Workers’ Compensation Expertise 

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Bill Hager has extensive workers’ compensation expertise. This expertise, among other things, relates to the following matters: (i) workers’ compensation insurance and related policies and the regulations of such policies, (ii) an insurer’s obligations and responsibilities, including claim responsibilities, under such policies, (iii) an insurer’s obligations and responsibilities overall in its capacity as an insurer.

Regulatory: Workers’ Compensation Expertise

My expertise as to these matters can be found as follows. I am a former:

  • Commissioner of Insurance (Iowa),
  • First Deputy Commissioner of Insurance,
  • Administrative Law Judge, and
  • Assistant Attorney General assigned on a full time basis to the Department of Insurance (Iowa).

In those capacities, on a daily basis, I had full regulatory oversight and responsibility for and I dealt directly with workers’ compensation insurers and their policies and their obligations to insureds and their good faith duties and their relationship with their insureds particularly as to matters of policy coverage and an insured’s obligations under such policies.

Insurance Industry: Workers’ Compensation Expertise: In addition to my regulatory background as above, I have served or am serving in the following capacities, each of which included daily knowledge of and interaction with workers’ compensation insurers and their coverage and claim obligations and their insureds’ obligations under such policies:

  • General Counsel and Chief Lobbyist for the American Academy of Actuaries,
  • President and Chief Executive Officer of the National Council on Compensation Insurance (“NCCI”), a major U.S. workers’ compensation property casualty insurance entity doing business in some 40 states including,
  • Nationally certified Insurance and Reinsurance Arbitrator (ARIAS-US), where I sit as an arbitrator on disputes between (among others) workers’ compensation insurers and their reinsurers,

Legislative: Workers’ Compensation Expertise. In addition to expertise gained as above as (i) a regulator and (ii) a member of the insurance industry, I have served or am serving in the following legislative capacities, each of which included daily knowledge of and interaction with workers’ compensation insurers and their coverage and claim obligations under such policies:

  • Elected Member of the Florida House of Representatives (currently) where I serve as a Member and Vice Chairman of the Insurance Committee (among other committees), which has legislative oversight over all insurance operations in the state (as administered by the Florida Office of Insurance Regulation) including those relating to workers’ compensation insurance and related insurer and insured obligations;
  • In addition, I sit on and am Vice Chairman of the Civil Justice Subcommittee of the Florida House, which has responsibilities as to Florida laws that establish (among other things) liability,
  • Chief of Staff (then known as an “Administrative Assistant”) at the U.S. House of Representatives,
  • Counsel to the Iowa House of Representatives;

Given this, I set out below, more specific detail as to my background as to workers’ compensation.

1. Expertise as to Workers’ Compensation Insurance Policies. 

A. Workers’ Compensation Insurance Policy Expertise as an Insurance Regulator. I have had extensive and substantive experience relating directly to workers’ compensation insurance policies including interpreting policy language and determining the insurer’s obligations under such policies. As a regulator for eight years in three positions ((i) an Administrative Law Judge in the Department of Insurance (Iowa), (ii) Assistant Attorney General assigned to the Department of Insurance (Iowa), (iii) First Deputy Commissioner of Insurance and (iv) Commissioner of Insurance), along with my staff, I approved (or disapproved) of the language of workers’ compensation insurance policies used by each of the 1,000 property casualty insurance companies doing business in the state (most of whom, but not all, issued workers’ compensation plans). This regulatory action also included the approval of policy application forms. In addition, I regularly served as an Administrative Law Judge (then known as a “Hearing Officer”) in matters relating directly to workers’ compensation insurance policies.

B. Workers’ Compensation Insurance Policy Expertise: NAIC. While Commissioner, I also served as a member of the National Association of Insurance Commissioners (“NAIC”), (including membership on its Executive Committee), the nationwide organization of all state insurance commissioners. That organization has responsibilities for establishing model insurance administrative regulations and model statutes for consideration by all of the states. While with the NAIC, I served among others as:

NAIC Leadership: Member of the Executive Committee. As stated, I also served as an elected member of the Executive Committee of the NAIC, the body that served as the steering committee of the organization, providing leadership between full membership meetings and providing recommendations to the full membership as to complex or politically charged issues within the organization. In this capacity, all workers’ compensation issues reported to the Executive Committee through the so-called “C” Committee, namely the NAIC Property Casualty Committee.

