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