RiskProNet News


Operating Wellness Programs in Face of Legal Challenges

“If you’re an employer trying to sponsor a wellness program, then the recent kerfuffle between the AARP and the Equal Employment Opportunity Commission affects you.” This quote from a recent issue of Benefit News sums up the discussion at this month’s Wellness Practice Group teleconference.

The consensus was that the “EEOC is unlikely to make this a ‘witch hunt.’ They don’t have time.”

A more likely scenario is that a plaintiff’s attorney will challenge a company’s wellness program.

The major question is whether companies can legally subsidize up to 30 percent of an employee’s health care program costs if the employee participates in wellness programs. This has been an exception to the law making it illegal to base eligibility or premiums on health-related factors, including genetics.

Here are comments from the teleconference:

  • It is permissible to give employees a choice of wellness activates in which they can participate. For example, a company can create a walking challenge and give gift certificates as rewards as long as the program is voluntary.
  • Fitness programs usually are acceptable as long as no health information is collected. An employer can, for example, give “points” for taking fitness classes or tracking steps taken each day. This is believed to be legal even if some employees are unable to participate because of disabilities.
  • One person raised the question of whether a client’s other insurance would provide legal defense in the case of challenges to a wellness program. Directors and officers liability coverage may provide protection in selected situations, although the GL policy is unlikely to cover this.

Other Matters Discussed

  • Bravo recently conducted a webinar on creating a program within legal guidelines. It also reviews genetic testing guidelines. A white paper on the topic also is available.
  • No RPNI member agencies and few clients have a staff person dedicated to wellness program.

The Wellness Practice Group meets via conference call every other month.


Best Ways to Handle Claims Servicing

Assigning a claims service person to a specific client – as opposed to allocating assignments by the type of claims — works best, RiskProNet members agreed at the recent Claims Practice Group teleconference.

Members discussed a recent survey, with data ranging from the number of people in the claims department to software used to manage claims.

 “We try to create a relationship between the claims department and our clients. We don’t really have specialists. If we did, we would have two or three different people working with the same client. We’d rather have a client talk to the same person every time. We learn how the client operates, and the client learns how we operate. Our approach is to create a long-term relationship that will have benefits beyond the sales and underwriting process.”

 Saving money for clients

“We review the x-mod on workers comp for our largest clients and often find errors. For some reason, reviewing the report is not a normal process for most of our competitors. There’s no secret sauce; it’s literally just doing it. We save clients millions of dollars and four points on the average. Something like this can make a big difference for you and your agency.  It’s a lot of fun to get an email saying, ‘Thank you for saving me $27,000 because you made sure the claim was closed and you pushed refilling.’”

Additional comments

“There is quite a variation in terms of the number of people assigned to claims. It makes us wonder what services other people are offering that we aren’t. If we take out life and benefit, the spread narrows.”


Using Stewardship Reports for Large Accounts

Claims managers agreed that stewardship reports for large accounts should ideally be reviewed three, six and nine months after renewal. This, along along with other administrative matters relating to stewardship reports were discussed at a recent claims managers practice group conference call.

Discussions included several sample documents, provided by Brad Larsen at Buckner Company, including:

  • Worksheet for creating stewardship timelines.
  • Cyber liability comparison form.
  • Claims review form.

Here are some of the comments and questions from the teleconference.