NAIC Property Casualty Insurance (C) Committee. As a member of the NAIC and more to the point as a Member of the Executive Committee, I had oversight responsibility over the so –called NAIC “C” Committee, which was responsible for most all property casualty issues, including as here, workers’ compensation issues. The responsibilities and mission of the “C” Committee are as follows (as set forth by the NAIC itself on its website).

Task Forces. The following task forces and working groups report to the Property and Casualty Insurance (C) Committee:

  • Advisory Organization Examination Oversight (C) Working Group
  • Affordable Care Act Medical Professional Liability (C) Working Group
  • Auto Insurance (C/D) Study Group
  • Catastrophe Insurance (C) Working Group
    • Data Collection Template (C) Subgroup
  • Casualty Actuarial and Statistical (C) Task Force
    • Profitability (C) Working Group
    • Statistical (C) Subgroup
  • Crop Insurance (C) Working Group
  • Earthquake (C) Study Group
  • Risk Retention (C) Working Group
  • Surplus Lines (C) Task Force
    • IID Plan of Operation (C) Review Group
  • Terrorism Insurance Implementation (C) Working Group
  • Title Insurance (C) Task Force
    • Title Insurance Financial Reporting (C) Working
    • Title Insurance Guaranty Fund (C/E) Working Group
  • Transparency and Readability (C) Working Group
  • Workers’ Compensation (C) Task Force
    • NAIC/IAIABC Joint (C) Working Group

Mission. The mission of the Property and Casualty Insurance (C) Committee is to monitor and respond to problems associated with the products, delivery and cost in the property/casualty insurance market and the surplus lines market as they operate with respect to individual persons and businesses. The Committee also is to monitor and respond to problems associated with financial reporting matters for property/casualty insurers that are of interest to regulatory actuaries and analysts and to monitor and respond to problems associated with the financial aspects of the surplus lines market.

Ongoing Support of NAIC Programs, Products or Services:

