Spring’s Senior Consulting Actuary Named Break Out Award Winner

We are thrilled to announce that our Senior Consulting Actuary, Peter Johnson, FCAS, MAAA has been named a 2019 Break Out Award Winner by Business Insurance. Peter leads our property & casualty team and works on a range of client projects as well as regulatory initiatives. He has almost 15 years of experience in reserving, pricing, alternative risk transfer and reinsurance risk transfer work.

Consulting Actuary

Peter is responsible for product and service development of P&C actuarial services for both large and small captive insurance companies, self-insured entities, and traditional insurance companies. These services include:

  • issuing statements of actuarial opinions
  • annual (or more frequent) reserve reviews
  • captive application reviews
  • captive feasibility studies
  • pricing/funding studies
  • retention analyses
  • financial statement projections
  • risk transfer testing analyses

Peter was born and raised in Wisconsin.  He is a fellow of the Casualty Actuarial Society and a member of the American Academy of Actuaries. You can learn more about him here.

We have been happy to have him on our team for about two years now and are so proud of this well-deserved recognition!

 

Crafting Cell Captives

Cell captives can help companies achieve a range of goals, and their use cases and utilization rates have been increasing in recent years. While moreCell Captive companies are adopting a cell captive structure, that doesn’t make them any less complicated. Accounting guidance and other regulatory factors often prohibit organizations from aligning the financial reporting of their cell captive with the corporate objectives of the entity.

In this whitepaper, co-authored by Karin Landry, Managing Partner of Spring and Josh Partlow, Partner at Johnson Lambert, will walk you through the evolution of cell captive structures, and provide guidance on financial reporting options and how to address GAAP guidance.

Download the white paper to get a brief history of cell captives, understand the different structures available, insight into the decision to consolidate or not, how variable interest entities come into play and more. We’ll use a sample balance sheet to illustrate these concepts.

Download the White Paper: Crafting Cell Captives

 

Verification

 

 

5 Reasons to Consider an Integrated Workers’ Comp and Disability Program

For employers with robust benefits programs in place, an integrated approach is continuing to become an increasingly popular way to take things to the next level, and for good reason. Although the concept is not new, and our team of experts has been developing solutions for years, certain aspects are getting employers’ attention.

Spring’s 2016 and 2018 employer surveys, led by Spring’s Senior Vice President Karen English, show that the core drivers to developing an integrated program are:

  • Costs savings
  • Simpler administration
  • Upgraded employee experience
  • Enhanced tracking capabilities
  • Improved compliance

There’s a lot more impacting these areas than you might think, so let’s take a deeper dive.

Cost Savings:

Having an efficient benefits program with systems that speak to and work with each other can go a long way for your bottom line. Integration provides greater transparency into your workforce – absence management challenges, productivity, employee health – among other things. This knowledge is an opportunity to create a healthier, more present workforce.

If this sounds like qualitative “fluff”, it’s not. One healthcare client was able to save over $10M in direct and indirect costs through integration. These savings resulted from savings in the following areas:

  • Workers’ compensation
  • Disability
  • Unplanned absence
  • Vacation
  • Other Leaves of Absence

Their program, done in tandem with captive insurance company funding, also yielded risk diversification and stability, as well as further saIntegrated disability managementvings of 10% of premiums.

The graph to the right shows the average levels of employer savings achieved by implementing an integrated program, spanning a range of direct and indirect cost categories.

 

Simpler Administration:

All parties benefit from an integrated benefits system. An immeasurable amount of time and effort is saved from not having to go to different platforms for critical information. This will speed up the claims process.

The best integrated programs send notifications and communications, and offer automated triggers, case management and documentation. For managers, results are easier to explain. For employees, access is simpler and more approachable. At the corporate level, you can expect faster turnaround time and greater visibility.

Upgraded Employee Experience:

Employees do not typically understand the nuances surrounding absences, nor the various policies, plans, and processes involved. They simply need time away. By integrating absence to include occupational and non-occupational events, your employees will experience:

  • Fewer points of contact
  • Clearer processes to follow
  • Faster turnaround times
  • Improved information access
  • Increase self-service options
  • Decreased confusion

These benefits lead to an enhanced employee experience including higher engagement, both at the organization and with their health. As all HR professionals know, engagement is critical for recruiting, retention and overall performance. Whether at risk or not, all employees will appreciate a smarter, more robust benefits program and an employer that is looking out for their wellbeing.

