AMERISAFE SASB & TCFD Report Index
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Sustainability Accounting Standards Board Information
SASB standards enable businesses around the world to identify, manage and communicate sustainability information to their investors. AMERISAFE is providing the following table, which addresses topics from the SASB Insurance Industry Standards. Because AMERISAFE is a monoline provider of workers’ compensation insurance, this disclosure does not address any metrics requesting information regarding other types of insurance products.
TRANSPARENT INFORMATION & FAIR ADVICE FOR CUSTOMERS
Total amount of monetary losses as a result of legal proceedings associated with marketing and communication of insurance product-related information to new and returning customers.
AMERISAFE is currently not involved in any legal proceedings associated with marketing and communication of insurance product-related information to new and returning customers.
In 2020, our complaints-to-claims ratio was 1 to 2,379. We have an extremely low number of complaints and corresponding complaints-to-claims ratio due to our high touch model and focus on customer experience. Our Legal and Regulatory Departments work closely with regulatory agencies and the corresponding customer to resolve complaints promptly.
One reason for our low number of complaints is because we prioritize high quality customer service. Compared to other carriers, AMERISAFE has more interaction with its policyholders through personal contact with employers and claimants. We provide immediate service to claimants, contacting injured workers within 48 hours of the assigned indemnity claim and help the injured worker and/or family understand the claims process, available benefits, and treatment options. We also work to maintain relationships with policyholders through workplace safety visits during each policy cycle.
As of December 31, 2020, we averaged 47 indemnity claims per field case manager, which we believe is significantly less than the industry average. Our low number of claims caseloads allow us to dedicate more time to injured workers and employers. This helps promote consistency of outcomes and expectations.
Customer retention rate.
Our policy renewal rate on voluntary business that we elected to quote for renewal was 94.4% in 2020, 94.1% in 2019, and 92.5% in 2018. These renewal rates are disclosed in our public filings with the SEC and on the Policyholders page of our website. This is calculated as the number of policyholders who chose to renew with us after we offered them a renewal quote. This methodology is not currently reported by geography.
Description of approach to informing customers about products.
AMERISAFE is a monoline insurer providing only workers’ compensation coverage, which is highly regulated such that terms of coverage are prescribed by state regulators. Accordingly, the “suitability” of our products is not applicable.
Our insurance product is sold and marketed through partner independent agents and wholesale brokers. As such, AMERISAFE has limited direct communication with the prospective policyholder customers prior to issuing a policy. The agencies and brokers we work with directly inform customers about the policy coverage available. Therefore we work closely with those agencies and brokers to ensure they are able to transparently provide appropriate education and information on workers’ compensation, our safety services approach, our premium audit process and our claims process. These agencies and brokers spend extensive time communicating with customers and gathering information about customers’ needs.
Once we receive a customer's information, and if the customer meets our underwriting criteria, our underwriters provide a quote and payment plan options. If we need additional information after the policy decision has been made, we communicate with the agents and brokers to obtain additional information from policyholders. All policies are audited after they are issued. We directly contact any non-paying policyholders to avoid issuing notices of cancellation. We also have training manuals for our employees and agents that discuss our processes around transparency and frequency of communication.
INCORPORATION OF ESG FACTORS IN INVESTMENT MANAGEMENT
Total invested assets, by industry and asset class.
AMERISAFE’s total invested assets, as of December 31, 2020, was $1.2 billion USD, and our investment portfolio allocation is as follows:
Description of approach to incorporation of environmental, social, and governance (ESG) factors in investment management processes and strategies.
We are heavily regulated, and our investment policy statement must comply with applicable laws in each state in which we operate. As such, the majority of our investments typically are held until maturity. In addition, our approach is to be more conservative than state law requires. For instance, our investment policy states we do not invest in derivatives, even though some state laws allow it.
Our in-house management investment committee consists of our Chief Executive Officer, Chief Financial Officer, Chief Risk Officer, Chief Administrative Officer/Compliance Officer, and Chief Underwriting Officer. Our Board is actively aware of the value in integrating ESG into our investment policy and has directed our management level Investment Committee to evaluate and develop such considerations into its existing investment policy. In particular, we are currently evaluating whether to avoid investments in corporate bonds where a large percentage of the issuer’s revenue comes from environmentally sensitive industries. We also are actively discussing potential social-oriented metrics that could be used in our screening process for municipal bonds.
POLICIES DESIGNED TO INCENTIVIZE
Net premiums written related to energy effciency and low carbon technology.
This metric is not directly applicable to AMERISAFE, as we are a monoline workers’ compensation insurance provider.
Discussion of products and/or product features that incentivize health, safety, and/or environmentally responsible actions and/or behaviors.
