The State of the States

State Workers’ Comp News

A round-up of key workers' comp developments in three states.
By: | February 10, 2014 • 7 min read

California: Report points to combination of factors pushing frequency

Increases in indemnity claim frequency have been concentrated in the Los Angeles area in the last couple of years. That’s one of the findings of an analysis of California’s rate of injuries of late.

The report notes that while claim frequency increased in most jurisdictions in 2010, it has decreased ever since. California, however, has bucked the trend.

“Since 2010, indemnity claim frequency in California has remained at the higher 2010 level, with preliminary frequency measures for 2012 and 2013 showing further increases, while countrywide frequency information shows a return to the more typical modest decline,” said the California Workers’ Compensation Insurance Rating Bureau. “The WCIRB currently projects close to a 4 percent increase in indemnity claim frequency for 2012 while data for NCCI states shows a 5 percent decline. While 2013 data is not yet available for other states, preliminary data for California suggests another significant increase (5 percent).”


The Analysis of Changes in Indemnity Claim Frequency – 2013 Report points to a combination of factors responsible for keeping claim frequency on the rise in California. Included are:

  • A high level of cumulative injury claims, a key driver in the 2010 increase, has continued through 2012. “Almost 10 percent of indemnity claims are estimated to involve a cumulative injury in 2012,” the report said. “Since 2010, increases in cumulative injury claims appear to be much more heavily concentrated in claims with permanent injuries and claims involving injuries to multiple body parts.”
  • An increase in the number of late-reported indemnity claims and cumulative injury claims. “While more than 98 percent of accident year 2008 indemnity claims were reported at 18 months, the WCIRB estimates that only 90.6 percent of accident year 2012 indemnity claims will have been reported by 18 months.”
  • A shift to more hazardous industries such as construction and manufacturing with the recent economic recovery. A shift away from hazardous industries “significantly dampened what would have been an even larger frequency increase” in 2010, according to the report. “In 2012, rather than dampening claim frequency, shifting industrial mix tended to slightly increase claim frequency.”
  • An increase in the number of newer workers into the system who are “often more likely to be injured on the job than more experienced workers,” the report explained. “The proportion of injured workers with less than two years of experience at their current job has grown by 17 percent from 2010 to 2013.”
  • The Los Angeles basin is driving the most recent numbers. “The 2010 indemnity claim frequency increase was generally experienced across all California regions,” according to the report. “Indemnity claim frequency increased an estimated 8 percent in the Los Angeles/LA Basin region in 2012 while the other California regions showed a decline.”
  • Larger claim sizes are a bigger factor in claim frequency. “The WCIRB’s 2012 report on indemnity claim frequency showed that the 2010 increase was generally experienced in smaller indemnity claims and was having a dampening impact on claim severity,” the report stated. “Contrary to the 2010 increase, recent changes in indemnity claim frequency appear to be more heavily concentrated in larger claim sizes.”

Delaware: Significant rate hike still under review

A proposed 41.75 percent increase for Delaware’s workers’ comp loss costs is on hold and might be for some time. That’s the latest update from the Delaware Compensation Rating Bureau.

The filing “has been subject to administrative and statutory provisions that did not exist for prior filing cycles,” according to a recent rating bureau circular. “Among those provisions are the potential for insurance department examinations of selected insurers’ processes and procedures for managing medical losses, and the participation of a Ratepayer Advocate in the adjudication of the DCRB’s filing.”

The update went on to advise that a decision was not expected until after a hearing, which may not take place until sometime next month. “The DCRB is keenly aware of the critical nature of this pending submission and its implications for carriers, producers, employers and other interested parties, and we will provide circular announcement of any further developments as quickly as possible when such developments occur.”


Meanwhile, a special workers’ comp task force continues trying to identify cost drivers in the system. The Workers’ Compensation Task Force was created by legislation last year to address the 26 percent increase in average workers’ comp rates over the previous two years.