  1. Discuss issues arising and make recommendations with respect to advisory organization and insurer filings for personal and commercial lines, as needed;
  2. Appoint a Catastrophe Insurance (C) Working Group to report progress at each national meeting on the following catastrophe insurance issues:
    • Monitor and recommend measures to improve the availability and affordability of insurance and reinsurance related to catastrophe perils for personal and commercial lines.
    • Evaluate potential state, regional and national programs to increase capacity for insurance and reinsurance related to catastrophe perils.
    • Monitor and assess proposals that address disaster insurance issues at the federal and state levels; assess concentration-of-risk issues and whether a regulatory solution is needed.
    • Provide a forum for discussing issues and recommending solutions related to insuring for catastrophe risk, including terrorism, war and natural disasters.
    • Update the State Disaster Response Plan, as needed, so that it provides a blueprint for action by the states to respond to catastrophic events.
    • Provide a forum for discussing various issues related to catastrophe modeling and monitor issues that will result in changes to the Catastrophe Computer Modeling Handbook.
    • Following a catastrophe, diverse regulatory mandates increase insurer uncertainty and could divert insurer resources that are needed to respond to claims. To provide added certainty for insurers and regulators in advance of a major disaster, procedures need to be in place so that regulators and insurers know what to expect and insurers are prepared to comply. To address these concerns, develop a model law, regulation and/or guideline to standardize insurer premium collection procedures, underwriting limitations, claims-handling processes and claims data reporting requirements that a state could adopt in advance of a catastrophe and activate after a catastrophe.
    • Review findings from the fall 2012 public hearing on catastrophe issues and consider developing a model guideline, white paper and/or compilation of best practices to reduce post-disaster insurance recovery obstacles for insurance consumers. Issues could include, but are not limited to: the appropriate duration for payment of additional living expenses; the appropriate duration for consumers to recover the full replacement cost of personal and real property; streamlined inventory requirements in the event of a total loss; enhanced training requirements regarding calculation of accurate dwelling replacement values; requiring insurers to provide a complete copy of a policy upon request as part of the claim settlement process; and providing claimants access to copies of all claim-related documents in a claim file.
    • Study the potential for privatization of flood insurance and provide a report by the 2014 Fall National Meeting.
  3. Appoint a Risk Retention (C) Working Group to monitor and review developments in case law and rehabilitation proceedings and the findings contained in the U.S. Government Accountability Office’s report on risk-retention groups; if warranted, make appropriate changes to the Risk Retention and Purchasing Group Handbook; report at each national meeting.
  4. Appoint a Crop Insurance (C) Working Group to:
    • Monitor the activities of the Federal Crop Insurance Corporation (FCIC) that affect state insurance regulators.
    • Serve as a forum for discussing issues related to the interaction of federal crop insurance programs with state insurance regulation.
    • Review law changes and court decisions and, if warranted, make appropriate changes to the Federal Crop Insurance Program Handbook: A Guide for Insurance Regulators.
    • Monitor the regulatory information exchanges between the FCIC and state insurance regulators, as well as the FCIC and the NAIC, and make recommendations for improvement or revisions, as needed. Report at each national meeting.
  5. Coordinate with the National Flood Insurance Program (NFIP) on the regulation of flood insurance to continue developing a handbook or white paper to assist state insurance regulators in understanding the federal flood insurance program and how it interacts with state insurance regulation. Complete work on a handbook or white paper by the 2014 Fall National Meeting. Report progress on the handbook or white paper and any other activities; report at each national meeting.
  6. Monitor the activities of the Workers’ Compensation (C) Task Force.
  7. Monitor the activities of the Casualty Actuarial and Statistical (C) Task Force.
  8. Monitor the activities of the Surplus Lines (C) Task Force.
  9. Monitor the activities of the Title Insurance (C) Task Force.
  10. Appoint an Advisory Organization Examination Oversight (C) Working Group to:
    • Revise the protocols, as necessary, for the examination of national or multi-state advisory organizations (includes rating organizations and statistical agents) to be more comprehensive, efficient and possibly less frequent than the current system of single-state exams. Solicit input and collaboration from other interested and affected committees and task forces.
    • Monitor the data reporting and data-collection processes of advisory organizations (including rating organizations and statistical agents) to determine if they are implementing appropriate measures to ensure data quality. Report the results of this ongoing charge as needed.
    • Actively assist with and coordinate multi-state examinations of advisory organizations (including rating organizations and statistical agents).
  11. Appoint a Terrorism Insurance Implementation (C) Working Group to coordinate the NAIC’s efforts to address insurance coverage for acts of terrorism. Work with the U.S. Department of the Treasury’s Terrorism Risk Insurance Program Office on matters of mutual concern. Discuss long-term solutions to address the risk of loss from acts of terrorism.
  12. Appoint an Earthquake (C) Study Group to:
    • Study, in coordination with other NAIC task forces and working groups, earthquake matters of concern to state insurance regulators; report on this at each national meeting.
    • Increase knowledge and awareness of the earthquake risk nationally and in each state. This includes working with earth scientists, first responders, emergency managers, consumer groups, public and private modelers, and other experts.
    • Work with engineers, the Federal Emergency Management Agency (FEMA) and other seismic and actuarial experts to determine effective techniques for retrofitting and mitigating against earthquake risk. This includes identifying which building types are most seismically at risk and exploring methods of collecting post-earthquake loss damage information to improve loss-modeling and loss-mitigation capabilities.
    • Identify strategies to communicate earthquake risk awareness, preparation, loss-mitigation and recovery measures to insurers, producers and consumers. This includes continued development of an earthquake consumer brochure and working with social scientists to understand the latest research on promoting public preparedness.
    • Stay abreast of federal and state legislation impacting the earthquake insurance industry. This includes receiving presentations from speakers on pending federal and/or state legislation involving mitigation initiatives and alternative financing methodologies.
    • Assist state insurance regulators in determining the availability and affordability of earthquake coverage in their respective states.
  13. Appoint a Transparency and Readability of Consumer Information (C) Working Group to study and evaluate actions that will improve the capacity of consumers to comparison shop on the basis of differences in coverage provided by different insurance carriers offering personal lines products. Review the three NAIC property/casualty policy simplification models (Model #730, Model #731 and Model #732) for currency and recommend changes, if appropriate. Examine current industry practices and state laws and regulations relevant to this topic, then develop findings and/or recommended action items to the Committee. Examine approaches to: 1) systematize and improve pre-sale disclosures of coverage; 2) increase consumer accessibility to different carriers’ policy forms on a pre-sale basis; and 3) facilitate consumers’ capacity to understand the content of insurance policies and assess differences in insurers’ policy forms. In examining the second of these issues, the Working Group should consider all possible avenues of accessibility, including state insurance department websites, the NAIC, insurance companies and the possibility of pre-sale provision of complete policy language. In examining the third of these issues, the Working Group should consider: a) implementing new readability rules as suggested by the Market Regulation and Consumer Affairs (D) Committee; b) promoting consistent, clear and logical formatting and organization of all policies; and c) any other measures that would improve the intellectual accessibility of policy forms.
  14. Appoint an Auto Insurance (C/D) Working Group, a joint working group of the Property and Casualty Insurance (C) Committee and the Market Regulation and Consumer Affairs (D) Committee, to review issues relating to low-income households and the auto insurance marketplace and to make recommendations as appropriate.
  15. Provide an impartial forum for considering appeals of adverse decisions involving alien insurers delisted or rejected for listing to the Quarterly Listing of Alien Insurers. Appeal procedures are described in the International Insurers Department (IID) Plan of Operation.
  16. Appoint an Affordable Care Act Medical Professional Liability (C) Working Group to study the potential impact of the federal Affordable Care Act (ACA) on the professional liability exposures of medical providers, with particular attention to potential increases in such exposures as a result of provisions in the ACA that are intended to discourage the practice of defensive medicine; report on its findings at each national meeting.
  17. Review information from the public hearing on lender-placed insurance and determine if changes to the Creditor-Placed Insurance Model Act (#375) are warranted. Make recommendations for changes, if warranted. Complete work on the model by the 2014 Fall National Meeting.

