Shocked by the Interest!

Our New Work Comp Product EZRT Has Only a Few Spots Left for July Quotes.

Wow!  We are amazed at the response.  We are currently working with a choice group of Staffing Firms with total payroll of over one hundred million dollars.  With so many Staffing Firms seeing non-renewal notices either from their carrier or PEO, we are having discussions everyday with a new company.

Staffing Firms are also learning that one of the go-to Work Comp markets will no longer quote if you are exiting a PEO.  They have had difficulties getting some PEOs to participate in cumulative trauma losses.  As a result, they will now only quote staffing firms insured with other insurance companies.  Sadly, some Staffing Firms and their brokers are waiting for a quote that will not materialize and have no Plan B.

If your policy cancels on or before July 1, we have 7 slots still available as of the morning of May 6th.  EZRT offers a low deposit, monthly pay-as-you-go, a $5,000 deductible per claim and some of the lowest rates you will ever see.

We have a simple 3-page application and once completed, will save your slot with underwriting while you gather the claim and payroll data we also require.

If you would like to learn more about what EZRT can do for your margins, please call me today.

F. Michael Hrovat

909-844-7237

 

EZRT is Now Available for the Staffing Industry!

You Spoke... We Listened... A Work Comp Solution Built Around Your Needs.

For years, Staffing Firms have been forced to settle for insurance solutions that met the needs of underwriters not business owners.  You have been saddled with high deductibles, letters of credit, massive deposits, high minimum premiums, rigid installments and then and only then you will be allowed to buy insurance.  Sometimes you have even been told to outsource your outsourcing through a PEO.  

We call our solution EZRT (Easy Retain & Transfer).

After searching for the right insurance partners we have built the following based upon the needs of the staffing industry...

• Low or no deposit.
• Monthly payroll reporting.
• $5,000 deductible per claim.
• Fast certificate turnaround
• Simple new class code approval.
• A+ Rated carrier
• Retain your employees.
• Write your own payroll checks.
• Your name and only your name on certs and paychecks.
• No Letters of Credit
• Low factoring terms also available, but not required.

EZRT allows you easily to retain the small predictable losses and transfer to unpredictable costs to an A+ rated insurance company.  By assuming a small deductible, you will buy down your rates and broaden your margins.  EZRT will help grow your business and give you an unfair advantage in your bids.  Staffing Firms have been told they must either be insured first dollar or have $250,000 deductible.  One is "too low" and the other is "too high"... we have one that is "just right".

If you are a California based Staffing Firm, EZRT was literally made for you.

To learn more about EZRT, please call me at 909.844.7237

Or you can reach me by email at

Michael.Hrovat@HubInternational.com

What Powerful Three Words can Lower your Work Comp Costs?

What Powerful Three Words can Lower your Work Comp Costs?

Businesses spend millions of dollars each year to improve the safety of their employees.  Respirators are fitted, fork lifts are inspected, spills are cleaned, backgrounds are checked and committees meet.  But after all these things are done to reduce the frequency of injury, people still get hurt.

These injuries may have been preventable, but they still happened.  This is where the powerful three words come into play; "Get Well Soon".  If your family member, friend or neighbor feel off a ladder in front of you, after you drive them to the doctor you might consider sending a get well card.

Each year 7,000,000,000 greeting cards are sold in the United States, of those 7% or 49,000,000 are Get Well Cards.  Of those, how many were purchased for any of the 2,800,000 work related injuries which occur each year?

Being nice is the right thing to do, but it is also harder to sue someone who is being nice.  I'm not saying that a $3 card will prevent all litigation, but it will show that you are human.  Being hurt at work is a scary thing for most employees.  They don't know if they are going to still have a job or be able to pay their bills.

I have even seen businesses send Wal-Mart gift cards to injureds, so they have a little something to buy diapers.

Sometimes being nice is not just the right thing to do, it makes good business sense too.

If you would like to lower your costs by having a better insurance structure, please call...