  • Do you involve carriers in reviewing claims or do this on your own? Both. If clients are no longer on risk, carriers sometimes want to pull back on service delivery. There is a lot to be said for doing it yourself, especially if carriers want to charge for reports.
  • Ask clients if they are aware of any circumstances that could result in a claim when the policy approaches renewal. Remind them that under certain circumstances, they must report a claim within 30 to 60 days after a policy expires to have coverage.
  • The Epic agency management system has a good system for creating reminders. “It’s efficient and a good way to avoid keeping everything in my personal diary, although I still do.”
  • A central calendar should outline the commitments made to each client.
  • A workers comp review is typically created three months after renewal, and data is due to NCCI 6 months post-renewal.
  • We have an annual service team meeting with loss control and production on large accounts. We want to look at revenues and service hours three to four months before renewal. We get an agreement with the producer and the client on how many hours we can spend and how many meetings are appropriate. “The client needs to have the perception, as well as the reality, that we are constantly following up.”
  • Some clients don’t want to see you four times a year or don’t have the volume to merit meetings that frequently. Once we build a relationship with a client, we may be able to do conference calls rather than face-to-face meetings or make intermittent calls on a particular claim. The right amount of service will not be the same for every client.
  • We have three tiers of service levels, based on volume. The lowest is somewhat reactionary. Time lines are written for the highest level. Each service level is based on revenue generated and producers are charged back $250 to $500 per account.
  • Most carriers other than Travelers are unwilling to share benchmark data on how clients compare with others in the industry. Travelers will only share data with current clients.
  • Zurich shared benchmark data with one client on a major construction account. “It’s not something Zurich normally does and I think it was because of the size of the account. They’re the only other carrier I’ve found willing to share data.”
  • How do you suggest starting a stewardship-reporting program? Start with one batch of clients and then move on to the lower level.


Many New Trends in Personal Lines

Self-driving cars could mean reduced income from auto insurance, members of the Personal Lines Practice Group agreed at a recent teleconference. Other issues included dog bites, the younger generation with little interest in home ownership and jewelry, and videotaping homes of major personal lines client

Here are some of the comments:

Self-Driving Cars

J.D. Powers estimates that there will be about 10 million driverless cars in use by 2020. While this is a small percentage of the 1.4 billion cars on the road, it may have an impact on auto books at insurance agencies.

“A lot of younger drivers are waiting until they are 18 to get licenses instead of getting them at 16 because their parents don’t want to pay the premiums. Or they are using Uber and similar services and not driving at all. Today they have the convenience of not needing to drive in a city, and they aren’t driving as much as they used to.

“We are seeing some of this, but it is less dramatic because we are outside a metropolitan area. Everyone here still needs a car. In the cities, we are seeing clients turning to MetroMile or Lemonade. Auto insurance based on the mileage component has unbeatable premiums.”

“The scariest part is that I don’t think even the carriers know what is coming. You will still have to insure your vehicle, even if it’s driverless. There will be some sort of risk but we don’t know it will be. Will medical payments and physical damage fall back to the manufacturers? Or will the manufacturer be able to say that the vehicle was being used during inclement weather and the owner should not have been on the road?”

“Consumers are not fully confident of automated driving systems. Almost 50 percent say they ‘would’ or ‘probably would’ try driverless cars. The younger generation is much more trusting of technology.”

“The future is likely to bring more auto-sharing as well as self-driving vehicles. This also will impact insurance policies.

Changing values

“The younger generation doesn’t want to buy homes because they don’t want to be strapped to anything permanent. We are seeing apartments galore.

“We see young people coming out of school with student loan debts and reluctant to buy homes.”

“Values are changing with the generations. When I started in the industry, coverage for jewelry and collections was a big deal. This is still true of those 55 and older but we don’t see the same interest in the wealthy groups that are emerging. My children, for example, don’t want silver or jewelry.”

“We are spending more time vetting a client before we write a proposal. If prospective clients don’t value insurance, they won’t value the protection received from their insurance policies. They will end up going online and looking for something cheaper.”

 Keeping in Touch with Clients

“We offer the videography for free but we’ve had clients say they will pay for it. When we ask them if they want it again the following year, they always say ‘yes.’ You wonder whether you need to do it again, but we’re realizing that it really is necessary and people value it.  We’re upselling through the use of video.”

“Many of our clients don’t want to meet face-to-face and prefer to do everything by email and telephone. We tried videotaping but did not see a big response. But anyone who has gone through a natural disaster will recognize what a benefit it is.”

“We’re posting answers to customer questions on our blog. This will be a reference, so we can refer other clients with the same questions to the blog entry.”

“We ask clients to fill out a survey every other year. We decided yearly was too often, so we call them on alternate years. We’re finding that some clients haven’t even thought to tell us about a major home renovation.”