AMERISAFE offers Evolved Safety, a service that provides 24/7 safety training to policyholders and their employers. These training offerings are available on a standard non-fee basis with additional trainings available for an additional fee. In addition, during 2020, 92.5% of new voluntary business policyholders were visited prior to offering a premium quote, which includes an assessment of the employers’ safety practices. Our safety team also conducts periodic workplace visits, assists in recommending enhanced safety management programs, and conducts post-accident reviews. We believe this approach to safety helps our employers prevent many serious employee injuries.
Additional state-mandated or permitted incentives exist on a state-by-state basis to reduce premiums for employers with robust safety management programs. AMERISAFE actively writes business in 24 states that mandate or permit safety incentives for workers’ compensation insurance. As part of our ongoing commitment to innovation that serves the health and safety of our policyholders and their employees, we continuously seek to improve our service model to improve outcomes for injured workers.
ENVIRONMENTAL RISK EXPOSURE
Probable Maximum Loss (PML) of insured products from weather-related natural catastrophes.
As a monoline workers’ compensation insurance company, we do not have the same exposure to weather-related catastrophe losses as property insurers; accordingly, such catastrophe events are not a significant input for our modeling purposes. For example, we do not consider hurricanes to present significant risk to our business because insured employees in the lines of business we underwrite typically are not working during a hurricane or other extreme weather-related events.
While we typically insure smaller, more mobile work forces that work at different locations and are less likely to be aggregated in one location, we are exploring whether to take additional geographic metrics into consideration when assessing climate-related risks. For example, when we model PMLs for concentration of payroll in cities where we have policyholders, we may consider the city’s earthquake exposure (in addition to other exposures such as terrorism or industrial accidents). As earthquakes are natural disasters that can have significant impacts on our policyholders, we are mindful of policies that are in fault zones.
Potential weather-related events and other natural catastrophes that may impact our reinsurance program are modeled. AMERISAFE purchases two programs for reinsurance: 1) a working layer, providing coverage for individual claims pertaining to catastrophic claims (e.g., permanently disabled), and 2) catastrophe insurance for mass casualty events.
Total amount of monetary losses attributable to insurance payouts from (1) modeled natural catastrophes and (2) non- modeled natural catastrophes, by type of event and geographic segment (net and gross of reinsurance).
We complete catastrophe modeling annually to identify the PML associated with natural catastrophe events. Our policyholders have not had any losses directly associated with a natural catastrophe event; therefore we have $0 in losses attributable to insurance payouts from natural catastrophe events.
Description of approach to incorporation of environmental risks into (1) the underwriting process for individual contracts and (2) the management of firm- level risks and capital adequacy.
AMERISAFE considers the climate-related considerations relevant to our policyholders’ location during its underwriting process and analyzes the potential impact to capital as a result of possible natural catastrophe events.
For the reasons discussed elsewhere herein, we do not believe environmental risks present a material company-level risk to our business at this time. As noted above, we are in the early stages of considering potential environmental risk exposures of certain industries for which we provide workers’ compensation coverage.
SYSTEMIC RISK MANAGEMENT
Exposure to derivative instruments by category: (1) total potential exposure to noncentrally cleared derivatives, (2) total fair value of acceptable collateral posted with the Central Clearinghouse, and (3) total potential exposure to centrally cleared derivatives.
We do not invest in derivatives. As such, we have no exposure to any derivative instruments of any category.
Total fair value of securities lending collateral assets.
Description of approach to managing capital and liquidity-related risks associated with systemic non-insurance activities.
Our investment policy is conservative in accordance with applicable insurance laws in the states in which we write business. As such, our capital is primarily invested in long-term municipal and corporate bonds. AMERISAFE substantially exceeds minimum Risk Based Capital requirements established by state insurance regulators. We do not participate in any systemic non-insurance activities.
Number of policies in force, by segment: (1) property and casualty, (2) life, (3) assumed reinsurance.
As of December 31, 2020, AMERISAFE had more than 8,000 voluntary business policyholders with an average annual workers’ compensation policy written premium of $33,000.
As of December 31, 2020, the ten largest voluntary business policyholders accounted for 2.0% of in-force premiums.
Workers’ compensation insurance is not property insurance. Our insurance provides for wage replacement and medical care benefits to the employees of our policyholders. As a monoline insurer, workers’ compensation is our only line of business. We do not write life insurance or reinsurance.
Task force on Climate-related Financial Disclosures Information
The Financial Stability Board Task Force on Climate-related Financial Disclosures (TCFD) is a market-driven initiative, set up to develop a set of recommendations for voluntary and consistent climate-related financial risk disclosures in mainstream filings. The work and recommendations of the Task Force help firms understand what financial markets want from disclosure in order to measure and respond to climate change risks and encourage firms to align their disclosures with investors’ needs.
Describe the board's oversight of climate-related risks and opportunities.
AMERISAFE’s Risk Committee is comprised of all members of the Board of Directors and is responsible for assessing risks and challenges the company is facing. Our Nominating and Corporate Governance Committee is primarily responsible for oversight of risks and opportunities presented by ESG matters, including climate-related risks, and coordinates with the Risk Committee with respect to such risks as appropriate. While the Board generally considers climate impacts to be indirect to AMERISAFE’s operations and business strategy, we recognize that climate affects the industries in which our policyholders operate and may indirectly affect our business and operations.
