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Platinum Program Managers: A Look At California's Workers' Comp Market with An Eye on the Auto Services Industry

Featuring Dan Rieden, President, Platinum Program Managers & Insurance Services, Inc.


Posted on 08 Jan 13 by Annie George

We recently spoke with Dan Rieden, president of Platinum Program Managers & Insurance Services, Inc., about the Workers’ Compensation market in California and specifically in the Auto Services industry. Platinum, based in Newport Beach, California, is a premier Wholesaler/ Managing General Underwriter. Since 2007, Platinum has been serving the insurance community, providing appointed agencies throughout California and the Western United States with competitive Workers’ Compensation quotations for the Auto Services industry with a focus on Auto Dealers.

Annie George (AG): We’ve been featuring articles on the Workers’ Compensation market in several newsletter issues recently. I’d like to turn the focus on the Comp market in California and get your insight as to where it’s heading, including in the Auto Services Industry – a niche in which Platinum has a strong and solid footprint.

Dan Rieden (DR): “In program business in terms of the Workers’ Compensation market, you have carriers that like this space, with some entering the market while others have left. Over the last several years the soft market and loss ratios in the red have kept carriers out and this has affected the overall industry. Many carriers have been in the California marketplace before and either curtailed their writings or pulled out of the market in general. They want to balance their books of business between Workers’ Comp and the other lines.

“What’s more, those that are in fact entering the market do so with a jaundice eye because the California market has been so tough in recent years.  We have seen rate increases from the California Department of Insurance, and some of them have been quite significant. For example, in the Auto Services industry we’re seeing double-digit rate increases from what we saw for 2012.

“We also have SB 863 legislation, which is supposed to help us reform the California Workers’ Comp marketplace. There have been various studies on the impact of these reforms, and it’s still not quite clear what direction they ultimately will take. The prevailing attitude amongst the carriers is one of wait-and-see, with many sitting on the sidelines. They’re not quite ready to jump back into the California market and want to see what type of impact the SB 863 reforms will have.”

SB 863 is a $17 billion Workers’ Compensation insurance program that promises to increase benefits for injured employees and cut costs for businesses. The bill, according to the state’s governor’s office, was as a result of workers’ compensation insurance costs in California skyrocketing in the past two years, rising from $14.8 billion to $19 billion. The new law contains nearly 50 statutory provisions set to automatically take effect January 1, 2013, with over a half-dozen more taking effect through administrative action first and another 16 taking effect after January 1 and the following year. The new law increases payments by 30% to workers who suffer permanent injuries on the job, while shortening the wait for approval of medical treatment from two years to three months. It also will create an independent review process for medical treatment and billing disputes, fee schedules for home health care, language interpretation and other comp-related services, and fees for current and future lien filings. The new law also ends coverage for insomnia, sexual dysfunction or mental health issues, unless they are directly related to a workplace injury. These types of claims often lead to litigation.

AG: “What has precipitated the significant rate increases in California?”

DR:  “Past losses and the development of losses have had a serious impact in carrier results. The increase is necessary to keep the carriers and marketplace healthy. In addition, in terms of the Auto Services industry, it’s been performing very well. Payroll has been increasing for most insureds, which is great news from an economic standpoint, but it does add to the rate increases.

AG: Is loss control strong in the Auto Services industry and specifically in the Auto Dealers sector?

DR: “Auto Dealers have a great deal of loss control measures that help them with their ongoing ability to control claims, including implementation of loss-control evaluations and adherence to recommendations made by those evaluations. What’s more, CALOSHA oversees a lot of the mandatory loss control measures.

“From a pure loss control view, the Auto Dealers niche is a very well-run industry. From a claim standpoint, claims will happen. You have your standard lifting injuries, cuts, scrapes, bruises, but when an anomaly occurs, an auto dealer will try to determine what to do to mitigate the situation from happening again. Typically they evaluate a claim – what happened, where it happened, why it happened – and try to take measures that will remedy a similar occurrence in the future.”

Platinum has been writing Workers’ Compensation for the Auto Services industry for six years, with Dan’s experience in this niche going back to 1986. “We are very in tune with what goes on in the Auto Services industry and specifically with Auto Dealerships. We write over 250 Auto Dealers in California, which represents about a 30% market share.”

“Additionally, with the implosion of two self-insured programs in California, Platinum’s book of business will continue to grow significantly. We’re poised to pick up the business from the discontinuation of these self-insured programs. In fact, we have over 300 submissions for Auto Dealers alone for January. 

“Our underwriting model is to write the profitable, better dealerships from a loss standpoint. We have one carrier that does this very well and quite competitively. We don’t write accounts with a high frequency of losses that haven’t performed well – this usually doesn’t fit our underwriting appetite. If an account has been clean, loss-free, perhaps with single large loss over a five-year period, that is something we will consider.”

Dan expects to see an increase in Platinum’s book of business of 20-25% in 2013 and has plans to expand into other states in the Auto Services Workers’ Comp arena. “We have an optimistic view of the marketplace even with all that has occurred in the last several years. It’s better to jump in when the rates are going up, not when they have already peaked.”

Platinum currently writes Workers’ Compensation programs in California, Arizona, Colorado, Idaho, Montana, Nevada, New Mexico, Oregon, and Utah. For more information about Platinum, you can visit their website at www.ppmins.com, or call Dan at 949.209.0233.