Enhanced Tracking Capabilities:

To make sustainable improvements, it is imperative to track your integrated program and mine the data across all absences to investigate patterns and draw predictions. An integrated program allows for metrics across plans and policies with drill-down features such as:

  • Occupational vs. non-occupational
  • Paid vs. unpaid
  • Job protected vs. non job protected
  • Return-to-work vs. stay-at-work
  • Sick, vacation, etc.
  • Self vs. family
  • Continuous vs. intermittent
  • Diagnosis specific

With all these different facets captured uniformly, you have reporting that is comprehensive; supports workforce planning and budget; allows for strategic planning with HR as a business partner; and offers opportunities for prevention; so that your organization can be proactive instead of reactive. These kinds of insights allow employers to move into population health management.

Improved Compliance:

With the hub of intelligence that an integrated program offers, employers have a more reliable way of remaining compliant when it comes to things like the ADA, FMLA and ERISA, as well as any state-specific regulations and policies unique to the company. Automation will make leave requests and absence tracking much easier to manage, and accurate documentation will aid accountability for employers and employees alike.

Ultimately, an integrated workers’ compensation and disability program can have significant positive impact on a company and its employees, especially for larger employers. We have seen great, quantifiable success with integrated programs from our clients. If you are thinking that this process seems too big a task to take on, don’t worry. Any company can start at any point along the continuum shown below, and gradually work their way to a model that facilitates population health management in the workforce.

 

Population health management

 

Spring to Present at RIMS 2019

This year the annual Risk Management Society (RIMS) conference is in our neck of the woods, which is very exciting! We are looking forward to playing host and showing colleagues and clients around town.

RIMS is one of the most renowned events in the risk management and insurance spaces, for which we have been proud sponsors and participants for over a decade. This year, we are delighted to not only be a sponsoring exhibitor, but to be speaking as well. Spring’s Senior Actuarial Consultant and Property & Casualty Practice Lead, Peter Johnson, will be leading a session, “IBNR: Your View Versus the Actuary’s” on Tuesday, April 30th from 1:30-2:30PM. He will be joined by Lynn Tenerowicz, Vice President and Chief Risk Officer at Baystate Health. The pair will be doing a deep dive on Incurred But Not Reported (IBNR) claims, covering:RIMS 2019 Speaker

  • Term definition
  • The differences between your view as the employer and an actuary’s on reporting and calculations
  • Different reserving methods and their pros and cons
  • IBNR industry trends and benchmarks across different coverage and benefit lines
  • Loss development methods
  • The effects of claim frequency and severity
  • The impact of IBNR on a company’s financials

The presentation will include a case study and plenty of graphics to help paint the picture for you. This session is great for risk and claims managers of all industries, or anyone simply looking to learn more about financials.

We hope you can make it! But if you can’t, please be sure to stop by booth 579 to chat with our team throughout the 3-day event.

CICA 2019: Preparing for the Future by Learning from the Past

Event Recap

We are off the heels of another great Captive Insurance Companies Association (CICA) annual conference. This year, I was happy to escape Boston’s cold and head to Tucson, Arizona from March 10th-12th for a few days learning, networking, and as you see here, some impromptu sight-seeing. CICA 2019This was Spring’s 12th year attending and being involved with the CICA event, and I wanted to share what we view as the key takeaways and over-arching theme of the conference: preparing for the future – captives and otherwise.

It’s true what they say, that you can’t figure out where you’re going if you don’t understand where you’ve been. So before we dive into the future-focused learnings of CICA 2019, we can set the stage with “Captive History: Lessons Learned Through the Years”, where a panel of “Michaels” led the audience on a trip down memory lane. They started with the 1920’s, brought us to the first captive in 1950s, and landed where we are now, with over 6,000 captives in existence worldwide. They covered key lessons learned from factors such as:

  • Corporate globalization
  • Domicile specialization
  • Access to internet

And others.

A number of sessions around regulatory and tax updates help illustrate the current captive landscape, such as “Regulatory Hot Topics”, “Captive Tax Developments – What They Are and What They Mean”, and “Addressing the Extra-Domicile Regulatory and Premium Tax Risks”.