951.779.8656

or email me at

michael.hrovat@hubinternational.com

2014: Staffing Industry Salesperson of the Year!

2014: Staffing Industry Salesperson of the Year!

For the next few minutes please turn off your political switch and turn flip on the economic lever.  The passage of the Affordable Care Act (Obamacare) has changed the way businesses staff their operations.  Employers with 50 or more Full Time Equivalent employees will at some point be required to offer an approved and affordable health plan to employees working more than 30 hours per week.  Failure to do so will result in a fine of $2,000 per employee per year, not counting the first 30 uncovered employees.  If an uncovered employee qualifies for a subsidized plan from an exchange (75% will), your fine can increase to $3,000. 

For this and a host of other reasons found in 2000 pages of legislation and countless interpretations, extensions and guidelines employers with 49 Full Time Equivalents will do anything possible to avoid hitting 50 and thus adding tens of thousands of dollars of insurance expense or tens of thousands of dollars of non-deductible fines.

Employers who have offered tiered plans or carve outs to the staff now face fines for discriminating against lower wage employees.  It is either illegal or will be illegal to offer a lesser plan to lower wage employees.  

Businesses are now financially and legally incentivized to OUTSOURCE.  School districts are even outsourcing cafeteria workers and crossing guards to be able to continue high value plans for credentialed staff and avoid having to provide plans to lower wage employees which could exceed their individual payroll.  Outsourcing is a method of providing a "virtual carve out".

Total payroll for the staffing industry has now returned to pre-recession levels according to the ASA.  2% of labor is now outsourced.  These numbers are not due to robust economic growth, but to a structural change to the hiring patterns of American businesses.

The Staffing Industry is booming, thanks in large measure to the passage of Obamacare.  At some point this growth can turn into a poison pill.  In 2016 or later, employers will be mandated to provide some coverage to some employees or face heavy fines.  At that point healthcare will be a $7 per hour or higher burden.  The labor being outsourced is the result of Risk Management by employers, specifically the TRANSFER of risk to the Staffing Industry.  Workers's Comp has been the industry's nemesis for decades, if you do not begin planning today a high Experience Modification will be the least of your firm's problems.

If you would like to learn more about the impact of the Affordable Care Act (Good and Bad), please feel free to contact me at any time.

Michael.Hrovat@HubInternational.com

909-844-7237

Why is the PEO Dropping my Staffing Firm?

Why is the PEO Dropping My Staffing Firm?

That is a question more and more staffing executives are asking themselves.  PEOs are businesses too. They purchase Work Comp insurance, but usually maintain deductibles of $500,000 to $1,000,000 per loss.  Simply put, Main Street businesses purchase insurance by the ounce, Staffing firms buy it by the pound and PEOs by the ton.  This purchasing power has allowed some PEOs to purchase Work Comp wholesale and then sell it retail.

There is a finite number of insurance companies who will provide these plans and one of the major providers is now canceling ALL PEO clients.  The company had very good rates and very loose terms which allowed them to insure almost any PEO regardless of exposure.

PEOs are now trying to replace their own Work Comp insurance before July 1st.  Simply put, if your PEO loses their insurance, so do you.  The replacement policies for the PEOs will be more expensive and/or more restrictive.  If you are a Staffing Firm, many underwriters view your operations as too risky and too far removed from the employee on a daily basis.  When an additional layer of a PEO is included, the insurance industry refers to it as piggy-backing.  ABC Insurance is asked to insure the employees of DEF Labor Leasing and those employees are then provided to GHI Staffing which are then placed at JKL Logistics who manage a warehouse for MNO Retailer...

That is why your PEO is canceling you.  If the PEO faces the tough choice of dumping Staffing Firms in order to keep their doors open and still retain 90% of their revenue, the trigger will be pulled.

On the bright side, there are still options for Staffing Firms depending upon your client mix and payroll.  Replacing Work Comp coverage for a Staffing Firm takes 60-90 days.  We have the markets, relationships, experience and clout to keep you in business without sacrificing your margins.

