|We want to start our edition this week pausing to honor the law enforcement heroes slain and injured in the Dallas shooting last Thursday, July 7. Our hearts are heavy for their families, their friends, their colleagues and their community.
I know that you all shared in the celebration of our country’s 240th birthday last Monday. And if you are like me and my gang, that celebration included some barbeque, fresh summer corn on the cob and lots of cold beverages. And of course, the fireworks, whether big bangs or little fizzles, they are always fun. It’s not only a fun time together but also a time to remember those who have fought and continue to fight for the freedom we enjoy every day. For that reason, I’m sharing a few inspirational quotes that should give us another pause of appreciation as we move toward our next 4th of July celebration.
“You have to love a nation that celebrates its independence every July 4, not with a parade of guns, tanks, and soldiers who file by the White House in a show of strength and muscle, but with family picnics where kids throw Frisbees, the potato salad gets iffy, and the flies die from happiness. You may think you have overeaten, but it is patriotism.”
— Erma Bombeck
“The United States is the only country with a known birthday. All the rest began, they know not when, and grew into power, they know not how…. There is no “Republican,” no “Democrat,” on the Fourth of July, – all are Americans.” — James Gillespie Blaine
“Our greatest happiness does not depend on the condition of life in which chance has placed us, but is always the result of a good conscience, good health, occupation and freedom in all just pursuits.” –Thomas Jefferson
“In the truest sense, freedom cannot be bestowed; it must be achieved.” — Franklin D. Roosevelt
“Those who won our independence believed liberty to be the secret of happiness and courage to be the secret of liberty.” — Louis D. Brandeis
“In the process of gaining our rightful place, we must not be guilty of wrongful deeds. Let us not seek to satisfy our thirst for freedom by drinking from the cup of bitterness and hatred. We must forever conduct our struggle on the high plane of dignity and discipline.” — Martin Luther King Jr.
“We on this continent should never forget that men first crossed the Atlantic not to find soil for their ploughs but to secure liberty for their souls.” — Robert J. McCracken
“America has never been united by blood or birth or soil. We are bound by ideals that move us beyond our backgrounds, lift us above our interests and teach us what it means to be citizens.” –George W. Bush
|More Hispanics and Elderly Keep Florida a Swing State
Last week’s July Fourth celebration here in Tallahassee included a naturalization ceremony for 13 new U.S. citizens, from countries that included Colombia and Peru. The latest U.S. Census data shows two key demographics in Florida are growing: the elderly and Hispanics. The state grew by nearly 1.5 million people in the past five years (2010-2015). 51% of that growth was Hispanics and 46% were people 65 and older. In that span, the state’s Hispanic population grew by 18% – twice that of black growth and six times more than white growth.
Not surprisingly, Hispanic stronghold Miami-Dade and Broward counties represented a third of the 1.5 million growth. Two-thirds of Miami-Dade county is Hispanic, the highest percentage in the state. But trumping that growth was the I-4 corridor of Seminole, Orange, Osceola, Polk, and Hillsborough counties, which grew by a combined 219,229 people and is home to large populations of Puerto Rican and Central and South American Hispanics.
One of the key questions unanswered: how many of these new Floridians are registered to vote and of those, how many will actually cast ballots? Data shows the Hispanic population in Florida, as it is nationally, is young, with more than half under 30 and who vote infrequently, as other millennials. Although in recent years more Hispanics have registered as Democrats than Republicans, the newest entrants – as their young Anglo counterparts – are registering as “no party affiliation.” Voter registration has been slowly growing, with Hispanics now comprising 16.4% of Florida’s 12.2 million voters.
The Census also shows Florida has maintained and is strengthening its position as a retiree haven, with 19.5% of the population age 65 and over – the highest of any state in the country. Aging baby boomers have become more conservative as they’ve aged and also less trusting of government compared to an increasingly diverse mixture of younger voters. Sumter County, home of The Villages retirement community, has the distinction of being the only county in the nation where the majority of the population is now 65+. The county has also seen an increase of 20% in its Hispanic population, but remains a Republican voting majority.
There is no doubt that Florida remains a critical swing state in the November election. Enjoy the summer while you can. Our next holiday marks the traditional end of summer, Labor Day Weekend, and with it, the start of the television campaign ads, full tilt!
