The State of the Longshore Market

If you are not in the Longshore market frequently you may not have noticed that almost overnight we have switched to a hard market, for virtually every significant traditional Longshore carrier.
It is worthwhile to catalog here some of the issues that are developing because of this.

TIME:
The vast majority of Longshore accounts are being remarketed right now and the number of submissions on every underwriters desk (electronically or paper) has increased exponentially since the beginning of the year. Realistically that means EVERY underwriter is now more backlogged than they have ever been. Thus getting middle market risks turned around in less than a week is practically impossible. Larger or more complex risks could be 2 weeks or more.  

ACTION… Start earlier and manage the client expectations to reality.

INFORMATION: The number of submissions is making the underwriters more selective, that requires information to be more TIMELY and more important to sell the story of your client. For all accounts a narrative is useful, but for middle market account, it is critical today. Gone are the days of the acord application and some loss runs. Many underwriters will not even start working a risk until such time as all the information is in hand. 
Watch out for the website – we had one recently for a marine contractor that said they built bridges and had a picture of the Golden Gate in San Francisco.  In reality all they built were little wooden bridges for carts at a golf course or a marina!  If possible sanitize the website, if not at least explain the reality of the exposure in your narrative before the underwriter reads it online.  
Add some relevant photos to the submission, especially if the operation is not the norm.

PRICING:
Pricing is up, 10-15% on decent accounts, more on risks with poor loss ratio or other issues. “As expiring” is only an option for the very best accounts. Prepare client early for this, AND check their mods early… add 10% to the rate and 10% to the mod and you are looking at big dollars overall.

MARKET AVAILABILITY:
Some carriers are pulling back out of particular states or areas, and whilst we have yet to find an area that does not at least have one or two markets, options are disappearing fast in some cases and even larger accounts and risks that have traditionally been relatively easy to handled are now heading to Assigned Risks/JUA or state funds!  Never a good idea long term.

Why is all this happening? Simply, the Longshore market has always been small, so the changes by two or three carriers who had significant books of work comp trigger are having a huge effect on our market.
  
Why the change for them?  Most of them are not making money in WC so instead of correcting the price, they simply withdraw. Longshore is one of the first to go in states with bad state act loss ratios, even though the Longshore books are often profitable.
 
Non-renewals are frequent, not the exception. Every day we receive more submissions saying “this has been non-renewed” and give a reason which is rarely specific to the client or their results.

So bottom line is:
    Start Early
    Understand mod revisions early
    Expect pricing increases for many accounts and prepare the client
    Manage expectations, no one is quoting very far out and rarely quickly
    Create a narrative, sell your client, add photos
    Make sure any website hyperbole is removed or explained.  

There is an ancient Chinese curse, may you live in “Interesting Times”.  We really are in “Interesting Times” in Longshore!

LS202

LS202  --   Never heard of this Longshore form?  Perhaps you or your clients need to know about it now or at least need a reminder.   Officially it is titled “Employer's First Report of Injury” – note carefully that first word “Employer’s”

“The LS202 is to be filed in duplicate with the District Director in the appropriate district office of the Office of Workers’ Compensation Programs within 10 days from the date of injury or death or from the date the employer first has knowledge of an injury or death….. Penalties may be charged for failure to comply with provisions of the law.”

“REPORTABLE INJURY – Any accidental injury which causes loss of one or more shifts of work or death allegedly arising out of and in the course of employment, including any occupational disease or infection believed or alleged to have arisen naturally out of compensation it must also file”

The responsibility for this lies with the insured.   This is common practice for Shipyards, Stevedores and the like who are used to Longshore claims.   But for those businesses who have few Longshore claims this can easily be forgotten.  The penalties are severe; the DOL has the ability to fine up to $11,000 PER CLAIMANT for this.   One insured whose Longshore exposure is a small part of their business, is being pursued for 7 such claims where they forgot to file and that bill could be as much as $77,000!

It simple to file online,  at http://www.dol.gov/owcp/dlhwc/ls-202.pdf or print it out and fax it (if you still have a fax).   But however you file, make sure your client keeps a proof of the filing so it the DOL misplace the form, you have proof you filed within the required period.

WATCH OUT THE FINES ARE COMING….   Send this notice to ALL your clients with Longshore exposure (even incidental) to make sure they know that the Longshore act makes this clearly their responsibility, not the insurance companies.

One other benefit is that filing the LS202 starts the statute running on the Longshore claim.  The employee has 12 months to file their Longshore claim once you have filed that form.    The only problem with this scenario is that typically if they have not filed their claim in a reasonable period of time, the DOL will likely write to the employee asking them if they want to file a Longshore claim.   Take advice from you Adjuster or Attorney on filing the form for this purpose based on the individual facts of that claim.