Please call or email me ASAP to discuss.

909-844-7237

Michael.Hrovat@HubInternational.com

Special Issue: Staffing, Work Comp & Bankruptcy

Special Issue:  Staffing, Work Comp and Bankruptcy...

What happens to a staffing firm when their insurance carrier, PEO or franchisor files for Chapter 11 Bankruptcy or other financial restructuring?

When an insurance company fails, most states operate guarantee funds to make sure the claims are paid.  Carriers are monitored and are usually seized before they have a chance to fail unnoticed.  Your premiums are not guaranteed, but the payment of claims are.  Even if a carrier is seized, the policies do not cancel immediately and a business could have up to 364 days to replace coverage.

PEOs are monitored and regulated 50 different ways.  Some states require licensing and some don't.  In general, if a PEO fails, there is no notice given to the clients.  If their insurance is non-renewed, they usually don't share that with their clients 90-days in advance.  Consumer protections are much stronger for insurance companies than for PEO relationships.

What happens if your work comp is provided by your franchisor?  This can be tricky.  In these cases the franchisor is rarely self-insured, they are usually on high-deductible plans with admitted carriers.  These plans require very large collateral requirements, usually in the millions if not tens of millions of dollars.  As these dollars are held by the insurance company to pay future claims that may not have even occurred, courts have forced insurance companies to surrender these assets of bankrupt businesses to pay creditors.  Insurance companies are in the business of assuming pure risk, but they despise credit risk.  If they see that an insured has a $500,000 deductible and is unable to pay claims, the policy will cancel.

If your insurance company, PEO or franchisor is experiencing financial challenges or even filed for bankruptcy protection, do not wait until the last minute.  Be proactive and immediately seek contingency plans to cover your work comp exposure so you can avoid joining them in line at the bankruptcy court.

If you would like to discuss these or any other issues, please feel free to contact me below.  We can help.

michael.hrovat@huninternational.com

How Does an Insurance Company Determine Your Work Comp Premium?

When your Work Comp insurance is renewing, you often worry how their decision is going to impact your margins?  What will happen to your bill rate?  Will you be told to drop clients?

If your company generates less than a $1,000,000 in payroll, your carrier will rely on what they know about your operations. Have you had losses or not?  Have your payments been on time?  What is your experience modification?  Where do you operate geographically?  These items are all taken into account, credits and debits are given and THE LAST STEP is seeing what premium is required.

If your payroll is over $1,000,000, the process runs almost backwards.  Larger staffing firms don't have the issue of having claims or not.  Claims will occur.  The question is how many and what will they look like.  Your underwriter will compare the historical losses to your payroll (not necessarily your premiums).  They will analyze how many losses you have for every $1,000,000 in gross payroll.  They will also determine your average historical average claim and adjust this for medical cost inflation.  Using your new projected payroll, the underwriter will forecast your projected losses. (aka Loss Pick).

Now that the underwriter has your Loss Pick they determine how much money they need to pay those losses for you over time.  In hard markets they will price to a final loss ratio of 40-50%.  In softer markets, they will price to as high as a 70% loss ratio.  Now that the final desired premium is known, the underwriter backs into the required net rates to reach the premium.  In this case the premium determines the rate, where with smaller operations the rates determine the premium.

Our software mimics the above process so we can do much of the work for the underwriter.  Once we know what your premium should be, we then seek an insurance company willing to insure our client under those terms.  We are able to show our client what their premium should be and not sit around on pins and needles waiting for a surprise from an underwriter.  Using this process, we have seen insurance companies consistently offer terms within hundreds of dollars of our projection and recommendation.

If you would like to take control of your margins and not leave them up to the whims of the insurance industry, give me a call or email today.

951.779.8656 Office

Michael.Hrovat@HubInternational.com

196-Point Inspection

We all check our tires, oil and wipers; but when was the last time you checked your insurance endorsements?  Just as worn tires can blow and cause a crash, misaligned insurance coverages can send your business over a financial cliff.

