SMP Consulting Group (Website) is thrilled to report that CFO Magazine (Website) published an article written by one of our employees regarding the cost breakdown of workers compensation insurance (Breaking the Code).
A number of CFO's have reached out to SMP for further information and thanking us for a "do it yourself" tutorial.
Calculating the premium cost for workers compensation is very complicated and the article guides a CFO through the process.
For more information please contact SMP Consulting Group
"The Workers Compensation Audit Specialist for over 30 years!"
Friday, September 19, 2014
Monday, August 11, 2014
Whiteboard animation that explains workers compensation audits
SMP Consulting Group is pleased to announce the release of its whiteboard animation that explains the importance of workers compensation audits. "Not everyone knows the importance of a workers compensation audit or why middle market and large companies should consider the service" said Greg Walker, SMP Consulting Group's Chief Operation Office (Bio). Insurance premiums for workers compensation continue to increase each year. The data used to calculate the premium is complicated and prone to errors and mistakes.
For further information please read our blogs or visit our website
Greg Walker
Friday, July 11, 2014
Workers Compensation - State of the Industry
The National Council on Compensation Insurance (www.NCCI.com) provides annual reports on the state of the industry. The following are some interesting facts:
- The workers compensation insurance product line reported revenue of $37.0 billion for 2013.
- The combined ratio for 2013 was 1.01%
- That combined ratio calculates a $370.0 million loss (1% of revenue) for the industry.
What is the combined ratio?
The combined ratio measure the profitability of the line. It general it combines the losses incurred from claims plus the expenses for running the program. It does not include the gains from investing the premiums so actual losses are a bit lower. Unfortunately we have all experienced yield compression during the last two years. It's hard to make a return on our savings.
- In 2001 the combined ratio was 122.0%......wow!
That's a record loss year for the industry!
- During the last 35 years the industry has only had a combined ratio less the 100% four times. Only twice in the last decade. It has been hard to make money.
With investment returns at historical lows the industry is searching for ways to contain cost. Claims management will continue to be the focus.
- The workers compensation insurance product line reported revenue of $37.0 billion for 2013.
- The combined ratio for 2013 was 1.01%
- That combined ratio calculates a $370.0 million loss (1% of revenue) for the industry.
What is the combined ratio?
The combined ratio measure the profitability of the line. It general it combines the losses incurred from claims plus the expenses for running the program. It does not include the gains from investing the premiums so actual losses are a bit lower. Unfortunately we have all experienced yield compression during the last two years. It's hard to make a return on our savings.
- In 2001 the combined ratio was 122.0%......wow!
That's a record loss year for the industry!
- During the last 35 years the industry has only had a combined ratio less the 100% four times. Only twice in the last decade. It has been hard to make money.
With investment returns at historical lows the industry is searching for ways to contain cost. Claims management will continue to be the focus.
Wednesday, July 9, 2014
Workers Compensation rates continuing to increase in 2014, but at a slower pace than 2013.
Workers compensation rates are continuing to increase this year, but at a slower rate than 2013, according to an analysis released this week by Moody’s Investors Service Inc.
Rate firming is expected to slow to 5.5% this year, down from 8% in 2013, Moody’s said in Monday’s report. Still, this year’s rate increases are expected to remain “sufficiently above loss-ratio inflation” of about 2%, allowing an underwriting profit for 2014.
“However, our rate surveys suggest a reversal in risk appetite for WC in 2014, with carriers seeking to retain profitable accounts and competing for new business, which will dampen the pace of rate increases,” the report reads.
Moody’s expects that workers comp insurers will have a combined ratio of 98% in 2014 and 96% in 2015 if current industry trends continue, including rate increases and a reduction in taking on unprofitable accounts. That’s compared with a combined ratio of 103% in 2013.
Reserves for workers comp insurers “appear about break-even to modestly deficient for the industry,” Moody’s said. The use of predictive modeling in workers comp could lead to more stable loss reserve estimates in the future as the comp industry accepts such technology on a wider scale, according to the analysis.