CARRIERS – a suggestion,  why not ask not only for a copy of the LS202, but the record of filing  not only will this help your ultimate customers, but also help in processing claims with the DOL.   Try, for example, applying for the DOL to approve a settlement on a claim on which they don’t even have a LS202.

I know that we all love forms – but the penalties for NOT filing this far outweigh the time it takes

Happy filing.

Security Guards Round 2

Following the expansion of Longshore into the security world in K.L. v. Blue Marine Security BRB No. 08-0789 (Apr. 16, 2009) (see this blog June 2009 for details) the BRB has further expanded the definition in Gelinas v. Electric Boat Corp., 45 BRBS 69 (2011) –

Security guard may be covered if his work is “integral to shipbuilding”

In 1984 Congress expressly excluded from Longshore coverage “individuals employed exclusively to perform office clerical, secretarial, security, or data processing work…. [provided such persons are covered by State workers’ compensation laws]. The Benefits Review Board has taken every opportunity, however, to limit this exclusion as applied to security guards.

Tim Gelinas was employed as a security guard at his employer’s facility that builds submarines, in Rhode Island. The employer requires security guards obtain an emergency medical technician (EMT) certificate. During the regular work week, Gelinas is primarily assigned to the entry gates of employer’s facility; during weekends, claimant performs security rounds through employer’s submarine production areas. In addition to his usual security-related duties, as an EMT he is required to respond to medical incidents that occur at employer’s facility. He filed a hearing loss claim on April 21, 2010.

Generally, a claimant satisfies the “status” requirement if he is an employee at least some of whose work is integral to the loading, unloading, constructing, or repairing of vessels.

The Board has held that the term “exclusively” modifies all four classifications of work listed in this exclusion. Dobey, 33 BRBS at 65 n.7. It has also concluded that the term “office” also modifies those classifications of work

The Board then parsed the evidence and nitpicked the ALJs factfindings. It seems the Board too often ignores the Act’s limitations on its power and prohibition from substituting its view of the facts from that of the ALJ. In its closing paragraph the Board wrote, “We remand the case for the ALJ to determine if claimant’s work is integral to the shipbuilding process. He should discuss the evidence relevant to the status issue, make appropriate findings based on the relevant law and evidence, and give a written explanation of the reasons and basis for his findings of fact and conclusions of law. If, on remand, the ALJ finds that claimant’s work is integral to the shipbuilding process, he should resolve any other issues raised by the parties.”

This decision is even more difficult to square with the Board’s earlier decision in Gelinas v. Electric Boat Corp., 44 BRBS 85 (2010), in which the Board held that an occupational health nurse (no relation to Tim Gelinas) failed to establish her work was integral to shipbuilding and thus not entitled to benefits. We wonder what the Board will do if, on remand, the ALJ reaches the same conclusion and denies benefits again. Stay tuned, this one may not be over.

Seabright Sold

Enstar Group Limited (Nasdaq:ESGR) and SeaBright Holdings, Inc. (NYSE:SBX)  jointly announced August 27th that they have entered into a definitive merger agreement under which Enstar will acquire SeaBright for $11.11 per share in cash. The purchase price represents a 34.3% premium over SeaBright's closing stock price today of $8.27.

Seabright Holdings is the parent of Longshore and WC Insurer Seabright Insurance Company and MGA “Pointsure”.

According the their joint press release the acquisition is currently expected to close in the first quarter of 2013.

Read the full press release on Seabright’s website at http://investor.sbxhi.com/releasedetail.cfm?ReleaseID=702618

OSHA "Tool Shed" directive for marine cargo handling

WASHINGTON – The Occupational Safety and Health Administration on August 10th 2012  issued a revised directive* providing enforcement guidance for inspections of Longshoring operations and at marine terminals, also known as the marine cargo handling industry. The directive is aimed at eliminating workplace hazards in the industry by addressing updated requirements for personal protective equipment (PPE) and the safe operation of Vertical Tandem Lifts (VTLs).

According to the Bureau of Labor Statistics, seven workers died and more than 2,900 were injured performing marine cargo handling operations in 2010. OSHA is committed to reducing and eliminating these worker injuries, illnesses and fatalities by conducting focused interventions in the industry.

The new "Tool Shed" directive is available at http://www.osha.gov/pls/oshaweb/owadisp.show_document?p_table=DIRECTIVES&p_id=3349

CMIP Seminar - Houston,TX - October 15-16, 2012

St. Petersburg, FL, - LIG Marine Managers' sister company, LIG Educational & Consulting Services, in conjunction with the International Institute for Marine Insurance Studies, announces the next 2012 CMIP Seminar for those individuals working towards earning the Certified Marine Insurance Professional (CMIP) Designation.

