AIA PRAISES REINTRODUCTION OF LONGSHORE AND HARBOR WORKERS ACT CHANGES

A press release form the AIA sent yesterday announced:

The American Insurance Association (AIA) commended the reintroduction of the Longshore and Harbor Workers Act Amendment of 2011 (S. 669) which is sponsored by Senator Johnny Isakson (R-GA).  The legislation would amend the federally-administered Longshore Act and will benefit injured workers and their employers by applying the best medical treatment and administrative practices from state workers’ compensation programs.

The Longshore Act is the nation’s most expensive workers’ compensation program.  The measure covers workers in the Longshore, shipbuilding, marine construction and other industries and is designed to improve and update the antiquated Longshore Act, which provides medical, physical rehabilitation and wage replacement benefits for work-related injuries, illnesses and deaths.  The last time the Longshore Act was updated was in 1984.

“The Longshore Act is archaic and needs to be brought into the 21^st century,” said Bruce Wood, associate general counsel and director of workers’ compensation for AIA.  “In 1984, Ronald Reagan was president, the Soviet Union was a country, and the Berlin Wall was still standing.  Meanwhile, state workers’ compensation systems have been modernized but the federal government hasn’t taken any action to update the Longshore Act.”

The costs associated with the out-of-date Longshore Act continue to rise faster than state workers’ compensation programs while employees and employers alike suffer from the unnecessary administrative burdens that plague the system.

Further, the bill provides an opportunity to improve medical care to enable injured workers to return to work and adopt the best workers’ compensation administrative practices to reduce costs to employers and the federal government.

AIA has been a long-time supporter of Senator Isakson’s efforts on the Longshore Act, extending back several years prior to 2006.  The bill also has the support of the Coalition for the Longshore Act, the Strategic Services on Unemployment and Workers’ Compensation Association (UWC), the National Association of Waterfront Employers, the American Shipbuilders’ Association, and other assorted maritime employer interests.

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The American Insurance Association (AIA) is the leading property-casualty insurance trade organization, representing approximately 300 insurers that write more than $100 billion in premiums each year. AIA member companies offer all types of property - casualty insurance, including personal and commercial auto insurance, commercial property and liability coverage for small businesses, workers' compensation, homeowners' insurance, medical malpractice coverage, and product liability insurance.

Longshore Not Approved

It is happening again – carriers who are not authorized to write Longshore are adding it by endorsement to their policies.

In one recent case that was brought to our attention, the carrier was part of one of the large insurance groups where other members of that same group are fully approved, just not this one.

Remember that only carriers authorized by the Federal Department of Labor are allowed to write Longshore.

If you need to check your carrier you can find the list in the Longshore Toolbox, hit the “RESEARCH” tab and select “APPROVED CARRIERS”

Despite rumors to the contrary there is no exemption for “If Any” Longshore - although interestingly most of the cases we have seen recently have real Longshore payroll on the policies in some cases significant numbers!

Longshore Rule Changes Deadline

The Department of Labor proposed rule changes to the Longshore act in response to the removal of the 65ft limitation for recreational marine repair/service business February 2009.

Full details of the proposed rule change can be found at
http://www.cftc.gov/ucm/groups/public/@lrfederalregister/documents/file/2010-20311a.pdf

We have analyzed these changes and have posted our position with the DOL as a formal comment. You can find a copy of our position paper and our proposal for a better rule at

http://resource.ligmarine.com/Proposed Longshore Rules 701.pdf

If you have comments for the DOL on these proposals, you need to submit them before the close of tomorrow, Thursday November 18^th - the easiest way is through the website http://www.regulations.gov/search/Regs/home.html#home enter 1240-AA02 in the search box and “PROPOSED RULES” in the document type to locate the rule and submit your comments .

If you want to read comments that have been posted by others, change the document type to public submissions.

ACT NOW!

FLORIDA LONGSHORE RATES (again)

OK, change time again, effective January 1st 2011, the FLORIDA rate are changing yet again...

The Longshore load increased slightly from 1.19 to 1.23 for the "surcharged" rate group (surcharged classes are the typically DRY rate groups that have no specific Longshore code . . . carpenters, electricians etc. are classic examples). However, State rates on average went up 7.8%. Through some complex math that means the average Longshore rate for these "surcharged" classes will go up 7.94%. This will vary by class code.