Generating new business

“We’ve found social media is great for branding but it doesn’t bring qualified leads. Ninety percent of our referrals come from real estate agents, lenders and title companies. This is where we need to focus in the future. We don’t offer any inducements to them. Their primary interest is to have us take care of the insurance needs so the sale won’t fall through because of an unresolved issue. After the flood zone remapping, we went into various real estate offices and spent 10 to 30 minutes on a Q& A about elevation certificates, grandfathered provisions and assumption of a policy at the act of sale. This sparked an interest and real estate agents realized we could help them. We pay $760 a year for an ad in a brochure that regional real estate agents give to their prospects.”

“We have added two personal lines producers and give a bonus of 50 to 60 percent of the annual growth in their books of business. One producer is ‘the only summer intern we have had success with’ as a full-time employee. She was a college athlete and is very competitive. The other is an account manager who wanted to move into sales. We’ve given up on college recruiting fairs and focus on someone with more experience. You can’t walk in looking like you’re 18 years old, especially if it’s a commercial lines account.”

Directors and officers liability

“If clients serve on nonprofit boards, alert them to find out whether the nonprofits have directors and officers liability insurance. Clients are always appreciative when we suggest that they check this, and it can lead to selling an umbrella policy.”


Dog bites

State Farm paid more than $10 billion in dog bite claims in 2016. California had the largest number of dog bite claims.


Check for Cyber Liabilities During Acquisitions

Caution your clients to check for cyber liability exposures when they acquire a new company. This was among the topics at a recent Cyber Liability Practice Group teleconference.

SullivanCurtisMonroe’s Patrick Hernandez, newly selected as chair of the practice group, brought two recent issues to the attention of the group. The City of San Diego is suing Experian for a data breach that affected 250,000 people in the city. Panerabread.com apparently failed to encrypt customer records for eight months.

Here are additional comments from the meeting:

  • Endeavor Insurance Services has a new offering to provide coverage in case of remote access to data.
  • RiskProNet members are receiving client requests for help in identifying cyber vulnerabilities. One RiskProNet member has partnerships with law firms to provide guidance, while another refers clients to the Chubb vendor list. SullivanCurtisMonroe is preparing a list of vendors in this area, and will share the list via the slack channel.
  • Check policies for the following language:

–Does the definition of the insured include independent contractors, interns and volunteers?

–Most policies define covered territory as anywhere in the world. Consider a policy that covers territory anywhere in the universe, given today’s transmission of data via satellite.

–What happens if there is a dishonest employee?

–Will EPLI coverage apply to cyber breaches that could result in disclosure of information about employees?


Presenting a CCIP Proposal Discussed at Construction Group

The sales cycle for a Contractor Controlled Insurance Program, (CCIP) or “wrap,” is typically 12 to 18 months. “But once you have a contractor intrigued, you are a consultant rather than a sales person. That opens the door.”

This was the advice at the recent Construction Practice Group teleconference from Roberto Rivera-Rodriguez of SullivanCurtisMonroe.

An important part of the sales process is to present a pro forma based on a project similar to the one on which the contractor is bidding, Rivera-Rodriquez said. He then presented a sample proposal and led the group through key portions.

Sample pro formas are available both from him and Charles Comiskey, practice group chair and senior vice president of Brady Chapman Holland & Associates.

Here are some of the comments:

“Middle-market contractors are a good market for wraps, as many think they are too small to benefit. The key is to explain to contractors that they will be ahead even in the worst-case scenario because they can control their losses. Bespoke coverage options also are an important advantage.”

“As soon as contractors get a taste for the profits available and see this as broker-driven, they are huge proponents.”

“Quality control is key to profits. Contractors are good candidates for a wraps only if they know their subs well. In one case, an employee failed to report an injury on time and the policy ended up not covering the claim.”

“As the labor shortage hits, we are starting to see more onsite losses. We’re getting the B & C teams from subs. The problem can be that you have right contractor but the wrong crew. When the economy is not as good, we get the A team.”

“Adequate markets exist, with about half a dozen available for residential projects.”


Observations on Dealing With Millennials

Millennials rarely “get it” when it comes to insurance until they purchase a first home. Although their initial insurance purchases are modest, the unsolved challenge is to keep millennials as a future revenue source, members of the Personal Lines Practice Group agreed at a recent conference call.

