member updates & announcements

Transcription

1 Not to Exceed Rates Announced Not to Exceed rates for the CIS coverage in the Property/Casualty Trust beginning July 1, 2014, and in CIS Benefits beginning January 1, 2015, were announced at the CIS Annual Conference on Feb. 27. Final rates will be set by the Board of Trustees next month. It s important to remember that rates are only one factor in determining what to budget for the next fiscal year. Exposures - what and who a member covers as well as claims experience have a role in determining actual costs. Inside this issue: Not to Exceed Rates Announced Participation in Employment Claims Cost Court St. NE, Salem, OR Property/Casualty Trust Rates in the Property/Casualty Trust are being driven by continued poor experience in General Liability, particularly with employment claims. While the new Hire to Retire risk management program should mitigate those claims in future years, the actuary s estimate of claims for and the level at which we are currently funding are very different. The not to exceed rate changes for the coming year, overall and by individual line of coverage, are: Overall if a member has all coverages with CIS 11.5% Individual Lines of Coverage Liability 26.0% Auto Physical Damage 15.0% Property 0% - No change Workers Compensation 0% - No change Most members can use deductibles and retrospective plans to reduce their up-front costs and mitigate the effects of these rate changes. The P/C Trust renewal process on the CIS website will open after rates are finalized in early April.

2 Page 2 CIS Benefits The following are not-to-exceed rate changes for pooled groups (under 100 employees) effective January 1, Members with more than 100 employees have an experience modification that must be factored into their rates. The experience modification factors and experience reports will be available for employers by Friday, March 14. Medical EBS (Cities) Final rates by plan for January 1 will be published by the end of April. Rates will not change for the remainder of This is the second year in a row that medical and dental rates for the counties have been flat. An additional 2% surcharge will be applied to high-deductible health plans offered with a health savings account (HSA). Claims in these plans are, for the second year in a row, far exceeding the expectations on which the premiums are based. The CIS Board of Trustees has directed staff to analyze additional data to understand the source of the increased claims and to develop a plan to bring the premiums in line with the costs of the plans. AOCIT (Counties) CIS/Regence* 5% CIS/Regence* 0% Kaiser Medical 5% Kaiser Medical 5% VSP Vision 5% VSP Vision 5% CIS/MODA (ODS) 4% CIS/MODA (ODS) 0% Dental Kaiser Dental 5% Kaiser Dental 5% Willamette Dental 0% Willamette Dental 0% Life/Long-Term Disability No change No change * Additional 2% surcharge on HDHP plans with HSAs

3 Page 3 Participation in Employment Claims Cost In January, the CIS Board of Trustees approved a new requirement that members participate in 10% of the cost of employment claims, to a maximum of $10,000, for each employment claim filed after June 30, This change, announced in last month s Quarterly Report and at the Annual Conference, has generated some questions. Here are the key points of the new program, followed by questions and answers about how it will work. Applies to employment claims filed on or after July 1, Applies only to employment claims. Does not apply to any other type of claim. Members pay 10% of the cost of any employment claims up to a cap of $10,000. Amounts due are billed to the member at renewal, following claim closure. Payments under this program work in concert with a member s aggregate deductible or retro plan. Questions and Answers: Q: I heard that CIS is requiring us to pay 10% of all claims. Is that true? A: No. CIS members will pay 10% of employment claims only. No other claims - auto, property, workers compensation, or any other type of liability claims are subject to this participation requirement. Q: Does the 10% participation only apply to an employment claim if a lawsuit is filed? A: No. The 10% participation applies to all employment claims, whether or not the claim is litigated in court or is resolved prior to a lawsuit being filed.