The Natural Longshore codes (those that have a specific F code applicable) have also changed - here are some examples

	July 2010	Jan 2011	Change
6824F Boat Building	11.73	10.44	-11.06
6872F Ship Repair	22.19	20.70	-6.7%
6006F Marine Contractors	12.06	13.35	+10.7%
7327F Stevedoring Containerized	19.34	23.01	+19.0%

These new rates apply only for risks that are new or renewing after January 1st 2010.

Clearly quite a mixed bag of rates… a 30% swing from the highest increase to the lowest reduction.

Longshore & 3c

The out of state problem for Longshore has long been around but has recently been brought to the surface by new claims being denied.   Here's the situation in a nutshell.

• Client is based in one state and that state is listed in 3A of the WC policy.
• Client has all other states (except monopolistic) in 3c
• Client has a Longshore endorsement with the 3A state listed
• One of client’s employees goes to neighboring state for ONE DAY to do a Longshore job.
• Claim is denied in that state:

WHY?  simple, but illogical.

The LONGSHORE endorsement only covers accidents in a state listed in the Longshore endorsement's schedule!    As the 3A state was not the location of the injury - no coverage.

This makes no sense - Longshore is federal coverage so why restrict it to a listed state...    but if you read the endorsement that is what it says and that is how it is being used today by certain carriers to deny claims.

The problem is increased when the carrier is a state fund, assigned risk, JUA or pseudo state fund as many of those are not ABLE to provide out of state coverages.

HOW TO SOLVE

1. Add EVERY state the client could work in to the Longshore endorsement.   Usually free or low cost if added on an if any basis...   Problem:  many carriers cannot or will not do this.
2. Add an other states LONGSHORE endorsement to the policy (only one or two carriers will do this) Problem: follows 3C so no coverage in monopolistic states.
3. Add “ALL STATES" Longshore coverage - only one carrier will do, but great solution.
4. Put your E&O carrier on speed dial...   if you don't take care of this by 1, 2 or 3 you WILL have the uncovered claim... the only questions is when.

Longshore in Russia

A case a few years ago has recently come to my attention   Dennis Greenan vs Crowley Marine Service Inc  55134-5-I

Greenan worked to help offload a barge just off Sakhalin Island.   In case your geography, like mine, is pretty weak in the north Pacific, I researched online and it is “a large elongated island in the North Pacific, lying between 45°50' and 54°24' N. It is part of Russia and is its largest island”.

The Longshore act has long said that it applies in the “territorial waters of the United States” and whilst understandably it has been stretched to the high seas when sailing directly between two US ports, this is now the third, and most far reaching, opinion taking the Longshore act into foreign lands.  The first was Jamaica, the second the English Channel and now this third Russian Case.

There is little in the case to dispute that Mr. Greenan job was one that would have given him Longshore STATUS, but the SITUS (location) is a stretch in Russian Waters, in fact just off the beach.

Here is the big problem, in Webber v. SC Loveland, the case in Jamaica, whist the court extended benefits to Mr. Webber, they held that the insurance company did not have to pay as their policy specified the states where coverage was provided and clearly Jamaica was not one of them.

Worse, few carriers will provide Longshore outside the US, so now we are faced with an expansion of the territory, without any way to insure it in most case!

Watch this blog for more information, as it becomes available.

Looking for Work?

The Insurance and Financial Management Branch Chief of the Longshore program in the Federal Department of Labor  is retiring at the end of 2010 and they are looking for a person with significant experience on the underwriting/broker (as opposed to only the claims) side of the industry to work in their D.C .office. 

The position is at the highest level of the federal general salary scale which ranges up to $155,000 and offers outstanding fringe benefits.  Although they seek a long-term employee, the position is open to those who may be ready to retire from the private insurance industry but seek a short term opportunity to continue to work, earning another small pension and life-long benefits. 

The person in the job oversees the regulation of the insurance industry, accepting, reviewing and acting on applications to participate in the system from insurance companies and self-insured employers.  The incumbent also manages the Longshore Special Fund, paying benefits directly to 5,000 beneficiaries and assessing participating companies for support of the Fund, managing an ongoing industry auditing contract, and participating in numerous policy decisions in the Longshore Division. 

The vacancy announcement is now posted through October 22, 2010 on the federal government’s job site, WWW.USAJOBS.GOV.  The posting number is DE-10-ESA-OW-126 and instructions for applicants are detailed at this site.  ACT FAST!