New Objectives and Goals (representing new NAIC programs, services or initiatives):

  • Appoint a Climate Change and Global Warming (C) Working Group to:
  • Review the enterprise risk management efforts by carriers and how they may be impacted by climate change and global warming.
  • Investigate and receive information regarding the use of modeling by carriers and their reinsurers concerning climate change and global warming and its possible impact on investments.

Review the impact of climate change and global warming on insurance investments through a presentation by interested parties.

My service on the following NAIC Committees (as then characterized) was also helpful in this regard:

  • Member, the Blanks Committee;
  • Member, Guarantee Fund Committee;
  • Member, Rehabilitator and Liquidators Committee;
  • Chair and Member of the Financial Services and Insurance Regulation Task Force;
  • Member, Casualty Actuarial Committee;
  • Member, Commercial Lines Committee;
  • Member, Valuation of Securities Committee;
  • Member, International Insurance Relations Committee;
  • Member, Accounting Practices and Procedures Committee; and
  • Member, State and Federal Legislative Committee.

C. Workers’ Compensation Insurance Policy Expertise: American Academy of Actuaries. Along these same lines, I served as general counsel and chief lobbyist to the American Academy of Actuaries, Washington D.C. The Academy is the national professional association for actuaries. These professionals establish premium levels for commercial property policies. In addition, because policy language dictates premium levels, actuaries are also active in determining policy language.

D. Workers’ Compensation Insurance Policy Expertise: American Academy of Actuaries. Along these same lines, I served as general counsel and chief lobbyist to the American Academy of Actuaries, Washington D.C. The Academy is the national professional association for actuaries. These professionals establish premium levels for policies. In addition, because policy language dictates premium levels, actuaries are also active in determining policy language.

E. Workers’ Compensation Insurance Policy Expertise: CEO of A Major U.S. Workers’ Compensation Insurance Entity. After serving as a regulator, I served as President and Chief Executive Officer for the National Council on Compensation Insurance (“NCCI”), New York City, a nationwide industry organization with about 1,500 employees with annual revenues of about $150 million that did (and does) business in about 40 states. NCCI was domiciled in Florida and did business throughout the U.S.

This means while CEO, NCCI was subject to the full authority of the various State Departments of Insurance throughout the U.S. (“SDOI”) and subject as well to those states’ Insurance Codes as well as the jurisdiction of all states and federal courts.

Among my responsibilities at NCCI was (together with my staff) to formulate all workers’ compensation insurance policy forms as used in our 40 states of operation. This work included drafting all policy language (tailored to the specific state’s insurance code) as well as drafting all endorsements and all other policy forms. In addition, my responsibilities included gaining state insurance department approval of all such policy forms as a condition precedent to their use as submitted by some 600 insurance companies. Finally, I note that among others, the life insurance benefit under workers’ compensation is an important coverage. I am very familiar with the meaning and relevance of specific state approval of policy forms, endorsements and applications and related documents and matters.

F. Workers’ Compensation Insurance Policy Expertise: Reinsurance Arbitrator. I am also one of about 400+ certified reinsurance arbitrators (by ARIAS-US) and have sat as an arbitrator on workers’ compensation insurance issues in disputes about policy language between reinsurers and their insurers. I have also sat as an arbitrator on cases between reinsurers and workers’ compensation insurers in disputes about classifications.