The panel is holding a hearing later this month and is expected to hear a presentation from the Massachusetts-based Workers Compensation Research Institute, according to the Property Casualty Insurers Association of America.

“Workers’ compensation costs are spiraling in Delaware and that threatens the state’s economy with particularly harsh impacts for small businesses. The high costs take a toll on employers,” said Oyango Snell, PCI’s regional manager. “The WCRI can independently compare Delaware’s workers’ compensation system to other states’ systems to identify potential areas of reforms.”

PCI cited figures from A.M. Best saying Delaware’s workers’ comp loss ratio “remains significantly higher than nearby states and the national average.” It said where the U.S. 2011 workers’ comp loss ratio was 65 percent, Delaware’s was 115 percent. In 2012, the U.S. rate was 68 percent while the Delaware loss ratio was 89 percent.

“Clearly, Delaware’s workers’ compensation costs are increasing at an incredible pace,” PCI said. “There are a number of cost driving factors, and now more than ever, PCI is advocating for effective reforms that will drive costs down while maintaining quality care for injured workers.”

Texas ponders becoming NCCI state

A hearing later this month may lead to Texas becoming the 35th jurisdiction for which NCCI is the comp rating agency. The Texas Department of Insurance has filed a petition requesting the change.

“As of December 2013, there are 34 states plus the District of Columbia that are ‘NCCI states,’ which means that NCCI administers certain workers’ compensation functions in those states, 11 independent states, including Texas, and four monopolistic states,” the petition reads. “If Texas becomes an NCCI state, policyholders operating in other NCCI states and carriers writing workers’ compensation coverage in multiple NCCI states would have more consistent rules.”

The petition requests adoption of NCCI’s Basic Manual with Texas exceptions, and the national and Texas-specific endorsements and forms in the NCCI Forms Manual. If the insurance commissioner approves, the change would become effective for Texas workers’ comp policies with effective dates of June 1 or after.

“The NCCI Basic Manual and the Texas exceptions incorporate the Texas classifications currently in effect; so as a result of this rule, the current Texas classifications would remain in effect and would not change to the national classifications used in most NCCI states,” the petition states. “The Texas exceptions include a more formal dispute resolution process than TDI’s current process for disputes about rules or classifications that cannot be resolved between the policyholders and carriers.”

The plan would require insurance carriers to pay additional fees for subscribing to NCCI services in Texas. The top four national workers’ comp carriers currently pay NCCI between 11 and 18 cents per $100 of direct written premium.

“However, the additional fees may be offset by the reduction in the maintenance taxes for workers’ compensation that are payable and due to the Comptroller of Public Accounts on March 1,” the department explains. “NCCI has developed a transition plan through 2015 allowing discounts for additional Texas services.”


Agents will be offered free access to the NCCI Basic Manual with Texas exceptions, and the national and Texas-specific endorsements and forms in the NCCI Forms Manual until June 1. After that, they will be charged an annual $50 access fee.

According to the petition, adopting the cited NCCI manuals and exceptions would allow NCCI to operate in Texas by:

  • Drafting new or revised manual rules and forms.
  • Filing the rules and forms with the Texas Department of Insurance for acceptance as submitted, acceptance with changes, or rejection.
  • Assigning classification codes to businesses upon request.
  • Responding to telephone and written inquiries regarding workers’ comp classification and premium calculation.

The Texas insurance commissioner and TDI would continue to undertake such duties as prescribing standard policy forms and a uniform policy, approving non-standard forms and endorsements, determining hazards by classifications, requiring carriers to use the classifications determined for Texas, establishing classification relativities, adopting a uniform experience rating plan, and developing and updating statistical plans, as necessary.