4 Page 4 Q: Why is CIS doing this? A: Increasing employment claims are driving up liability rates. The 10% participation program ensures that members who do not have any employment claims will not have to shoulder as much of the burden of paying for those claims. At the same time, we are putting more resources into helping members prevent employment claims Q: Is this going to cost $10,000 every time an employment claim is filed? A: No, the program requires the member to pay 10%, up to a maximum of $10,000 per claim. The average cost of a non-law enforcement employment claim is $37,000. The average cost of a police or sheriff s office employment claim is $57,000. Therefore, if an employment claim is filed against your entity on or after July 1, 2014, the average cost will be between $3,700 and $5,700. Only for those employment claims that exceed $100,000 in defense and settlement costs will your entity be responsible for the maximum $10,000 per claim. Q: Okay, I understand that it s all employment claims, whether or not the claim is litigated. But what does CIS mean by cost? Does that mean we pay for 10% of CIS staff time spent working on employment claims? A: The CIS member pays 10% of the external cost to resolve the claim; the external cost can include outside investigator s fees, defense attorney fees, plaintiff s attorney fees, settlement payments, jury awards, court fees, expert witness fees, and other costs associated with trial or mediation. These costs are currently considered part of the claim s value. External cost does not include CIS staff time, such as for CIS adjusters performing investigations, or documents copied or prepared by CIS, even if prepared for use at a trial or mediation. These costs are not now charged to a claim, and will not be charged in the future.

5 Page 5 Q: So are we going to have to pay up to $10,000 this very next year? We haven t budgeted for that. A: Everyone needs time to prepare for expenses. That is why the 10% participation is not due as claim costs are incurred. The 10% will be billed at the next renewal, as part of the renewal invoice, after the claim is resolved. For example: Assume your entity has an employment claim filed against it on August 1, If that claim is quickly resolved on November 15, 2014 for $25,000, then your entity will owe 10% of that cost at the next renewal. So, your entity will be billed $2,500 on July 1, The key point is that the 10% is due in the fiscal year following resolution of the claim, not the year in which the claim is filed. Q: Are we going to get charged for 10% of the cost of a Pre-Loss call? A: Never! Calling Pre-Loss will always be free for CIS Liability program members. Calling Pre-Loss will always result in your entity paying out less money. By calling Pre-Loss and following the advice, your $5,000 employment claim deductible is waived, and you get money-saving advice from a highly-qualified employment attorney. Q: Does calling Pre-Loss waive the 10% participation requirement? A: Calling Pre-Loss and following the advice given waives the $5,000 employment claim deductible. The employment claim deductible is completely separate from the new 10% participation program. So, calling Pre-Loss does not waive the 10% participation requirement for employment claims. If you call Pre-Loss, however, you will be more likely to avoid employment claims, and avoiding employment claims altogether is how to avoid paying for 10% of the cost of resolving employment claims. Q: Is the 10% in addition to the Pre-Loss deductible? A: Because the employment claim Pre-Loss deductible is a completely separate program from the new 10% participation program, a member who does not call Pre-Loss before terminating

6 Page 6 an employee, and later receives an employment claim, would be responsible for the 10% of the cost of resolving the claim, up to a maximum of $10,000, plus the $5,000 Pre-Loss deductible. In other words, the cost to a member who doesn t contact Pre-Loss, or who does call but doesn t follow CIS advice, could potentially be up to $15,000. Q: We can t afford any more bills. How can we avoid paying anything extra? A: You can completely avoid paying anything under this new program by avoiding employment claims. CIS is here to help you achieve that goal by providing your entity with free Pre-Loss advice, employment law webinars, Spring Supervisor training, 500+ online learning courses, and the new Hire-to-Retire program. Q: How does the 10% participation work if we are on an alternative plan (retro, aggregate deductible)? A: The 10% participation in employment claims works in concert with your retro or aggregate deductible program. If your entity hasn t met its deductible or maximum claim liability for the year, the 10% participation will count toward your deductible or maximum liability. Claim cost above the retro liability or aggregate deductible will be subject to the 10% participation. For example, if your entity has a $50,000 aggregate deductible and the claim is $37,000, the full cost of the claim will count toward the deductible, and there will not be any additional participation. If under the same $50,000 aggregate deductible there is an $80,000 employment claim, the first $50,000 will count toward the deductible, and your entity will participate in 10% of the $30,000 amount over the deductible ($3,000). The deductible will be applied based on when claims are paid.