2. Audits, Classification, and Fraud: Expertise as to Duties of Workers’ Compensation Insurance Companies. 

A. Audits, Classification, and Fraud: Expertise as to Duties of Workers’ Compensation Insurance Companies as Commissioner of Insurance. I have also had significant experience and responsibility in connection with determining and passing judgment on insurers’ responsibilities as to claims. In particular, in my three regulatory positions previously described, I had daily responsibility to assure and to hold accountable all of the state’s workers’ compensation insurers for their related obligations. I did so through a series of action steps and tools. The action steps and tools included the following:

  1. Audits, Classification, and Fraud: NAIC Market Regulation Handbook. As Commissioner, I had as an available tool, the NAIC Market Regulation Handbook (“Examiners Handbook” or “Handbook”). Among other things, this Handbook sets forth standards to assess workers’ compensation insurer behavior relating to (i) policy application, (ii) policy issuance and (iii) responsibilities relating to their agents. The Handbook also sets forth standards of review as to agent contracts and appointments by insurers of agents. The Handbook is used by every department of insurance in the United States. The standards have been universally promulgated by all of the nation’s Commissioners of Insurance and adopted formally by them through the NAIC. The standards of the Handbook are universally recognized as appropriate standards against which to judge workers’ compensation insurer behavior.
  2. Audits, Classification, and Fraud: Market Conduct Examinations. On a regular basis, my regulatory agency conducted Market Conduct Examinations of workers’ compensation insurers utilizing the Examiners Handbook to determine whether in fact the target insurer was meeting all of their obligations to their insureds and others. This action entailed physically going into the insurers’ application and policy issuance files to determine any errant action or inappropriate policy behavior. As further discussed below, errant insurers were warned, disciplined and prosecuted as required.
  3. Audits, Classification, and Fraud: NAIC Financial Examiners Handbook. As Commissioner, I had available another tool, namely the NAIC Financial Examiners Handbook (“Financial Examiners Handbook”). Among other things, the Financial Examiners Handbook sets forth standards to assess workers’ compensation insurer solvency on a triennial basis. Among other documents reviewed by examiners in reaching financial conclusions are agent contracts and policyholder matters. As with the Market Conduct Examiners Handbook, the Financial Examiners Handbook is used by every department of insurance in the United States. Similarly, these standards have been universally agreed to by all of the nation’s Commissioners of Insurance as adopted formally by them through the NAIC. The standards of the Financial Examiners Handbook are universally recognized as appropriate standards against which to judge workers’ compensation insurer behavior.
  4. Audits, Classification, and Fraud: Financial Examinations. On a regular basis, my Department conducted financial examinations of workers’ compensation insurers utilizing the Financial Examiners Handbook to determine whether in fact the insurer was and was likely to remain solvent. As with market conduct exams, financial examinations entailed physically going into the insurers’ operations and studying, among others, files to (i) assure compliance with agent and policyholder duties and (ii) to assure that financial reporting as to agent and policyholder matters were properly carried out. As further discussed below, errant insurers were warned, disciplined and prosecuted as required.
  5. Audits, Classification, and Fraud: Complaints from the Public. On a daily basis, my Department received incoming consumer complaints as to workers’ compensation insurance company practices. This Consumer Protection Division was staffed by Department lawyers who resolved the individual complaint and also, equally important, those lawyers also determined whether an insurer evidenced unacceptable practices –that is to say, whether the incoming consumer complaints in fact constituted a red flag as to the workers’ compensation insurance company’s potential behavior across the board.
  6. Audits, Classification, and Fraud: Prosecution. To the extent insurer behavior required formal action (whether as a result of complaints from the public or as a result of Department investigation through a Market Conduct Examination or the Financial Examination), my Department prosecuted such workers’ compensation insurers under the state’s civil Administrative Procedures Act. In connection with such prosecutions, I served in various capacities during my eight years as a regulator, including serving as (i) prosecutor (as Assistant Attorney General), (ii) as the decision maker as to whether to initiate prosecution in the first instance (while First Deputy and Commissioner of Insurance) and (iii) as the Administrative Law Judge (“ALJ”) who presided over the prosecution and entered findings of fact and conclusions of law as to insurer coverage determinations and claim settlement practices. I have served as an ALJ in scores of such cases where the workers’ compensation insurer’s (i) agent, (ii) policy form, (iii) policy application and (iv) overall conduct were the primary issues and I entered final decisions and orders in such matters.