The CMIP Designation is designed for agents, brokers, CSRs, Insurance Company Personnel, Underwriters or other insurance industry professionals who wish to expand their knowledge of the Commercial Marine Insurance industry. The CMIP Designation requires attendance at four 1½-day Seminars and successfully passing a short exam at the end of each Seminar.

The next CMIP Seminar, "Insuring Marine Employees", is being held October 15-16, 2012 in Houston, TX at the Sheraton North Houston Hotel. Topics for this dynamic seminar include "various exposures to Marine Employees" with practical "How to Guides" on properly insuring them, the essential policies and programs available to this sector, and delving into the tricky issues of "Payroll Allocation, Officer and Owner Exclusions, Common Endorsements: advantages/disadvantages, and Auditing techniques."

The speakers for these seminars include:
Ian Greenway, LIG President - Insuring Marine Employees

Richard Wood, Chief Operating Officer, Signal Mutual Indemnity Association - Mutuality in Longshore and P&I

Kenneth Baldwin, Chief Underwriting Officer, Travelers
- Protection & Indemnity

For more information and to REGISTER ONLINE, visit www.IIMIS.org

If you need further assistance, please contact Karen Tischler: KLT@LIGMarine.com or (415) 690-6214.

Recreational Marine Regulations. “Sinking the Marine Industry” ?

WASHINGTON:  Congressman Allen West (R-FL) chaired a hearing yesterday,  July 12th, entitled “Sinking the Marine Industry: How Regulations are Affecting Today’s Maritime Business” as part of the House Small Business Subcommittee on Investigations, Oversight and Regulations . 

West’s constituent, Kristina Hebert, Chief Operating Officer, Ward’s Marine Electric, Inc,. in Fort Lauderdale, testified on behalf of the United States Superyacht Association. Hebert, said  “The new rules have created confusion in both the recreational marine repair industry and the insurance industry,” Hebert said. “The misapplication of the exemption brought thousands of workers under the duplicative coverage or even worse left them without any coverage at all. For these reasons, the rulemaking seriously missed the mark and will serve only to cost American jobs and drive economic activity offshore.”

Congress are at least listening to the concerns of the Marine Industry

For more information from Congressman's website and links to the written testimony and video go to http://allenwestrepublic.wordpress.com/2012/07/12/rep-allen-west-statement-sinking-the-marine-industry-how-regulations-are-affecting-todays-martime-business/

MEL Mononline Market Changes

Over the last few months two significant players in the MEL market have stopped writing.   One stopped everything and the other just MEL.     Whilst there are still approximately 20 or so underwriters of monoline MEL today in London and the US, these two had significant shares of the market and so we expect to see some shift in pricing in three areas:

1.            The high risk, hard, heavy "working" MEL - here pricing will go up.

2.            The very low hazard "if any" type of risk where minimum premium are rising.

3.            Risks which were perceived by one of the departing markets as "soft"/low risk accounts, which other underwriters might see as hard

The first of these will be very much dependent on the account, but do expect more detailed questions on individual claims especially if still open. 

The second may only be a rise of $500 - $1,500, but that could be up to 40% of the premium to a small MEL client.

The third and last are the most critical, in one case recently we have a range of quotes on a CLEAN account where the most expensive was 20 times (yes TWENTY times) the lowest, not due to some rate scale, but the perception of the most expensive underwriter was that it fit into Category 1 and the others considered it a Category 2 account.

As with any market change there are three key issues...

Information - especially detailed claims history, explanation of injuries and detailed status on open claims particularly

Time - turning around the best quote for most, today takes a week - something more if there is missing information up front. 

Market Access - are you covering all the markets?    If you are dealing with London, does your Lloyd's broker regularly access the dozen or so underwriters there that write MEL or do they just regularly go to the same one or two?

This is no longer the quick, easy line it was for many clients.  It will take work and preparation for most.

Want to know more about MEL?   

Watch the Webinar at www.ligmarine.com/Video 

Read the article at LongshoreToolbox.com/Files/What_is_MEL.pdf, or

Attend the Insuring Marine Employees Seminar in Houston in October, for more information go to www.iimis.org/SEMS.aspx

The End of Concurrent Jurisdiction in VA

HB153, ending concurrent jurisdiction in VA  was signed by the governor Friday April 6th and becomes effective July 1st. 2012

See previous post on this blog Mach 1st 2012 for more details or read a full copy of the bill at HB153 

Don’t expect the unions to give up fighting this, but for now it will be law in about 3 months.