Your insurance policy is a contract written by, priced by and interpreted by your insurance company. Coverage gaps need to be discovered before the crash, not afterward.  I met with a Staffing Firm once that provided temps at an airport.  They were responsible by contract for the financial loss an airline suffered if their employees caused a flight to be delayed.  Do your temps or sales staff drive their own cars while on the clock?  Is your company insured if they injure someone?  How do you know?

Our 196-Point inspection will analyze the most common areas of potential economic disaster.  This is a $2,500 value, but for the month of April we are providing 10 reviews at no cost.

Message or email me to reserve your spot today.

Michael.Hrovat@HubInternational.com

Trust, but Verify... and Verify Again.

Identity theft is a growing crime.  You personal data is stored at banks, insurance companies, retailers, medical offices, government agencies, your laptop, your phone, your wallet and the list goes on.  A hundred years ago, robbery was much harder and entailed the risk of being shot in the act or hanged afterwards.  Today, the only fear to some is that of carpel tunnel syndrome from hacking away on the keyboard.

Here are a few tips...

Do not answer calls if the caller ID is blocked.

Do not confirm any personal information to anyone who calls you.

Do not store personal credit and banking info on your phone.

Shred your mail.

Do not pay at the pump with your credit card.

Pay cash in restaurants.

Do not fall for AOL, Netflix, etc. emails asking for your to update your credit card info.

If caller won't give their full name and company, hang up.

If a caller yells or threatens, hang up.

Your insurance will probably not cover you for most of the losses you can suffer from identity theft.  Sometimes the criminal is not even on the same continent.  The internet has given us the ability to earn money at the speed of light on a global basis; the money can be stolen just as fast.

There is a Disturbance in The Force...

There is a disturbance in the force, the insurance Salesforce that is.  No really, the insurance market place is seeing some negative developments.  Staffing firms that outsource to PEOs for their back office and Work Comp insurance will find it more difficult to purchase traditional insurance.  Insurance companies are having a hard time getting PEOs to cooperate in cumulative trauma cases.  The loss data at times is questionable and not always reported to rating bureaus.  With insurance carriers picking and choosing their target markets more carefully, this has become a new hurdle.

Also, a very large insurance player in the staffing field is about to exit California and other markets and start canceling policies effective April 1st (this is not an April Fools).  2014 is a year that Staffing Firms need to market beyond their current broker and seek out options that are both rare and relationship driven.

I recently placed coverage for a staffing firm with a carrier that had previously declined the risk.  The prior broker had described their operations in a careless manner which scared the underwriters away.  After providing documentation, the burnt bridges were rebuilt and the client greatly improved their insurance structure.

Let's talk.

When $1 = $3

When you have a Work Comp claim, there are both hard and soft costs.  The dollars paid by your insurance company will haunt your checkbook for up to 4 years.

The first year is charged against you at renewal when determining your next year's premium.  In years 2, 3 & 4 the losses go against your experience modification AND are still developed by the underwriters.  On average $1 in loss will cost you $3 in future premiums.

The soft costs of lost productivity, morale and added training costs can add another $3.  A local police department is turning away 1/3 of applicants because they can't write a simple paragraph.  How hard are your people to replace and bring up to speed?

Safety matters not just because it is the right thing to do, it makes good business sense as well.

Temps Are People Too...

In my 25 years in the insurance industry, there is one group of employers and employees that have always been treated as second class.  Insurance companies wrongly assume that every staffing firm places 99% of their employees driving forklifts while blindfolded on rooftops.  They also believe all of this payroll is reported under clerical as well.  An underwriter recently told me that client companies only use temp agencies to save money. (Oh the horror of it all!)

Insurance companies also tend to view temps as "those people" who couldn't qualify for a "real job" due to their criminal, drug and educational history.  The misconception that every temp is a day laborer on parol causes legitimate injuries and claims to be overly questioned, treatment delayed and unnecessary litigation.

