PA Employers May See Workers' Compensation Rate Increases

By: William Forbes

Pennsylvania employers could be facing an increase in workers' compensation rates starting in November, due to a Pennsylvania Supreme Court decision. 

According to this recent article in the Pittsburgh Post-Gazette, "The court struck down a key part of the workers’ compensation law passed in 1996 to limit benefits for the most severe workplace injuries. Under that provision, an employer’s insurance provider could request that injured workers undergo a medical assessment after two years out of the workplace."

If the medical assessment found that the employee was less than 50% injured at that time, then the insurer was able to cap partial benefits at 10 years. However, if the employee was found to be more than 50% injured, he/she was able to receive full benefits for life.

The new ruling dictates that these medical assessments will not happen, which means more workers could end up receiving lifetime benefits. As a result of these and other changes made by the court, the Pennsylvania Compensation Rating Bureau proposed a cost hike that, if approved, will take effect after November 1.

For more information on the rate hike, and the court's ruling, see the full article in the Pittsburgh Post-Gazette: http://www.post-gazette.com/business/career-workplace/2017/08/24/Workers-compensation-insurance-court-ruling-premiums/stories/201708230302

For questions about your workers' compensation policy, contact your agent. 

Why Are Car Insurance Prices Rising?

By: William Forbes

Being an insurance agent, I get asked every day, "Why is the cost of my car insurance going up?" And, the majority of the time this question isn't even coming from one of my clients. I get asked by friends, family, my supermarket cashier...it seems to be a question on everyone's mind.

Believe it or not, there are some very specific reasons for the increased cost of auto insurance; and none of them have to do with insurance companies being out to get us (I hear this suggestion quite a bit as an agent, too).

Forbes recently published an article (link here) that does a nice job of explaining some of the reasons. As stated in the article, "the driving force in the upward march in premiums is an auto insurance industry that’s been finding it increasingly difficult to sustain healthy profit margins."

This means auto insurers are finding it difficult to make a profit off insurance premiums, when the expense of running an insurance company is considered.

The article points to a few main reasons why profits have been down for insurers:

  1. More costly accidents. Both the severity of accidents and the number of fatal car accidents have been trending upward. So, fulfilling these types of claims, particularly those that include high medical costs, is very costly.
     
  2. A decline in investment revenue. The article explains that insurance companies hold large investment portfolios, and when interest rates and investment income is lower, they can't offset losses.
     
  3. Bad weather. As comprehensive claims from bad weather (tornadoes, hail, flooding) continue to rise, so does the amount insurance companies pay out to their insureds. I would also add to this that cars are getting more expensive to repair - the cost of parts is increasing, and added technology features make what used to be simple repairs, more costly. For example, windshields now have cameras in them, and this increases the cost of replacing them.

For a deeper dive into these three points, check out the full article on Forbes.com. And, if you have questions about your policy, always feel free to contact your agent.

(Here is the full link to the article: https://www.forbes.com/sites/ccasazza/2017/05/23/why-are-car-insurance-rates-still-going-up/#3315a8cb7753)

Crain's Reports State Farm Suffers Worst Car Insurance Losses Ever

By: William Forbes

Take a read of this recent article published by Crain's Chicago Business, titled, "State Farm suffers worst car insurance losses ever."

The article touches on a trend we are seeing across the insurance industry. Reported claims are on the rise, and this results in higher insurance rates for all of us. In addition, the article makes a good point that State Farm's losses are a clear sign of how distracted driving is impacting insurance companies.

Erie stands out as one of the few companies that's been able to keep its rates level over the years.

Full link to article: http://www.chicagobusiness.com/article/20170228/NEWS07/170229881/state-farm-suffers-worst-car-insurance-losses-ever 

Your Driving Route Could Affect Your Insurance Price

By: William Forbes

USA Today recently posted an article about insurers using predictive technology to help personalize insurance rates. Specifically, the article focuses on insurers that are looking into weighing the risk involved with different travel routes and using that information to help determine an insured's rate. The goal of this rate method would be to customize insurance rates based on an individual's personal driving habits, but also to "promote and reward customers who mitigate risk," says the article.

We've seen rate and policy customization as a major trend in the industry recently.

Check out the full article here: http://www.usatoday.com/story/money/personalfinance/2016/11/14/route-risk-patent--car-insurance-rate-price/93287372/

Insurance Concept of the Week: Judgement Rates

Each week we will post and define an industry term or concept for our readers.

To conclude our discussion of rates, judgement rates are determined and applied to individual insureds by the insurance company. Judgement rates are used for commercial insurance. Each insured is evaluated on its own merits and chance of loss.

Check out all our posts on rates: 

1. What is a rate (link here)
2. Manual/class rates (link here)
3. Merit rates (link here)

Insurance Concept of the Week: Merit Rates

Each week we will post and define an industry term or concept for our readers.

To continue our discussion on rates, a merit rate considers the characteristics of a particular risk, and depending on those characteristics a premium can be increased or decreased. Merit rates take into consideration a person's loss history, as well as steps he/she has taken to prevent loss, such as installing a smoke detector in a home.

Check out our previous posts on: (1) what is a rate (link here), and (2) manual/class rates (link here).

Insurance Concept of the Week: Manual or Class Rates

Each week we will post and define an industry term or concept for our readers.

Continued from last week's discussion on rates (link here), manual or class rates group insureds into classes based on similar characteristics. These classes receive the same rate. Manual rates are often used as the starting point for developing merit rates, which we will look at next week.

Insurance Concept of the Week: Rate

Each week we will post and define an industry term or concept for our readers.

There has been a lot of coverage in the news recently about insurance rates. So, we are going to use the next few "Concept of the Week" posts to look more closely at insurance rates and how insurance companies arrive at them.

A rate is a price per unit, and it is used to determine the total premium of an insurance policy. Rates establish a price structure to cover claims and other insurer expenses, as well as provide profit for the insurer.

Next week we will start looking at some of the different types of rates used by insurers.