Nancy Grover is the president of NMG Consulting and the Editor of Workers' Compensation Report, a publication of our parent company, LRP Publications. She can be reached at [email protected]

Exclusive | Hank Greenberg on China Trade, Starr’s Rapid Growth and 100th, Spitzer, Schneiderman and More

In a robust and frank conversation, the insurance legend provides unique insights into global trade, his past battles and what the future holds for the industry and his company.
By: | October 12, 2018 • 12 min read

In 1960, Maurice “Hank” Greenberg was hired as a vice president of C.V. Starr & Co. At age 35, he had already accomplished a great deal.

He served his country as part of the Allied Forces that stormed the beaches at Normandy and liberated the Nazi death camps. He fought again during the Korean War, earning a Bronze Star. He held a law degree from New York Law School.


Now he was ready to make his mark on the business world.

Even C.V. Starr himself — who hired Mr. Greenberg and later hand-picked him as the successor to the company he founded in Shanghai in 1919 — could not have imagined what a mark it would be.

Mr. Greenberg began to build AIG as a Starr subsidiary, then in 1969, he took it public. The company would, at its peak, achieve a market cap of some $180 billion and cement its place as the largest insurance and financial services company in history.

This month, Mr. Greenberg travels to China to celebrate the 100th anniversary of C.V. Starr & Co. That visit occurs at a prickly time in U.S.-Sino relations, as the Trump administration levies tariffs on hundreds of billions of dollars in Chinese goods and China retaliates.

In September, Risk & Insurance® sat down with Mr. Greenberg in his Park Avenue office to hear his thoughts on the centennial of C.V. Starr, the dynamics of U.S. trade relationships with China and the future of the U.S. insurance industry as it faces the challenges of technology development and talent recruitment and retention, among many others. What follows is an edited transcript of that discussion.

R&I: One hundred years is quite an impressive milestone for any company. Celebrating the anniversary in China signifies the importance and longevity of that relationship. Can you tell us more about C.V. Starr’s history with China?

Hank Greenberg: We have a long history in China. I first went there in 1975. There was little there, but I had business throughout Asia, and I stopped there all the time. I’d stop there a couple of times a year and build relationships.

When I first started visiting China, there was only one state-owned insurance company there, PICC (the People’s Insurance Company of China); it was tiny at the time. We helped them to grow.

I also received the first foreign life insurance license in China, for AIA (The American International Assurance Co.). To date, there has been no other foreign life insurance company in China. It took me 20 years of hard work to get that license.

We also introduced an agency system in China. They had none. Their life company employees would get a salary whether they sold something or not. With the agency system of course you get paid a commission if you sell something. Once that agency system was installed, it went on to create more than a million jobs.

R&I: So Starr’s success has meant success for the Chinese insurance industry as well.

Hank Greenberg: That’s partly why we’re going to be celebrating that anniversary there next month. That celebration will occur alongside that of IBLAC (International Business Leaders’ Advisory Council), an international business advisory group that was put together when Zhu Rongji was the mayor of Shanghai [Zhu is since retired from public life]. He asked me to start that to attract foreign companies to invest in Shanghai.

“It turns out that it is harder [for China] to change, because they have one leader. My guess is that we’ll work it out sooner or later. Trump and Xi have to meet. That will result in some agreement that will get to them and they will have to finish the rest of the negotiations. I believe that will happen.” — Maurice “Hank” Greenberg, chairman and CEO, C.V. Starr & Co. Inc.

Shanghai and China in general were just coming out of the doldrums then; there was a lack of foreign investment. Zhu asked me to chair IBLAC and to help get it started, which I did. I served as chairman of that group for a couple of terms. I am still a part of that board, and it will be celebrating its 30th anniversary along with our 100th anniversary.


We have a good relationship with China, and we’re candid as you can tell from the op-ed I published in the Wall Street Journal. I’m told that my op-ed was received quite well in China, by both Chinese companies and foreign companies doing business there.

On August 29, Mr. Greenberg published an opinion piece in the WSJ reminding Chinese leaders of the productive history of U.S.-Sino relations and suggesting that Chinese leaders take pragmatic steps to ease trade tensions with the U.S.