Not every temp agency is perfect, but neither are every car dealership, bakery and library.  Temp agencies have been able to place people who are looking for jobs into meaningful careers.  One of the best Business Development Managers I know got her start as a temp for a mom & pop insurance agency filing health insurance documents.  I would argue that the Staffing Industry has had a more positive impact on unemployment than both political parties combined.

The labor market is changing.  You could even say it has been "fundamentally transformed".  Staffing firms are providing a very needed means for people to not only get a job, but to get a career.  

So, the next time you see an advertisement or sign for a staffing firm, realize this; they are in the business of getting people to work so they can provide for their families and pay taxes instead of being a drain on the system.

  

To the Staffing Industry I have but two words, "Thank you".

A Sign of Our Times?

While driving with the family today, we came across this sign at a small petting zoo near an apple farm.  Are we really at a point where we have to tell people not to hit, kick or climb on little animals?  I think the answer is yes.

We have to tell employees to wear goggles around equipment.  We have training to remind all that harassment is wrong.  We teach kids to obey the "Golden Rule" but can't tell them the source.

People do wrong and stupid things.  Maybe signs will help, but the need for signage I think is a bigger problem.  Common sense and common decency in the workplace or petting zoo is becoming more rare each year.

So let's be nice to ourselves, co-workers and llamas too; even if we don't see a sign.

How to Raise Your Insurance Premiums (Warning...Sarcasm Ahead)

Just to recap, insurance companies agree to assume specific and finite risks from your company in return for premium dollars.  If you want to double or even triple your premiums, simply increase the real or perceived risk of your operations.

For example, when your insurance company wants to perform a loss control visit, simply put them off.  After the visit occurs, then ignore the 1st, 2nd and 3rd requests for corrective action.

If the WCIRB, NCCI, ISO or any other agency wants to meet with you to learn more about your company, be sure to have a new or possibly disgruntled employee give the tour.  This will guarantee a rate increase.

When a claim does occur, try taking care of it yourself.  Adjusting is easy.  By waiting until you have a court date, the insurance company will have little or no chance of prevailing.

These tactics will raise your rates and may even result in a cancellation.

The above are all too real and all too common.  Your cost of insurance is not determined on your renewal date, but during the other 364 days.  If your risk is not properly managed and communications collapse, your rates are guaranteed to skyrocket.

Who Are You?

What is the number #1 error on insurance policies?  Sadly, it is your name; more specifically your company's name or names.  If you lay all of your insurance policies side by side, you will probably notice that the named insureds may not all match.

If you have active subsidiaries and they are not named on your policy, your insurance company can deny claims brought against those entities.  In fact, getting the named insured wrong is one of the leading causes of E&O suits against insurance agents.

If you purchase or merge with another company, all of your policies need to be amended and in some cases rewritten.  I once reviewed the policies of a large non-profit and the general liability insurance named all five legal entities, but the D&O covered only one.  Had there been a loss, there would have been no coverage.  The policy specified that new entities had to added within 30 days.

You spend thousands of dollars each year for your insurance coverage.  It is important to make sure that your insurance company knows exactly who you are.

A Dynamic World...

Life is dynamic; always changing.  We are either growing our business or shrinking it.  We are either getting fatter or skinnier; richer or poorer.

When I worked for the Federal government, we were sent through defensive driving classes.  We were taught at high speeds how to avoid accidents that occur in front of us; accelerate TOWARD the point of impact.  The reason being that due to the laws of physics, that is the one place the cars are guaranteed not to be once you get there.  This lesson kept a loose 2000 pound jet ski from bouncing through my windshield at 70 MPH just north of San Diego a few years ago.

Our lives are as dynamic as a bouncing jet ski on the highway.  We change, our clients change, our prospects change, our companies change, our markets change, our economies change, our laws change...  I think you get my point.  Instead of making a resolution this year, just be aware of the road ahead.  Ask your self each day if your are headed toward your goals instead of the jet ski.

Happy New Year!