Now that we’ve addressed the past and present, I believe the true emphasis at CICA this year was the future. Here are all the ways in which this theme came into play.

The Next Generation

The captive industry has a range of talent thought leaders and experts, but a fair amount of attention went to making sure the next generation is prepared to take over.

  • In “Shaping the Captive Leaders of the Future”, Courtney Claflin of the University of California and John Prescott of Johnson Lambert highlight the importance of recognizing an aging workforce and reacting accordingly. Among other advice, they recommended campus recruiting, internship programs, emerging leader programs, and data and technology as recruiting methods.
  • During “Succession Planning: Has Your Company Begun?”, a panel offered training and development best practices as well as on-boarding and transition guidelines.
  • “Keys to Succeeding as a Young Professional in the Captive Industry: Mentorship” was another discussion centered around bolstering the younger workforce demographic for not only successful careers, but for a strong industry as well.
  • CICA has always been focused on education, so it’s no surprise that students had a seat at the table at the conference. Specifically, one session spoke to bridging the gap between the classroom and the office environment, while another served as a spotlight on Butler University’s student-run captive.

The Geo-Political Landscape

The captive industry, and the insurance industry at large, are among those that can be most impacted by changes in the political and/or environmental climates. Thus, in speaking about the future, these areas were important to reflect upon.

  • A session led by Jason Flaxbeard, Jim Bulkowski and Eric Bishop spoke to changes in US tax reform, technology, corporate governance, cyber and more to emphasize the dynamics at play. They then speculated whether these new risks can be seen as an advantage, a danger, or both for captives.
  • During “The Political Climate and the Future of Captives”, the audience was led through some “Hotspots of 2019”, such as Brexit, the substance requirement for captives, and Association Health Plans. For each scenario, they outlined key lessons to be taken by captive and risk professionals.

Innovation

If we as an industry can’t continue to innovate as the industries around us do, I don’t need to tell you that the outcome won’t be great. The following topics shed light on how captives can adopt creative strategies for future growth.

  • Spring’s Managing Partner, Karin Landry, led a panel discussion on the opportunities for integrating workers’ compensation and disability through a captive. This is an emerging trend which we see larger employers moving toward, and the session offered strategical advice and case studies revealing tangible results of an integrated approach.
  • One Captives 101 session spoke to captives themselves as vehicles of innovation, stressing their importance for a stable and blossoming organization.
  • Andrew Rennick and Ryan Ralston presented innovative solutions for micro-captives, which have recently taken some press hits. Enterprise Risks, Extended Warranties and Product Recalls were some of the use cases they went through.
  • We can’t talk about the future and captives without mentioning cyber, can we? One session reviewed an AM Best and Guidewire Cyence Report to educate the audience on breach expenses, cyber market growth, and modeled carrier portfolios.
  • Speaking of topics trending in the industry, Steve McElhiney of EWI Re spoke to blockchain technology and its ties to captives through a case study. He listed several potential captive blockchain examples, such as exposure management, medical captives, and RRGs.

 

All in all, the conference was certainly valuable for industry professionals of all types and levels of experience. Myself and the rest of the Spring team are already looking forward to next year’s event, and putting these recent learnings to work!

Legal Alert: New Court Ruling on Association Health Plans

Association Health Plans allowed small businesses to band together for more affordable healthcare, and they have been a hot topic of late. After the Department of Labor under the Trump administration issued its final ruling on Association Health Plans (AHPs) last summer, several states took up issue with it. Specifically, eleven states and the District of Columbia sued the DOL, arguing that the broad availability of AHPs as outlined in the final rule goes against the consumer protections provided by the Affordable Care Act, and that the new regulation reflects a misinterpretation of the Employee Retirement Income Security Act of 1984 (ERISA).

Last night, March 28th, Federal Judge John Bates sided with these states and ruled to blocked components of the new AHP rule. Specifically, he stated that the provision allowing small business and the self-employed to buy health insurance on the large-group market was a clear “end run” around the ACA, and, therefore, illegal.