R&I: What’s your outlook on current trade relations between the U.S. and China?

Hank Greenberg: As to the current environment, when you are in negotiations, every leader negotiates differently.

President Trump is negotiating based on his well-known approach. What’s different now is that President Xi (Jinping, General Secretary of the Communist Party of China) made himself the emperor. All the past presidents in China before the revolution had two terms. He’s there for life, which makes things much more difficult.

R&I: Sure does. You’ve got a one- or two-term president talking to somebody who can wait it out. It’s definitely unique.

Hank Greenberg: So, clearly a lot of change is going on in China. Some of it is good. But as I said in the op-ed, China needs to be treated like the second largest economy in the world, which it is. And it will be the number one economy in the world in not too many years. That means that you can’t use the same terms of trade that you did 25 or 30 years ago.

They want to have access to our market and other markets. Fine, but you have to have reciprocity, and they have not been very good at that.

R&I: What stands in the way of that happening?

Hank Greenberg: I think there are several substantial challenges. One, their structure makes it very difficult. They have a senior official, a regulator, who runs a division within the government for insurance. He keeps that job as long as he does what leadership wants him to do. He may not be sure what they want him to do.

For example, the president made a speech many months ago saying they are going to open up banking, insurance and a couple of additional sectors to foreign investment; nothing happened.

The reason was that the head of that division got changed. A new administrator came in who was not sure what the president wanted so he did nothing. Time went on and the international community said, “Wait a minute, you promised that you were going to do that and you didn’t do that.”

So the structure is such that it is very difficult. China can’t react as fast as it should. That will change, but it is going to take time.

R&I: That’s interesting, because during the financial crisis in 2008 there was talk that China, given their more centralized authority, could react more quickly, not less quickly.

Hank Greenberg: It turns out that it is harder to change, because they have one leader. My guess is that we’ll work it out sooner or later. Trump and Xi have to meet. That will result in some agreement that will get to them and they will have to finish the rest of the negotiations. I believe that will happen.

R&I: Obviously, you have a very unique perspective and experience in China. For American companies coming to China, what are some of the current challenges?


Hank Greenberg: Well, they very much want to do business in China. That’s due to the sheer size of the country, at 1.4 billion people. It’s a very big market and not just for insurance companies. It’s a whole range of companies that would like to have access to China as easily as Chinese companies have access to the United States. As I said previously, that has to be resolved.

It’s not going to be easy, because China has a history of not being treated well by other countries. The U.S. has been pretty good in that way. We haven’t taken advantage of China.

R&I: Your op-ed was very enlightening on that topic.

Hank Greenberg: President Xi wants to rebuild the “middle kingdom,” to what China was, a great country. Part of that was his takeover of the South China Sea rock islands during the Obama Administration; we did nothing. It’s a little late now to try and do something. They promised they would never militarize those islands. Then they did. That’s a real problem in Southern Asia. The other countries in that region are not happy about that.

R&I: One thing that has differentiated your company is that it is not a public company, and it is not a mutual company. We think you’re the only large insurance company with that structure at that scale. What advantages does that give you?

Hank Greenberg: Two things. First of all, we’re more than an insurance company. We have the traditional investment unit with the insurance company. Then we have a separate investment unit that we started, which is very successful. So we have a source of income that is diverse. We don’t have to underwrite business that is going to lose a lot of money. Not knowingly anyway.

R&I: And that’s because you are a private company?

Hank Greenberg: Yes. We attract a different type of person in a private company.

R&I: Do you think that enables you to react more quickly?

Hank Greenberg: Absolutely. When we left AIG there were three of us. Myself, Howie Smith and Ed Matthews. Howie used to run the internal financials and Ed Matthews was the investment guy coming out of Morgan Stanley when I was putting AIG together. We started with three people and now we have 3,500 and growing.