Describe the management's role in assessing and managing climate-related risks and opportunities.
Currently, our Enterprise Risk Management (ERM) program, led by our Chief Risk Officer, assesses climate-related risks in terms of the potential impact on the industries of our policyholders. These industries include construction, trucking, logging and lumber, manufacturing, agriculture, maritime, and other industries.
Climate-related risks and opportunities identified over the short, medium, and long term.
Compared to other lines of business, workers’ compensation insurance is less affected by natural disasters. We do not write property risks, and the industries in which we insure workers are unlikely to be working during catastrophic weather-related events.
In terms of our business strategy, we are exploring whether to use additional geography-based modeling for assessing how weather events and other physical climate risks may impact our policyholders and their employees at one time, such as snowstorms or floods which may increase in frequency, intensity, and duration over time due to climate change. We are still evaluating ways of quantifying the indirect impacts of such natural disasters and other climate risks on our business and those of our policyholders.
For our operations, we recognize we are exposed to hurricane risk due to our headquarters being located in DeRidder, Louisiana. As part of the annual report we file with the State of California which highlights our organization’s exposure to climate change risks, we report our office’s distance from the Gulf of Mexico along with other climate risk factors.
Impact of climate-related risks and opportunities on the organization’s businesses, strategy, and financial planning.
To mitigate the climate-related risks on our business, we have in place an internal Disaster Recovery Plan. The Disaster Recovery Plan seeks to ensure the efficient and effective restoration of our Information Technology (IT) platform following a disaster. This plan establishes protocols and critical business continuity measures to guide AMERISAFE IT personnel and employees before, during, and after a disaster. In 2020, our Disaster Recovery Plan allowed our business operations to continue functioning in critical areas, even after our main DeRidder, Louisiana location was disrupted by two major storms.
We recognize that climate-related risks may also provide an opportunity for AMERISAFE to share resources that can innovate worker safety and education around climate risks as they affect our policyholders’ industries and may explore such opportunities with our safety training providers and partners in the future.
Resilience of strategy using a 2°C or lower scenario.
Because we only write workers' compensation we have no property-related exposure, we have not yet conducted climate-related scenario analysis.
Processes for identifying and assessing climate-related risks.
The Nominating and Corporate Governance Committee has responsibility for oversight of environmental, social and governance risks, including those indirectly raised by climate-related issues, and coordinates with the Risk Committee on such risks as appropriate. The Risk Committee has responsibility for the identification of current and emerging risks broadly across organizational and functional boundaries.
Processes for managing climate-related risks.
When AMERISAFE’s strategic, operational, and physical risks are identified, including those indirectly impacted by climate-related issues, risk mitigation plans are developed as part of our ERM program. The Chief Risk Officer is primarily responsible for the administration of the ERM program and supports periodic risk management training to ensure both employees and the Board are appropriately informed of their responsibilities and have plans to manage AMERISAFE’s top risks. Because of the nature of our business, climate change is not one of our top ten risks at this time.
Integration of risk processes into overall risk management.
We maintain a risk universe of strategic, operational, and physical risks that are assessed on an annual basis to determine what the most significant risks are to the company, what controls are in place to address these risks, and what their potential impacts are. Our department heads are responsible for executing on plans throughout the year to address or mitigate our key, identified risks.
METRICS AND TARGETS
Metrics used to assess climate-related risks and opportunities.
AMERISAFE is exploring operational as well as geography-based metrics for managing climate-related risks and opportunities. In terms of operational metrics, we track our main office’s electricity usage as well as our printed paper usage by department, with a goal of using less paper overall as a company. As a result of our efforts, overall paper usage has decreased by 68% over the past five years.
In terms of broader climate-related risk exposures from our policyholders, we are evaluating whether geography-based metrics can help us assess the risks of weather-related events to our policyholders. We currently account for earthquakes in assessing our PMLs and may expand this to other weather-related perils.
Scope 1 and 2 GHG emissions
We currently do not track our Scope 1 and 2 emissions.
Metrics used to assess climate-related risks and opportunities.
AMERISAFE does not currently have established targets in place. We may do so in the future as we continue to assess the potential risks that climate change may directly or indirectly pose to our business and operations.
We have established other operational sustainability targets, such as a goal towards reducing paper usage. To achieve this, we have instituted a recycling initiative to track how much paper is being printed by each department (which is in turn converted into a trees and emissions consumed metric to raise awareness), ensure that recycling bins for paper are clearly marked and available in all breakrooms, and that our waste hauler comes to recycle all of our shredded paper. We are also investigating ways to make our business operations use less paper but are somewhat limited by regulatory barriers such as state guidelines requiring policyholders to affirmatively choose to not receive information in paper form.