Here are some of the comments:

“Our book of business is starting to mature. We are missing millennials (generally defined as people born between 1982 and 2002), and that can affect the future of our agency. Are the systems in place that millennials will gravitate to?”

“I have two of my own and they are on their phones all day. Instagram is an area where we may be able to reach them. “

“I’m pulling a lot of kids off their parents’ policies and starting them on their own. Premiums are typically really high. I try to educate them about what is important in a policy. But I think it will come down to ‘I can get it cheaper somewhere else’ once they are truly on their own. They’re all about making sure they have their coffee money and their cocktail money.”

“They give insurance serious attention when they buy a home. Until then, it is price-driven. We try to explain that they may need more than minimum insurance so they don’t have their wages garnished for the next 20 years if there is an accident. Parents gravitate to that conversation and they get it. But the millennials talk to a buddy who found cheaper insurance.”

“We’ve lost a lot of millennials, which is good because they were our biggest problems. The  revenue stream down the road is the issue. Millennials don’t feel they own anything, so it’s hard to get them to buy anything extra. We try to keep the parents informed. Every millennial is the child of a client, as we don’t write insurance for people unless we have a relationship.”

Technology is key

“We’ve complained to our carrier partners about the ease of doing business that millennials want. The determining factor may be how smart and quick our systems are going to be.”

“Technology is our weakest link for millennials.”

“They’d rather go online than pick up the phone and talk about the issues.  They’ve grown up where information is everywhere. Their feeling is ‘We can do our own research’ and we mainly want to be sure we like the person we are dealing with. Referrals and ease of doing business mean everything to millennials.”

Monoline auto

“I have no good program for monoline auto. Nothing is competitive.”

“I think the industry is aware of this but the carriers haven’t bellied up to the bar on it. So the millennials will pick up insurance from Geico or somewhere similar. The second they see a premium of over $1,500, they’re gone.”

“We had a client’s son who found auto insurance that was cheaper because he gave incorrect information on mileage driven. He only calculated the mileage that he drove to and from work. Once he calculated it correctly, we could offer a less expensive policy with better coverage. They don’t realize that the carriers with cheaper policies will check their mileage and come back to them.”

Changing Markets in Florida, California

Florida insurance agents have a new offering, StormPeace, that covers claims that typical policies exclude or that have high deductibles. These include hurricane and wind damage or debris removal when a tree falls. Most claims are paid within three days.

The California earthquake market is changing, with some companies offering a 2 percent deductible rather than the traditional 15 percent.

Uninsured motorists

Uninsured drivers continue to be an issue, with estimates of uninsured motorists ranging from 26.7 percent in Florida to 4.5 percent in Maine. “We suggest maxing out coverage on the policies and also putting it under the umbrella policy.”

Pester to retire

Practice Group Chair George Pester, who has been with JKJ for 38 years, announced that he will retire in June after a “lifetime of joy” in insurance.


Claims Managers Hear From Travelers

Phishing attempts, ransom attacks and paper breaches (yes, paper) are the most common cyber and privacy claims today, speakers from Travelers told the Claims Practice Group at a recent conference call.

“Our biggest claims are from phishing attacks. Criminals are finding ways to get into email systems and there is a gold mine of boxes. They’ll set up rules to auto-forward messages to themselves and then move the messages to your delete folder. It used to be that hackers would take over the inbox and send out spam. That is less common today as they are becoming better at hiding their tracks.”

Ransom attacks, in which cyber criminals lock up or encrypt data in a company’s files, are an increasing issue for two reasons. The professional attackers are getting more sophisticated. At the same time, more amateurs are involved.

Amateurs are locking up data but are unable to encrypt it. “This is simply an act of cyber vandalism.”

Sophisticated criminal groups offer call-in numbers, chat systems and even “help desks” to assist companies in paying ransoms. Some ransom requests are as high as $10 million.

“There is a tendency to focus on electronic breaches, but paper breaches are also an issue. They have real costs and happen with frequency. Someone leaves a stack of papers out or loses a brief case. In one recent case, someone mailed a package of W-2 forms. It was sealed incorrectly and all the W-2s were missing when it reached the recipient.”

The key for an independent agent is to stress that a client needs to report a cyber breach immediately. “Cyber claims can look benign and turn out to be malicious. Time is of the essence.”