B. Audits, Classification, and Fraud: Expertise as to Duties of Workers’ Compensation Insurance Companies as an Insurance Industry Executive: CEO of a Major US Insurance Organization. I discuss my executive experience at NCCI under this section because in addition to expertise as to policies (discussed above), my experience at NCCI also resulted in expertise as to insurer responsibilities as to applications, policy issuance and their agents.

While I was President and CEO, NCCI was subject to the full range of authority of the SDOI as discussed above. I am very familiar with the duties of admitted insurers relating to their obligations and responsibilities and the regulatory scheme in place in the various states as to such matters.

While President and CEO of NCCI, I visited and physically toured and reviewed in excess of 400 insurance companies and gained direct exposure to the procedures and processes and standard industry practices of the U.S. workers’ compensation insurance community.

C. Audits, Classification, and Fraud: Expertise as to Duties of Workers’ Compensation Insurance Companies: General Counsel to the American Academy of Actuaries. As stated above, I served as General Counsel and Director of Government Relations for the American Academy of Actuaries. I mention it again here in connection with insurer agent and policy obligations because Academy members included affiliation with virtually every workers’ compensation insurance company in America. Among other things, such actuaries had duties relating to policy language and policy pricing. The Academy’s Board of Directors was likewise made up of leading insurance company executives from such workers’ compensation insurance companies.

D. Audits, Classification, and Fraud: Expertise as to Duties of Workers’ Compensation Insurance Companies: Attorney in Private Practice Iowa. As an attorney in private practice, I represented a number of agent and insurer interests and became familiar with applicable workers’ compensation industry standards of practice, including insurer responsibilities toward their agents. Those interests also included intimate involvement with insurance forms, as counsel to the (i) Professional Insurance Agents of Iowa and (ii) the Iowa Association of Life Underwriters (life, health and annuity insurance agents).

3. Classifications: Expertise as to Workers’ Compensation Insurance Underwriting.

A. Classifications: Expertise as to Underwriting Duties and Responsibilities of Workers’ Compensation Insurance Companies As Commissioner of Insurance. Consistent with the discussion immediately above, I have also had significant experience and responsibility in connection with determining and passing judgment on workers’ compensation insurance companies’ underwriting duties and responsibilities.

In particular, in my three regulatory positions previously described, I had daily responsibility to assure and to hold accountable all of the state’s 1,000 property casualty insurance companies for their underwriting obligations. As I did in connection with the general duties of workers’ compensation companies (discussed above), I did so as well as to underwriting through a series of action steps and tools. The action steps and tools included the following:

  1. Classifications: Underwriting: NAIC Market Regulation Handbook. As Commissioner, consistent with the prior discussion, I also utilized the NAIC Examiners Handbook in that it sets forth standards to assess the underwriting behavior of insurance companies relating to (i) underwriting during the policy application process, (ii) underwriting during the time of policy issuance, (iii) underwriting responsibilities relating to the insurance company’s agents and (iv) underwriting matters that arise subsequent to policy issuance, for example during claim settlement time. As discussed above, the standards are utilized by every state department of insurance and the standards of the Examiners Handbook are universally recognized as appropriate standards against which to judge the underwriting duties and responsibilities of workers’ compensation insurance companies.
  2. Classifications: Underwriting: Market Conduct Examinations. Also as discussed above, on a regular basis, Market Conduct Examinations of workers’ compensation insurers were conducted utilizing the Examiners Handbook to determine whether in fact the target insurer was meeting all of their obligations to their insureds and others as to underwriting issues. This action entailed physically going into the insurers’ application and policy issuance files to determine any errant action or inappropriate underwriting behavior. As further discussed below, errant insurers were warned, disciplined and prosecuted as required.
  3. Classifications: NAIC Financial Examiners Handbook. As above, I had available another tool, namely the Financial Examiners Handbook, which (parallel to the above discussion) sets forth standards to assess workers’ compensation insurer solvency on a triennial basis. Among other documents reviewed by examiners in reaching financial conclusions are insurer underwriting files and matters. These standards have been universally agreed to by all of the nation’s Commissioners of Insurance as adopted formally by them through the NAIC and are universally recognized as appropriate standards against which to judge workers’ compensation insurer behavior, including underwriting.
  4. Classifications: Underwriting: Financial Examinations. As above, my Department conducted financial examinations of workers’ compensation insurers utilizing the Financial Examiners Handbook to determine, as with market conduct exams, among others things, (i) assurance of compliance underwriting duties and (ii) assurance that financial reporting matters were properly carried out. As further discussed below (and above), errant insurers were warned, disciplined and prosecuted as required.
  5. Classifications: Underwriting: Complaints from the Public. On a daily basis, my Department received incoming consumer complaints as to underwriting practices of workers’ compensation insurance companies. This Consumer Protection Division was staffed by Department lawyers who resolved the individual complaint and also, equally important, those same lawyers also were trained to determine whether an insurer evidenced unacceptable practices — that is to say, whether the incoming consumer complaints in fact constituted a red flag as to an insurance company’s potential underwriting behavior across the board.
  6. Classifications: Underwriting: Prosecution. To the extent insurer behavior required formal action (whether as a result of complaints from the public or as a result of Department investigation through a Market Conduct Examination or the Financial Examination), my Department prosecuted such insurance companies under the state’s civil Administrative Procedures Act consistent with the discussion in the prior section.