Private Insurers Following Citizens’ Lead in Reducing Number of South Florida Policies
Barry Gilway told us so. The president of Citizens Property Insurance told his actuarial and underwriting committee this past March that the increased cost and frequency of non-storm water claims that was driving up Citizens’ costs – and rates – were spreading to Florida’s private P&C market.
Gilway shared competitive intelligence by his team that showed there were 9,000, 8,000, and 7,500 policy cancellations made respectively by each of 3 private companies in February. Other companies were reducing their exposure by not renewing policies in high-risk areas or restricting coverage at renewals. He called it “the tip of the iceberg.” He pointed out that the combined ratio of those composite companies was 76.02 in 2014 and had risen to 91.6 in March 2016. That’s a 16-point deterioration in one year for the composite group. That’s in a non-storm year! Gilway put the breakeven point at between 75 and 85. So, he pointed out, the industry is already 11 points in the red. He predicted (rightly so) that trend will continue given these flow of losses.
His Chief Risk Officer, John Rollins, put it this way: “We’d love to say things aren’t going to get worse. (But) we fear we have a dam about to be burst upon us.” Ladies and Gentlemen, the sound of water you hear is not the summer rains, but that dam that has burst. Ron Hurtibise, reporter for the Sun-Sentinel in Ft. Lauderdale, has chronicled Barry Gilway’s dire prediction in this revealing story.
Trio of Legal Issues Prompts NCCI to Amend Recent Rate Increase Filing
Last Thursday (6/30/2016) the Florida Office of Insurance Regulation (OIR) received an amended rate filing from the National Council on Compensation Insurance (NCCI) to incorporate into its proposed rates a third legal change impacting the state’s workers’ compensation system. This amended filing increases NCCI’s initial proposed combined average rate increase from 17.1% to 19.6%. Individual projected rate impacts for all three recent legal changes include the following:
- A 2.2% rate increase for the June 9th Supreme Court decision in Westphal v. City of St. Petersburg, wherein the Court found the 104 week limitation on temporary total disability benefits unconstitutional.
- 15% increase for the April 28th Supreme Court decision in Castellanos v. Next Door Company, which found the mandatory attorney fee schedule in Chapter 440, F.S. (fee caps) unconstitutional as a violation of due process under both the Florida and U.S. constitutions.
- A 1.8% rate increase related to updates within the state’s Workers’ Compensation Health Care Provider Reimbursement Manual. The revised manual became effective on July 1, 2016.
NCCI is proposing an effective date of October 1, 2016 for new and renewal workers’ compensation policies and that the 19.6% rate increase apply to all comp policies in effect as of October 1st on a pro-rata basis for the remainder of each policy’s term. The OIR has scheduled a public rate hearing for August 16, 2016 at 9:00 a.m. in the Jim King Committee Room, 401 Senate Office Building. LMA will of course be there to cover the hearing and provide our readers with updated information regarding hearing-related developments.
Big Money Payouts as Consumers Stick with their 2016 Federal Healthcare Plans
Halfway through year two of the federal healthcare plan public exchanges comes the government report that 87% of those participating stayed with the program and paid their premiums for their first month of coverage. HHS reports that amounted to 11.1 million of the 12.7 million Americans who signed up during the open enrollment period last winter.
Florida again tops the list of states with the highest number of those active enrollees at 1,531,714, as of March 31. (California had 1,415,428; Texas 1,092,650; North Carolina 545,354; and Georgia 478,016.) Hawaii had the lowest number of paid enrollees with 13,313. Of those enrolled, 85% were receiving federal premium subsidies, which are available to those individuals with incomes up to $47,520.
It’s those premium subsidies, together with cost sharing assistance (for out-of-pocket expenses such as deductibles) that helps make coverage more workable for consumers. For insurance companies, the “3 R’s” are supposed to make offering that coverage more workable (less risky) – risk corridors, reinsurance, and risk adjustment.
The Centers for Medicare & Medicaid (CMS) recently reported that the government will pay out $7.8 billion in reimbursements to 497 health insurers under the transitional program designed to stabilize premiums and protect insurers from big losses. The biggest recipients include the Blue Cross and Blue Shield Associations in Texas ($636.7 million), California ($325 million), and Illinois ($283.5 million).