“There is a tendency of the insured to downplay the risk. It’s not so much that they want to hide it from a carrier but a misunderstanding of how bad it can be.”

“We had an attack on the email system at a small engineering company. One person told me, ‘There’s nothing wrong with my system. I had my own IT person look at it, and I’m reporting it to you out of caution.’ Relying on your IT staff to tell you that you’re fine is almost like asking someone to grade his own paper. A good IT staff should not let the breach happen in the first place.”

Travelers clients are entitled to a free call to an attorney who is a “breach coach.” “I encourage the insured to take advantage of that sort of call. It won’t cost you anything and will give you peace of mind. If it does turn out to be something, you’re able to catch it. If there’s nothing to worry about, you’ve merely wasted half an hour of your time.”

It is important to report any suspicions of unauthorized access to the system. “The free call with the data privacy attorney will let you find out whether it is a big deal.”

Both possible as well as actual breaches of security should be reported. “You don’t need actual proof – only suspicion of it. It someone has gotten into the system without authorization, let us know.”

Most policies cover the forensics costs to determine whether an actual breach occurred. “Often we’ll find that someone got into the network but wasn’t able to access anything confidential. For example, they may have accessed a grocery list but not any social security numbers.”

“We need to educate clients to include IT people in the front end of investigations so you get the IT staff on board. IT people are generalists. You don’t necessarily expect that they will be able to stop all attacks. The takeaway is for agents to encourage clients to think about this when they deliver policies.

Third-party claims for data security breaches still are rare and court rulings are divided. Some courts say that the threat of damage to a third party is not enough – that the third party has to prove that he has suffered actual harm. It’s an “unsettled” area of law.

Travelers has a hotline on its website. If the insured wants to talk to a breach coach, this is possible without it becoming an actual claim.

EPL Common Claims: Sexual Harassment, Age Discrimination and Website Accessibility

Employment Practices Liability claims for sexual harassment are increasing. “We had an average of 10 more claims per month in the last quarter than in previous months.” Plaintiffs also are asking for larger dollar amounts.

About 30 percent of all EPL claims include an aspect of sexual harassment. However, 7 percent of individuals who say they were harassed never talked to a supervisor or manager, and 90 percent never took any formal action. In the current climate, it seems likely that claims may increase.

Age discrimination claims also are resulting from recruitment ads on Facebook. Facebook allows advertisers to target age groups, and some workers over 40 have claimed they were excluded from seeing the postings.

Website accessibility complaints also are an area of concern. Websites need to be accessible to people with seeing and hearing disabilities. Lawsuits have targeted schools over their educational materials, restaurants over online menus and retailers over the online shopping process. Often one law firm will target multiple businesses with “cut and paste” lawsuits by the same plaintiffs. Although the law prohibits awards of damages in ADA lawsuits, plaintiffs’ lawyers usually can recoup legal fees. In addition, there is the cost for businesses to make their websites accessible.


Check That Cyber Policies Cover Data in the Cloud

Two key messages came through loud and clear at a recent cyber liability practice group conference call, 1) cyber insurance polices should cover information stored in the cloud as well as on your premises and 2) there should be no terrorism exclusions.

Pushing information to the cloud does not necessarily make it more secure, Cyber Liability Practice Group members agreed at a recent teleconference.

FedEx, for example, is now dealing with the fact that passports, driver’s license numbers and other sensitive information about its customers was left online in a publicly available Amazon S3 bucket.

Terrorist Attacks by Cyber Hackers

Terrorism is another issue where cyber security can come into play, as the recent attack on the Olympics opening ceremony showed. Hackers shut down internet access and telecasts, grounded broadcasters’ drones and prevented spectators from printing reservations, resulting in an unusually high number of empty seats. Indications are that the hackers had the ability to do more damage than they did, but primarily wanted to make a statement.

The message for RiskProNet clients: Check terrorism policies to be sure they cover cyber attacks.

Protect W-2 Forms

With tax season approaching, phishing attacks to obtain W2 forms and the accompanying information are expected to be increasingly common. Last year more than 200 employers were affected.