AHPs are not being subject to the same requirements of the ACA, such as the provision of essential healthcare and the ability to base premiums on individual demographic factors. This led some to believe that the quality of healthcare provided by an AHP will not be adequate. Further, the final rule’s expansion of the term “employer” goes against ERISA’s intent to protect large companies’ plans. By enabling small businesses and individuals to join together and benefit from large group insurance rates, Judge Bates argued, AHPs violate components of the ACA that clearly define rules according to entity size.

What does this mean for AHPs now? Firstly, the new AHP rules in the eleven states who filed a suit and D.C. is no longer valid. Other states may choose to be more generous, as insurance is still regulated at the state level. Otherwise, the old AHP regulations, the ones in existing prior to June of 2018, still apply.

Ultimately, the court’s ruling yesterday stems from a misalignment between the Final Rule, ERISA and the ACA. Please get in touch if you have any questions.

4 Ways ADA Management is Like Raising a Pre-Teen

The world of absence management is continually evolving and changing, and this is one of the many reasons I love my work.  One component of my role is assisting organizations in managing their disability and leave programs, which includes being compliant with the American’s with Disabilities Act (ADA) and Amendments Act (ADAAA).  The ADA has pained employers for years due to its regulatory complexity, and although they are making strides and building functional processes to address it, it can sometimes feel like two steps forward and one step back.

I recently conducted a training on the ADA for a large employer team of subject matter experts.   After a challenging week of what felt like personal parental fails, I used an analogy that managing your ADA program is a lot like raising a pre-teen! Truth be told, that wasn’t in the script, but it was top of mind at the time and I knew that most of the audience could relate to both parental and ADA struggles.

If you still aren’t convinced of the overlap, I have outlined four challenges with the ADA (that I also experienced with my 12-year-old daughter).

  1. Everything must be managed on a case-by-case basis

Organizations must have a prescribed process to identify and manage ADA cases to ensure potential accommodations do not slip through the cracks. However, the regulation is clear in that every case must be reviewed based on its own merit.  Employers must consider every request, examine what is needed, and consider solutions that will satisfy the employee’s needs without causing undue hardship to the organization. Key elements of any job must be considered, such as location, essential functions, organizational structure, hardship potential, duration and the like. A simple yes or no is rarely enough. There are often conditions that must be met, including the potential for extensive negotiation, and any decision may be accomp

ADA Management

anied by resistance from different parties.

At home I also take into consideration things like location, duration, hardship to the family unit and every request must be reviewed on its own merits.  Just like with your ADA requests, a yes is always met with delight, but a no will always cause additional work and difficult discussions. That said, that doesn’t mean that you can routinely go the “yes” route just because it’s the path of least resistance.

 

  1. There is a constant demand for “things”

Regardless of whether the request is for Instagram or a sit-stand desk, the requests just keep rolling in!  Giving a simple “no” just isn’t going to work. You must engage with your employee (or child) by asking questions, digging into the details, justifying your rationale and following documented policies and regulations (or family rules). Why do they need what they are asking for? Examine both sides of the argument.

With accommodation requests, a simple “yes” is rarely the optimal solution.  The key is to really understand what is needed versus what is requested, as there are often gaps in between.  The dialogue and documentation need to support what the employee can do and what will ensure they are able to do the essential functions of their job with or without accommodations.  Simply approving their request for something may not actually yield a successful solution.  Instead as the employer you need to find an accommodation that suits not only the employee but as many stakeholders as appropriate.  I recently worked with a client surrounding parking accommodations which were on the rise and extremely challenging given their various office locations and distances to sites.  It highlighted how a simple “yes” doesn’t always  work.  Instead great care needs to be taken with each request and each potential accommodation.

With my daughter it started with an iPod and grew to the iPhone, which has now turned into social media requests.  Just saying yes doesn’t work for me – I need to dig in and see what I can provide her that might satisfy her need to fit in without creating an undue hardship for me. And if I do say yes, you can bet there is going to be a social meeting

agreement (similar to an accommodation agreement) to hold us both accountable! .

 

  1. Your voice is drowned out by others

Employees requesting an accommodation typically have resources to work with at an organization.  They may be working with a disability or workers’ compensation partner, their supervisor, HR, benefits and even occupational health resources.  All those voices become noise in the ADA process.  Even with the best of intentions, those s

ources put pressure on the situation that may drown out the voice of the accommodation team. Some parties may be encouraging return to work too aggressively or not aggressively enough. Silence from those resources may be perceived as lack of support the same way that vocalization may be viewed as intimidating. How do you find the right balance?

