter of air.
If the exposure limit is exceeded, mine operators would be required to take corrective actions to come into compliance.
The DOL said inhalation of respirable crystalline silica can lead to lung and kidney diseases, chronic bronchitis, black lung disease and progressive massive fibrosis, a condition typically found in coal workers that involves the development of masses of dense fibrosis in the upper lungs.
The DOL said these diseases are irreversible and potentially fatal.
The final rule requires mine operators to use engineering controls to prevent overexposure to silica dust, requires metal and nonmetal mine operators to establish medical surveillance programs to provide periodic health exams to miners at no charge, and institutes a new respiratory protection standard reflecting updates in best practices.
In a statement, Acting Labor Secretary Julie Su said, “We estimate that this final rule will save more than a thousand lives and prevent severe illness for thousands more.”
Wisconsin lawmakers voted down a bill that would have created a rebuttable presumption of compensability for workers injured by employer-mandated vaccines.
Assembly Bill 633 failed to advance Monday through a Senate joint resolution. The measure had been introduced in October 2023.
Lawmakers also voted not to advance Assembly Bill 115, which would have made changes to the conditions of liability for workers comp benefits for certain first responders diagnosed with work-related post-traumatic stress disorder.
Under the bill, volunteer firefighters, emergency medical responders, emergency services practitioners, correctional officers, emergency dispatchers, coroners, medical examiners and “medicolegal” investigators wouldn’t have been required to prove a PTSD diagnosis based on the current standard of showing that they experienced “unusual stress of greater dimensions than the day-to-day emotional strain and tension experienced by all employees.”
Instead, eligible employees would have had to demonstrate a diagnosis based on a less stringent standard applied to law-enforcement officers and career firefighters.
The U.S. Occupational Safety and Health Administration said Monday that it cited a Florida contractor following the September 2023 heat-related death of a sugar cane farm worker.
OSHA cited Belle Glade-based McNeill Labor Management Inc. for one “serious” violation for exposing workers to hazards associated with high ambient heat while working under direct sunlight and proposed $27,655 in penalties.
The company has contested the citation and proposed penalties before the Occupational Safety and Health Review Commission.
The worker, who came to Florida from Mexico to work at the farm, died on his first day on the job, OSHA said. The man suffered fatal heat-related injuries while working in an open field as the heat index reached 97 degrees.
OSHA said McNeil could have prevented the death by implementing safety rules designed to protect workers from heat-related hazards, including a plan to help workers acclimate to weather conditions.
The worker, who was sitting atop stacks of sugar cane on a trailer as he tossed them to the ground for planting, collapsed shortly after complaining about the effects of heat, OSHA said.
An investigation found that McNeil also failed to report the worker’s hospitalization and death, a legal requirement.
In related news, Florida Gov. Ron DeSantis on Thursday signed into law a measure that prevents local governments from requiring employers to institute heat-related workplace safety measures.