“This is a good talking point for conversations with clients,” one practice group member suggested. “Be certain that information is being stored and transmitted properly both within and without the organization.”

Online Cyber Policies from RPS

Manny Cho of Risk Placement Services, Inc., joined the call to discuss an online rating system that will provide a quote on cyber insurance and issue a policy in “less than two minutes.” The product is backed by Lloyds of London and fronted by Blue Cross/Blue Shield paper, he said.

In addition to the speed of issuance, a major benefit to the policy is that there are only six questions, and they are easy to answer. The questions cover past occurrences and claims, as well as antivirus protection, outsourcing and backup data storage. There are additional questions if the client wants coverage for crime and deception.

The online policies were first offered about two years and the average premium is around $3,300. Fitch lists RPS as the top cyber carrier in the U.S. with about 20,000 policyholders from all industries.

The policies appeal primarily to clients with revenues under $20 million, although the online portal can be used for clients with up to $100 million in revenue. The typical client is a contractor or manufacturer that doesn’t want to fill out a lengthy application, but also doesn’t want to face possible costs of $15,000 to $25,000 if a security breach occurs.

The portal is now structured so that a second quote from Axis is available for clients with up to $50 million in revenue. Although Chubb also has an online placement tool, its upper revenue boundary is $10 million.

The policy can run from six to eighteen months and can be signed electronically.


Data Analytics in Wellness & Controlling Prescription Costs

The use of data analytics in for managing wellness programs and the importance of controlling prescription costs were key discussion points at a recent wellness advisor practice group conference call.

Members have considered or have used Springbot, Benefitfocus and Zywave’s Decision Master Warehouse, although none received top recommendations. One challenge is that few clients have the ability to use such systems.

Data analytics are most critical for clients that self-insure some or all of their exposure. Analytic programs, for example, allow an employer to enter data on people who belong to a Weight Watchers group or a diabetes management program. It could violate HIPPA regulations to track them as individuals, but analytics can be used to see whether the group had fewer claims for medical expenses or took fewer sick days than others with similar health risks.

Quarterly reviews with clients are useful but are difficult to schedule. One agency sets a date for the next quarterly review at the end of each meeting, and this has been successful.

Controlling prescription drug prices

Services can help employees find out if there are possible alternatives for expensive medications, or whether there are significant price differences among local pharmacies.

GoodRX got positive remarks. The employer pays a month fee, and Good RX will help look for the least expensive place to fill the prescription. In the case of some very expensive drugs, GoodRX has found financial help.

RX Help Centers charge an administrative fee of $50 a month but the fee is waived if they are unable to save money for the member. Most participants save $500 to $600 a month. Not only does this help the employee, but it also creates a better claims experience for the employers.

Sometimes local pharmacies are willing to work with a large employer and can offer lower costs than chain pharmacies.

Higher Premiums for Tobacco Users

One client of a member agency is considering charging higher premiums for tobacco users. In order to do this legally, it is important to make resources available to help employees cease tobacco use. There is no requirement for a full-fledged program as long as employees receive information about the available programs. Although some companies will reimburse employees for the cost of tobacco-cessation programs, many programs also are free. The employer does not have to pay for a program.

Reference-based pricing is helping employers control costs, several members found. Comments included the following:

  • “We have been telling employees that they have to pay attention to prices.”
  • “Some TPAs negotiate up front before a procedure, while others wait to negotiate until afterward. People have more comfort in negotiating costs in advance.”
  • “We encourage members to be active in seeking preauthorization when something is planned.”
  • “We use a local third-party administrator that helps with pricing. “
  • “In some cases, doctors and hospitals outside the city are happy with reference-based pricing because the payment is higher than Medicare.”
  • “We had two clients where costs were running more than 200 percent over projections. With reference-based pricing, one is at 82 percent and the other, at 96 percent.”
  • “Working with providers is a challenge because some will look at an insurance card and say they don’t take it without looking any further. We have to tell them to type in the payer ID number.”
  • “It’s important to tell employees that they MUST open their mail. When bills pile up and no one says anything, it gets messy. Stress that employees must open their mail and send their bills in immediately.”

Advanced Medical Pricing Solutions (AMPS) in Peachtree Corners, Georgia, got good marks for helping control costs.