Wednesday, June 4, 2014
Big Data and Insurance Carriers
A recent article in PEO Compass (www.http://peocompass.com), authored by Rick Kirsch, discussed the use of Big Data by insurance carriers as being a potentially disruptive technology. Big Data is the buzz word for accumulating large pools of data and having the ability to manage, coordinate and analyze the various pieces. A well defined Big Data strategy allows carriers to better analyze risk (losses and potential losses) and price that risk accordingly. Since premiums (price) is a function of risk a better informed carrier can reduce price when the market perception of risk is overstated and capture market shar
e. Conversely, when risk is greater then the market perception a carrier may require higher premiums or limit its new business underwriting therefore limiting its losses. Big Data is a powerful tool.Although SMP views the use of Big Data analytics by insurance carriers as a positive contribution to the overall health of the industry SMP recognizes that the proper data inputs are mandatory to the proper data outputs.
SMP Consulting Group specializes in Workers Compensation Audits and assuring the data inputs including classification codes and loss runs (an important input when calculating MOD) are accurate.
For further information please visit www.smpconsultinggroup.com
Thursday, April 24, 2014
NCCI continues to support PEO's with its new designed webpage
Insurance Brokers should know that the< National Council on Compensation Insurance ("NCCI") revised its webpage on employee leasing providing relevant and concise information on the broader Professional Employer Organizations ("PEO"). In the past its employee leasing page was limited. The name change from employee leasing to Professional Employer Organization provides a more focused approach. "NCCI's webpage revision provides a practitioner with a one-stop resource for information and greatly expedites topic research and a place to find the proper forms" stated Greg Walker from SMP Consulting Group.
The site can be found at NCCI.
SMP Consulting Group provides premium recovery audit services for workers compensation, PEO's and subrogation claims. For further information www.smpconsultinggrou.com.
The site can be found at NCCI.
SMP Consulting Group provides premium recovery audit services for workers compensation, PEO's and subrogation claims. For further information www.smpconsultinggrou.com.
Monday, April 14, 2014
Providing voluntary accident and disability reduces workers compensation claims
Lieberman Research Worldwide surveyed 600 small business for Aflac and concluded that companies who provide voluntary accident and disability insurance experience a reduction in workers compensation claims. (Insurance Business).
One may conclude from the survey results that an employee will file a claim with his/her accident and disability insurance provider rather then file a worker's compensation claim.
Why should employers pay attention?
One of the variables for calculating the worker's compensation premium is the calculation of the experience modification. The more claims a company submits the higher the "MOD rate". The higher the MOD rate the higher the premiums.
Claims that are filed through the voluntary accident and disability insurance provider do not go into the MOD calculation. The savings can be significant.
More importantly voluntary accident and disability insurance is generally paid by the employee. Small and medium size businesses should encourage their workforce to sign-up.
SMP Consulting Group is the leading provider of workers compensation audits finding misclassifications and erroneous calculations for its clients. We only work on a continent basis without upfront fees. We only share in the savings. For more information visit our website at www.smpconsultinggroup.com.
One may conclude from the survey results that an employee will file a claim with his/her accident and disability insurance provider rather then file a worker's compensation claim.
Why should employers pay attention?
One of the variables for calculating the worker's compensation premium is the calculation of the experience modification. The more claims a company submits the higher the "MOD rate". The higher the MOD rate the higher the premiums.
Claims that are filed through the voluntary accident and disability insurance provider do not go into the MOD calculation. The savings can be significant.
More importantly voluntary accident and disability insurance is generally paid by the employee. Small and medium size businesses should encourage their workforce to sign-up.
SMP Consulting Group is the leading provider of workers compensation audits finding misclassifications and erroneous calculations for its clients. We only work on a continent basis without upfront fees. We only share in the savings. For more information visit our website at www.smpconsultinggroup.com.
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