Yet those reimbursements amounted to just 55% of what the insurance companies had asked the government for; last year, CMS paid 100% of the insurers’ 2014 claims. The program is funded by a $44 per-participant fee paid by insurers and self-insured employers, which will decrease to $27 for 2016. CMS reports it expects those fees to amount to $6.5 billion this year and together with another $1.7 billion in excess fees set aside from 2014, will be enough to cover this year’s payout to insurers.
CMS has also released data on another “R” – risk adjustment – designed to transfer payments to health insurers with high-risk patients from those insurers with low-risk enrollees. Blue Cross and Blue Shield of Florida will get the biggest payment at $377 million. Molina Healthcare of Florida will make the biggest payment into the program at $218.9 million.
Last summer, OIR reported health insurance premiums for 2016 PPACA-compliant plans in Florida increased an average of 9.5%. In mid-December, OIR announced two of the 19 companies participating (Cigna Health and Life Insurance Company and Preferred Medical Plan) were pulling out of the public exchange for 2016, blaming soaring costs.
Feds Investigating First Human Death in Use of Auto Piloted Vehicle
This past Thursday (6/30/2016) through an announcement from the National Highway Traffic Safety Administration, Florida unfortunately earned the distinction as having the first fatality resulting from the operation of a self-driving car. The fatality occurred on May 7th near Williston when the driver of a Tesla S sports car using the vehicle’s “autopilot” automated driving system was involved in a collision with a large truck. Preliminary reports from the Florida Highway Patrol indicate the crash occurred when a tractor-trailer rig made a left turn in front of the Tesla at an intersection of a divided highway where there was no traffic light. The Tesla driver died due to injuries sustained in the crash. Tesla has said on its website neither the driver nor the autopilot sensors noticed the white side of the trailer, which was perpendicular to the Model S, against the brightly lit sky, and neither applied the brakes.
This fatal accident comes during the midst of a competitive race by automobile manufacturers and technology firms to design and develop self-driving cars while touting the belief that computers can operate a vehicle more safely than human drivers. This view of the self-driving vehicle world is now under critical re-evaluation after evidence indicated that the operator of the Tesla electric car was killed when the car was in self-driving mode. The crash also appears to raise serious questions about whether self-driving vehicles can consistently make split-second decisions that result in life or death outcomes. A question that absolutely must be answered before federal regulators are likely to approve totally self-directed vehicles for use on U.S. highways. Sadly, this is the first known fatal accident involving a car actually being operated on its own utilizing complex computer software, cameras, sensors in addition to radar. Records indicate that the owner of the vehicle was a U.S. Navy veteran who owned a technology consulting firm. This past week Telsa referred to him in a press release as a person “who spent his life focused on innovation and the promise of technology and who believed strongly in Tesla’s mission.” LMA will continue monitoring the investigation and bring you results as soon as they are released.
Report Indicates TRIP Bolsters Availability and Cost of Coverage
This past week the U.S. Department of the Treasury’s Federal Insurance Office (FIO) released its report on the effectiveness of the Terrorism Risk Insurance Program. The requirement that this report be produced was contained within the Terrorism Risk Insurance Program Reauthorization Act of 2015, which was passed by Congress and signed into law on January 12, 2015.
The Report analyzes a plethora of data that was collected this year by Treasury Department concerning the participation of insurers in the Terrorism Risk Insurance Program . The report is rather lengthy at 29 pages and contains a number of key findings which we continue to evaluate. However, most importantly the report solidly concludes that TRIP, which provides a federal backstop for certain U.S. property and casualty insurance losses resulting from a certified act of terrorism, is an important mechanism in ensuring that terrorism risk insurance remains available and generally affordable in the United States.
In the meantime, though the file is too large to include here, if you would like to read the final report just let me know and we will send it to you. We’ll bring you additional information about other findings as we conclude our report review and analysis.
I had such a chuckle recently when I heard a news story about another big event in our great state and thought “only in Florida” would this make the news. Seems a Florida man who was on his honeymoon in Key West took the time to win The Mile High Key Lime Pie-Eatin’ Contest!! Too funny but true that a man from Sunrise, Florida beat last year’s record of 1 minute and 18 seconds, by gobbling down a 9-inch key lime pie in 1 minute and 2 seconds. And of course, the contestants weren’t allowed to use their hands. I guess you had to be there to truly appreciate this important gastronomical feat of downing Florida’s official state pie. I love that key lime pie too but not in 1 minute and 2 seconds with my hands tied behind my back. Only in Florida!
Lisa and the LMA Team
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