Rivard Insurance Agency, Inc E-Mail Newsletter SEPTEMBER – OCTOBER 2011 VOLUME 9, NUMBER 9 Reinsurance Rate Hikes… reported by the Florida Underwriters Magazine The latest news of Florida’s 15% reinsurance rate hike has been the buzz. Don’t be fooled into thinking this is a new charge passed on to the Policyholder. Insurance companies have previously passed on this charge to policyholders but it was capped at 10%, now it is capped at 15%. Therefore, the increase to the policyholder is a relatively small change of 5% more than what was previously passed on to them. Policyholders should also know that before any rates increase they must be approved by the Office of Insurance Regulation, BEFORE they are passed on to policyholders. All insurance companies writing in Florida are required to purchase a mandatory layer of reinsurance from the state-sponsored Florida Hurricane Cat Fund. It is hard to believe that the money Florida insurance companies have on hand is not enough to pay for actual claims, especially following a hurricane, but it is true. It is hard for the insurance companies to figure out the cost of reinsurance Rivard Insurance Agency because it is not considered a statutory asset until reinsurance losses are September - October incurred. When looking at annual reports for insurance companies of premiums 2011 Office Calendar collected and claims paid out, those numbers do not reflect the value of reinsurance needed to pay claims even after a small hurricane. Insurance September 5, 2011 companies with a well-planned reinsurance program will have a surplus to pay CLOSED for everyday claims AND reinsurance to pay for the extraordinary claims such as a hurricane. Rivard Insurance Agency Inc Workers Compensation Fraud… reported by the Florida 1014 Gateway Blvd. Underwriters Magazine Suite 107 Workers compensation fraud has been a troublesome area for the insurance Boynton Beach, FL. 33426 industry costing insurers and employers about $6 billion a year. Fraudulent Ph: 561-739-8346 claims have been on the rise which reflects the current economic conditions. Fax: 561-739-8360 The claims are either false or exaggerated injury claims, like injuries not occurring on the job yet reported as such. As the economy deteriorates the E-mail: number of suspicious or questionable claims increase. firstname.lastname@example.org Just as troubling is the impact increased medical costs have had on workers compensation. It used to be about 60% of the claim was the indemnity payment and 40% was the medical cost, it is now reversed. We’re on the Web! The industry is working to fight the fraud with anti-fraud efforts in fraud http://www.rivardinsurance.com awareness and investigation/enforcement. Florida Ranks in the top four among all the states’ fraud division and bureau. Claims are investigated looking for suspicious patterns or pre-existing injuries by using a data base to identify Find us on Facebook potential fraud. Commercial audits are another detection method for fraud. Fraud is an ongoing problem in the workers’ compensation area and is costs insurers and self-insured’s millions of dollars each year.
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