Got an email from a reader late yesterday about the sudden (as in instant) firing of SAIF’s new CEO.  On the job for three months, John Plotkin got a call Saturday (after he and the VP of Legal Affairs returned from a business trip) from the Board Chair telling him he had till 3 pm the next day to resign.  

Plotkin was given no reason for the decision, however we have learned there were a series of employee complaints that he had made “inappropriate comments” to several employees.  Among the “inappropriate comments” was a statement encouraging an employee to “speak English, not actuary.”  Several complaints referenced his dog, evidently brought to the office on April Fool’s Day as part of “bring your dog to work day”, a corporate April Fool’s event.

Ok, this is weird.  A phone call  – on a Saturday – telling you you’ve got 24 hours to quit or else, and you aren’t told why.  Later you find out the decision bas based on comments encouraging people to talk in language people can understand, and references to one’s canine.  You’re never given a copy of the complaints or been allowed to respond to them.

It gets even stranger.  Evidently SAIF employees are none too happy about the decision.  Several hundred showed up at a Board meeting last Wednesday to voice their displeasure about the firing – after an initial Board meeting earlier in the week was cancelled when a hundred showed up.

Clearly SAIF’s employees like the guy, even if he does have a bulldog and wants actuaries to speak English (so non-actuaries can understand them).

Then it comes out that none (as in zero) of the complaints were ever investigated.  And, HR processes were never followed.  And, you’d been told just two weeks earlier by the Board Chair you were DOING ALL THE RIGHT THINGS AND THAT YOU WERE SO PLEASED THAT THE BOARD HAD MADE THE RIGHT DECISION (from Plotkin’s address to the Board meeting).

I don’t know Plotkin, or SAIF, or much about this series of events, but what I do know is appalling.

There’s much more to this story and we can only hope it comes out quickly and fully.  Unfortunately, SAIF’s employees, policyholders, and claimants are going to be hurt by a precipitate decision based on innuendo and rumor.

What does this mean to you?

If a headhunter calls about the SAIF CEO job, RUN AWAY.

The last session on Thursday focused on regulatory and legislative trends  – primarily focused on state issues.  There’s also a session on the impact of ACA on work comp; that’s something I’ve spent far too much time on – that and the fact that lead speaker Mark Walls just looks fabulous after his make-up session in the green room has me in the reg/leg session.

Mark did spend a bit of time on ACA, citing concerns and issues including that unicorn of workers’ comp; the oft-described but never adequately documented “Monday morning injuries”; that employers are increasing deductibles and copays as a result of ACA; that he doesn’t believe that people with insurance are healthier than those without; and that a lot of people still aren’t covered.

Much as I like Mark, I have to disagree with him on most of these issues.  For reasons why, see here, here, and here.

Mark also touched on issues as diverse as unionization among Division 1 athletes, medical marijuana, opt out, and the potential need to change the basis for premium calculation from payroll basis to risk class.

He made a pretty compelling case for consideration of the latter, noting that this would reflect the changing way many employees are compensated and not penalize companies for seeking to pay higher performers more – and differently.

Lori Lovgren and Ann Bok followed Mark with the top five issues in work comp.

One of the more interesting is their work in estimating the potential impact of regulatory or legislative changes on work comp premium rates.  They get these requests from a variety of stakeholders in many states; an example was their estimate that eliminating physician dispensing up charges in FL would reduce costs by about a percentage point.

Don’t expect to see much in the way of legislated change this year as it is an election year, and elected reps won’t want to upset constituents while they are campaigning. That said, the potential issues NCCI is seeing include:

• changes to reimbursement and fee schedules
• medical cost containment e.g. employee choice of physician
• benefit changes
• claims administration issues

Among the rate changes coming are several rather significant ones:

• Missouri – 11.6% increase
• Hawaii – 6.2% increase
• Virginia – 4.1% increase
• Oklahoma – 14.6% decrease
• West Virginia – 8.9% decrease
• SD, KY, ME, and IN – decreases around 8%

With long-time top actuary Dennis Mealy’s retirement, NCCI tabbed Kathy Antonello to fill his very big shoes.

On a personal and professional note, it is GREAT to see a woman in a historically-male profession in such a prominent role (says the father of two professional women).

The public introduction of Ms Antonello to the work comp industry is happening now with her presentation on the State of the Line, perhaps the most-anticipated report in the industry.  Here are a few of the highlights:

• Total P&C premiums for 2013 were up 4.6 percent.
• The P&C 2013 combined ratio was 96%, a decline of 12 points from 2011 and 10 from the 1985 – 2012 average.
• Work Comp premium was up 5.4% – $2.3 billion over 2012 and over $8 billion (almost a third) from the low point in 2010.
• Work comp’s operating gain shot up to 14 percent, a huge jump from last year’s 5.6% and far above 5.3 percent – the average over the last 23 years.

Ms Antonello got into a lot of detail about various components, ALAE, ULAE, various margin calculations, and premium drivers, and did so with humor and polish.  Among the key drivers employment is perhaps the most important.  I’ll leave the rest of the details to those who want to download the full presentation. (available at no charge, registration is free as well)

She also provided a view into some cool new data visualization tools NCCI has developed, tools that help explain trends over time and the impact of various factors.

So here’s the $64 billion question – is a soft market nearing?  Will some see these strong results as a reason to double-down on work comp, write as much business as possible in as many states as possible, and thereby start a decline in effective premium rates?

States such as California, Arizona, Colorado, New Jersey, Florida, and Connecticut – where premiums grew by double digits – may be especially attractive to new entrants and some current writers.  

Add to those factors the news that premium rates approved for 2014 increased less than a point, and a report from Goldman Sachs that work comp premium increases are moderating, and the likelihood of a softer market looks a little higher.

What does this mean for you?

The work comp industry has never been unable to enjoy success for very long.  Just as we are starting to see daylight, there are some potentially-troubling indications that the market may soften.

That’s the one-word synopsis of the state of the line from this year’s NCCI conference.

I’d be a bit more positive; especially because the combined ratio is down 7 points to 101.

Premiums up for the third year running, and claim frequency continues a long-term decline with another 2 point drop in 2013.  

NCCI indicates medical costs have grown at a rate of 3 percent.

Even investment income is still robust at 14 percent. The result – operating margins are improved as well.

With the latest news indicating employment growth is accelerating after a long winter, the issues identified by NCCI as problematic, namely lagging employment, the potential non-renewal of TRIA, and the potential impact of the PPACA look like pretty small potatoes compared to all the good news.

In his kick-off presentation, NCCI CEO Steve Klingel took pains to note the statistics are national, and individual carrier experience varies quite a bit due to their reserving practices, the states they write work comp, mix of business and other factors.

Klingel noted RAND’s just-released report on TRIA makes a strong case for renewal of the Terrorism Risk Insurance Act; he also opined that state-specific judicial determinations can and will have significant impact on work comp.

Mr Klingel also delved into issues surrounding Big Data, data security, and the impact thereof.

If you aren’t here, you’re one of the few.  The place is packed.