The key is to manage expectations within the ADA process and bring the stakeholders together by giving them a seat at the table.  The interactive pr

ocess is a very critical part of accommodation reviews; it cannot be avoided in a compliant process.  Instead of dreading that part of the process, try to embrace it.  Use it to get to the best solution for the employee and the stakeholders and then make a firm decision on what can be implemented.

All parents understand that our children aren’t always listening to us even though we may think every word we utter is critical and wisdom-filled (just like a strong HR professional). Further, what they hear from us may differ from what they hear from their friends, friends’ parents, teachers, or even your spouse. But regardless of the frustration or eye rolls, the ultimate decision related to our children rests with us.  They may try to change our minds or tell us all the reasons why other opinions should be valued, but we determine the best solution and do our best to implement it at home.

 

  1. The goal post is hard to see, but it’s there in the distance

An organization cannot be compliant with the ADA, or appropriately manage absence, unless they are dedicated to developing an accommodation program and following through with clear processes and documentation. With that said, it is a long game – a marathon, not a sprint.  Most employees and supervisors will not be singing your praises immediately. At first, they will feel like you are making it “too easy” for employees, or “rewarding” employees who are abusing the system.  At the same time employees may think you are “asking too many questions” or “forcing them to pay more money to get paperwork completed.” On any given day all those things may be true, but you are also working to provide a compliant work environment that accommodates employees fairly. You want a solution that returns employees to productive work, processes that are in good faith and interactive and a way that documents what steps were taken and what was agreed to.  All of those are beneficial to your organization and to the individual as well.

I was recently working with a client that learned the hard way about documentation. They had a healthcare resource that was given an accommodation around not performing CPR as it was not viewed as an essential function. This employee was transitioned to a new role where CPR was required but the knowledge of her accommodation and lack of ability to perform this function was missed during transition. Unfortunately, this placed an unanticipated strain on the organization, which could have been avoided with greater documentation. Instead, the involved parties were working to solve the immediate need without thinking about the long-term impact on the employee or the organization.

As you focus on return to work and accommodations, try to aim for incremental change toward the most successful program possible, keeping the long-term vision in your view. Start with your policies and procedures, ensuring they reflect the type of program your organization needs.  Consider them as living documents that will require revisions as your accommodation program matures.  Build an efficient process around those policies, doing your best to move toward that pre-defined, distant goal post.

At home, incremental change is necessary as well.  Do I want a clean room, laundry done, dishes finished and homework perfect? Yes.  But I will settle for incremental change toward a successful and productive member of society.  This may mean taking things one step (or chore) at a time or placing more focus on the achievements compared to the gaps.

So next time my daughter tells me I am “annoying” and “all the other kids have Instagram” and “I don’t know what it’s like,” I will remind myself that on any given day those things may be true, but I’m trying to raise a healthy, happy kid and building this foundation is necessary to create long-term success.  Right now, it’s hard for me to see the goal post but I know it’s there.

 

Regulation around the ADA is complex, like my pre-teen, but it’s important to remember that it is built on the core premise of avoiding discrimination and pushing employers to do what is right.  It sometimes forces a difficult dialogue between employers and employees, but the goal is optimal for both parties.

Spring’s Managing Partner Makes Captive Review’s Power 50

We are proud and excited to announce that our Managing Partner, Karin Landry, has been named to the Captive Review Power 50 Power 50list for 2018, a recognition she’s received for the past several years. This year, she comes in at #10 and is alongside impressive company.

In a male-dominated industry, Karin has worked hard to make a name for herself and is a known thought leader in the captive space. She holds eight patents in insurance and is an expert in things like employee benefits captive, multinational pooling, medical stop-loss and health plans of all kinds. Karin works with large, global corporations of varying industries and types, and delivers tailored solutions based on their needs. As a means to grow the profession and prepare the next generation of captive experts, she also teaches a course at the International Center for Captive Insurance Education (ICCIE).

She is not only an industry leader, speaking at conferences such as the World Captive Forum, CICA and VCIA regularly, but she also runs the ship here at Spring, and we are glad to have her.