“I think technology can play a role in reducing operating expenses. In the last 70 years, you have seen the expense ratio of the industry rise, and I’m not sure the industry can afford a 35 percent expense ratio. But while technology can help, some additional fundamental changes will also be required.” — Maurice “Hank” Greenberg, chairman and CEO, C.V. Starr & Co. Inc.

R&I:  You being forced to leave AIG in 2005 really was an injustice, by the way. AIG wouldn’t have been in the position it was in 2008 if you had still been there.


Hank Greenberg: Absolutely not. We had all the right things in place. We met with the financial services division once a day every day to make sure they stuck to what they were supposed to do. Even Hank Paulson, the Secretary of Treasury, sat on the stand during my trial and said that if I’d been at the company, it would not have imploded the way it did.

R&I: And that fateful decision the AIG board made really affected the course of the country.

Hank Greenberg: So many people lost all of their net worth. The new management was taking on billions of dollars’ worth of risk with no collateral. They had decimated the internal risk management controls. And the government takeover of the company when the financial crisis blew up was grossly unfair.

From the time it went public, AIG’s value had increased from $300 million to $180 billion. Thanks to Eliot Spitzer, it’s now worth a fraction of that. His was a gross misuse of the Martin Act. It gives the Attorney General the power to investigate without probable cause and bring fraud charges without having to prove intent. Only in New York does the law grant the AG that much power.

R&I: It’s especially frustrating when you consider the quality of his own character, and the scandal he was involved in.

In early 2008, Spitzer was caught on a federal wiretap arranging a meeting with a prostitute at a Washington Hotel and resigned shortly thereafter.

Hank Greenberg: Yes. And it’s been successive. Look at Eric Schneiderman. He resigned earlier this year when it came out that he had abused several women. And this was after he came out so strongly against other men accused of the same thing. To me it demonstrates hypocrisy and abuse of power.

Schneiderman followed in Spitzer’s footsteps in leveraging the Martin Act against numerous corporations to generate multi-billion dollar settlements.

R&I: Starr, however, continues to thrive. You said you’re at 3,500 people and still growing. As you continue to expand, how do you deal with the challenge of attracting talent?

Hank Greenberg: We did something last week.

On September 16th, St. John’s University announced the largest gift in its 148-year history. The Starr Foundation donated $15 million to the school, establishing the Maurice R. Greenberg Leadership Initiative at St. John’s School of Risk Management, Insurance and Actuarial Science.

Hank Greenberg: We have recruited from St. John’s for many, many years. These are young people who want to be in the insurance industry. They don’t get into it by accident. They study to become proficient in this and we have recruited some very qualified individuals from that school. But we also recruit from many other universities. On the investment side, outside of the insurance industry, we also recruit from Wall Street.

R&I: We’re very interested in how you and other leaders in this industry view technology and how they’re going to use it.

Hank Greenberg: I think technology can play a role in reducing operating expenses. In the last 70 years, you have seen the expense ratio of the industry rise, and I’m not sure the industry can afford a 35 percent expense ratio. But while technology can help, some additional fundamental changes will also be required.

R&I: So as the pre-eminent leader of the insurance industry, what do you see in terms of where insurance is now an where it’s going?

Hank Greenberg: The country and the world will always need insurance. That doesn’t mean that what we have today is what we’re going to have 25 years from now.

How quickly the change comes and how far it will go will depend on individual companies and individual countries. Some will be more brave than others. But change will take place, there is no doubt about it.


More will go on in space, there is no question about that. We’re involved in it right now as an insurance company, and it will get broader.

One of the things you have to worry about is it’s now a nuclear world. It’s a more dangerous world. And again, we have to find some way to deal with that.

So, change is inevitable. You need people who can deal with change.

R&I:  Is there anything else, Mr. Greenberg, you want to comment on?

Hank Greenberg: I think I’ve covered it. &

The R&I Editorial Team can be reached at [email protected]