B. Classifications: Expertise As to Underwriting Duties and Responsibilities of Insurance Companies as an Insurance Industry Executive: CEO of a Major U.S. Insurance Organization with Major Underwriting Duties. I discuss my executive experience at NCCI under this section because my experience at NCCI also resulted in expertise as to insurer responsibilities as to (i) underwriting during the policy application process, (ii) underwriting during the time of policy issuance, (iii) underwriting responsibilities relating to the insurance company’s agents and (iv) underwriting matters that arise subsequent to policy issuance, for example during claim settlement time.

Classifications: The Gold Standard of Underwriting. While I was CEO, NCCI had the responsibility to formulate and submit for approval to most all of the Insurance Commissioners in the U.S., the underwriting standards used for underwriting most all of the workers’ compensation policies in this nation. Underwriting for workers’ compensation is routinely recognized throughout the industry as involving the most intense underwriting of all lines of insurance. This is so because there are over 600 officially designated workers’ compensation classification codes an employee may be placed in based on their principal job duties.

NCCI authored and maintained a detailed, word-by-word, phrase by phrase description as to each of these 600 classification codes, as to which insurers were required to adhere. That entire intense underwriting process inclusive of its classifications is encompassed in an industry wide recognized and used document called the Scopes Manual and is recognized as the Gold Standard for underwriting workers’ compensation insurance. Furthermore, the underwriting process, regardless of the line of insurance is fundamentally the same. This is because most all insurers (including workers’ compensation insurers) are about the business in the underwriting process of selecting the most favorable risks and rejecting the least favorable risks, regardless of the line of insurance. As such, it is the same process brought to bear on different lines of insurance - always with the same goal: identifying good risks and rejecting bad risks.

C. Classifications: Expertise as to the Underwriting Duties of Workers’ Compensation Insurance Companies: General Counsel to the American Academy of Actuaries. I served as General Counsel and Director of Government Relations for the American Academy of Actuaries. Academy members included affiliation with virtually every insurance company in America. Among other things, such actuaries had duties relating to the underwriting duties and responsibilities of insurance companies. The Academy’s Board of Directors was likewise made up of leading insurance company executives from such insurance companies.

D. Classifications: Expertise as to the Underwriting Duties and Responsibilities of Workers’ Compensation Insurance Companies: Attorney in Private Practice Iowa. As an attorney in private practice, I represented a number of insurer interests and became familiar with applicable workers’ compensation industry standards of practice, including insurer responsibilities toward the underwriting process, including working directly with the Iowa Association of Life Underwriters (whose duties included among others, the first line of underwriting).

4. Expertise as to Workers’ Compensation Insurance Agents.

A. Expertise as to Insurance Agents as a Regulator: Licensure. I have had extensive and substantive experience relating directly to the duty of care that comes to bear on insurance agents and agencies in their various relationships with workers’ compensation insurance companies. As an Assistant Attorney General (see above), I have prosecuted workers’ compensation insurance agents for violations relating to their duty of care. As an insurance regulator (see above), along with my staff, I have screened hundreds of thousands of agents for character and background (separate and apart from subject matter testing). As to subject matter, I have formulated agent-licensing exams in the first instance. Upon passage of the exam, I have licensed hundreds of thousands of insurance agents.