The End of Concurrent Jurisdiction in VA?

The Virginia Senate approved a bill Tuesday Feb 28^th under which shipyard workers and longshoremen who suffer serious injuries on the job will no longer be covered through Virginia's workers' compensation program.

HB153, had already passed the House, 70-26, and now goes to the desk of Gov. Bob McDonnell.

The bill would take shipyard workers and other longshoreman out of Virginia's workers' comp program for any injuries suffered July 1 2012, or later.  They would depend solely on the Longshore Act.

Not surprisingly the International Longshoremen's Association opposes the legislation.

Florida–Revision to 6006F

Code 6006F was created in July 2006 as an all-inclusive FLORIDA ONLY classification for marine construction.

Typically, a classification code followed by the letter “F” indicates that the code includes premium for operations that are subject to the Longshore Act. Code 6006F applies to risks regardless of whether the marine construction is subject to the Longshore Act or not.

As a result, NCCI has revised the description of state special Code 6006F  to further explain the intent of the original filing which is that Code 6006F is applicable to all marine construction around all bodies of water regardless of whether the work is performed on navigable waters.

NCCI will begin to conduct selected inspections of these types of risks beginning in 2012 to ensure the accurate assignment of these classifications.

Navigating Maritime Employers Liability

Join us for a Webinar on February 8

Space is limited to the first 100 registrants Reserve your Webinar seat now at: https://www3.gotomeeting.com/register/883470790

This webinar is the third of a series entitled “Navigating Commercial Marine and Longshore insurance”. Focusing on specific issues within the field AND sponsored by LIG Marine Managers.   Future webinars will include: • Deadly Marine E&O Mistakes • California Mods and Longshore • Multistate Longshore Exposures Title: Navigating Maritime Employers Liability Date: Wednesday, February 8, 2012 Time: 11:00 AM - 12:00 PM EST After registering you will receive a confirmation email containing information about joining the Webinar.

Parking Lot is Covered Longhsore Situs

Williams v. Northrop Grumman Shipbuilding, Inc., BRBS (2011).

The BRD recently held that the situs requirement was met where claimant's injury occurred on employer's parking lot located within the perimeter of employer's shipyard that is adjacent to navigable waters, albeit separated from the shipyard's working areas by a fence and a security gate.

Claimant, a nuclear pipe worker, fell and injured his shoulder in employer's North Yard Parking Lot. The parking lot is situated on the premises of employer's shipyard; however, it is separated from the working areas by a fence. It is owned and maintained by employer for use by its employees, Navy personnel, and contractors who have business with employer, and is used solely for parking. There is no access to navigable waters from the parking lot, and employees must swipe their badges at a security turnstile at one end of the lot to enter the production area.

The Board reasoned that the Fourth Circuit, within whose jurisdiction this case arose, has defined "adjoining area" under §3(a) as a discrete shoreside structure or facility that is similar to the enumerated areas, actually contiguous with navigable waters, and customarily used for maritime activity.   Here, employer's property extended from navigable waters to the outer edge of the parking lot. The Board concluded that "claimant's injury occurred in a shipbuilding area contiguous to navigable waters …."

7 Minutes to save you 7% or more on your Florida Longshore account

Join us for a Webinar on January 10

This webinar is the first of a series entitled Commercial Marine and Longshore insurance.  Focusing on specific issues within the field sponsored by LIG Marine Managers.   Each presentation will be under 10 minutes and then will provide time for questions and answers at the end.

Future webinars will include:
•  Understanding the new Recreational Vessels Regulations in  
               Longshore
•  Deadly Marine E&O Mistakes
•  California Mods and Longshore
•  Multistate Longshore Exposures

Tuesday, January 10, 2012
Time: 11:00 AM - 11:30 AM EST

After registering you will receive a confirmation email containing Space is limited to the first 100 registrants:
Reserve your Webinar seat now at:
https://www3.gotomeeting.com/register/640975350

Recreational Vessel Regulations Published

The long awaited regulations implementing the ARRA changes in the Longshore act from Feb 2009, were finally published Friday, Dec 30^th 2011.

The full text of the history and rule can be found at http://www.federalregister.gov/articles/2011/12/30/2011-32880/regulations-implementing-the-longshore-and-harbor-workers-compensation-act-recreational-vessels

The history and discussion is interesting, but you need to run down over ¾ of the way down the document, just under the section titled “AUTHORITY” for the actual revisions .

I am sure there will be much more comment, but this rule will take effect Jan 30^th 2012.