B. Expertise as to Insurance Agents as a Regulator: Prosecution and CE. I have had full responsibility for continuing education for licensed workers’ compensation insurance agents (approving CE courses in the first instance for acceptable content; overseeing the administration of such courses and granting and denying credit for such courses). I have initiated agent revocation actions and prosecuted those actions to completion.

C. Expertise as to Insurance Agents as a Regulator: ALJ. I have sat as the Administrative Law Judge in such actions and entered findings of facts and conclusions of law in scores of cases in which agents were prosecuted for violations relating to standards of care in connection with workers’ compensation insurance matters and I have had direct responsibility for the appointment process by workers’ compensation insurance companies (some 1,000 property casualty insurance companies) of all of their workers’ compensation agents. I have supervised as well the ongoing relationship of all workers’ compensation insurance companies in the state with all of their appointed agents.

D. Expertise as to Insurance Agents: Legal Representation. As a lawyer, I have defended workers’ compensation insurance agents and brokers against allegations (in administrative law forums) of violations of their duty of care.

E. Expertise as to Insurance Agents: Industry CEO. As President and Chief Executive Officer of a major Florida domiciled and U.S. licensed insurance entity (NCCI) doing business in some 40 states, I have had substantial working relationships with the U.S. insurance agent and agency community.

5. Pricing: Expertise as to Actuarial Issues.

A. Pricing: Expertise as to Actuarial Issues/ Regulator: As Insurance Commissioner, my agency was responsible for solvency oversight, insurance company examinations and financial and accounting matters of insurance companies. In particular, that oversight included the responsibility of overseeing practices of insurers, agents and actuaries who formulated their rates. In addition, I oversaw the state regulation of the securities industry with Iowa’s Superintendent of Securities reporting directly to me.

As a member of the NAIC, I served as both Vice Chairman and Chairman of the NAIC Life Insurance Committee. The charge of this Committee was oversight over all issues relating to life insurance products as well as life insurers, including practices such as underwriting. This Committee’s work included considerations relating to underlying actuarial issues as to the pricing and unfolding of this product.

B. Pricing: Expertise as to Actuarial Issues a CEO. During my tenure as CEO, NCCI had (and continues to have) responsibility to accurately price and file pricing for some $12 - $15 billion of workers’ compensation insurance in 39 states throughout the U.S. NCCI prepared proposed premium filings for regulators to approve by extracting key data from its 600 member insurance companies and then used that data to project necessary premium changes. NCCI carried out its intense pricing work though the professional efforts of an actuarial division of about 150 personnel. These individuals included support staff; statisticians; actuarial students and qualified actuaries. This staff produced about 40 major rate filings annual covering 40 states, pricing some $12 to $15 billion of insurance (workers’ compensation); and included the responsibility to advocate those rate changes before state government.

C. Pricing: Expertise as to Actuarial Issues: American Academy of Actuaries. I served as General Counsel and Director of Government Relations for the American Academy of Actuaries, including advising on admissions, discipline, federal antitrust and general corporate law. I represented the 10,000-member professional organization before Congress (e.g., Senate Committees on Banking, Commerce, Finance and Labor, and House committees on Education, Labor, Energy, and Ways and Means) and the various federal regulatory agencies. The Academy is the professional organization of actuaries and includes qualified actuaries from all disciplines and all forms of insurers. Academy members included affiliation with virtually every property casualty insurance company and actuarial consulting company in America. The Academy’s Board of Directors was likewise made up of leading insurance company executives from such companies.

D. Expert Experience and Authorship: Actuarial Issues. I have served in a number of cases as an expert on actuarial issues, including in Arizona, Florida and California. I am also the author of a number of articles on the actuarial profession.

E. Actuarial Issues as Reinsurance Arbitrator. I am certified by ARIAS as one of about 400 U.S. certified reinsurance arbitrators and sit as an arbitrator on disputes between insurers and their reinsurers; actuarial issues routinely arise in such disputes in the form of pricing disputes including information (and miss-information) supplied by the ceding company and that information’s (and mis-information’s) positive or adverse effect on the pricing that was agreed to at the time of the initial reinsurance agreement.

Contact Bill Hager at 561-306-5072 or via email to discuss your case.

William D. Hager - Insurance and Reinsurance Expert and Arbitrator

William D. Hager

Insurance and Reinsurance
Expert and Arbitrator

561-306-5072


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