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A Test of the Nation's Resilience Sept. 13, 2017


Hurricane Irma made landfall in the Florida Keys Sunday, becoming the first time in recorded history that two category 4 storms struck the United States in the same season. Even today, Hurricane Jose remains a third category 4 storm churning over the Atlantic Ocean. Florida Governor Rick Scott ordered the evacuation of South Florida before Irma began its path up the state's gulf coast Sunday, becoming one of the largest mass evacuations in American history. Six million people, more than a quarter of the state's total population, evacuated north to avoid the storm.


The storm weakened as it progressed up the Florida peninsula toward Tampa, a city that has not had a direct hurricane hit in the past 100 years. Although downgraded to a tropical storm, Irma's powerful winds cut power to more than 60% of the state. Irma flooded several Florida cities with heavy rain and high storm surges on Monday. The north Florida city of Jacksonville experienced record flood water levels. The National Flood Insurance Program (NFIP) estimates that more than 1.3 million homes lie in high-risk flood areas across Florida, constituting a broad coverage map for the NFIP. Notably, Florida homeowners hold more than a third of all of the flood policies nationwide. The average flood claim in the last 12 years has been for about $50,000, which will severely strain the NFIP even further as these new arising claims are adjusted.


In the wake of Hurricane Harvey, and in anticipation of Irma, Congress voted Friday to push back the September 30th deadline of the NFIP, extending it through Dec. 8th. The House voted 316-90 on the Senate-passed legislation, which included a $15.3 billion relief package for victims of widespread flooding from Hurricane Harvey in Texas and Louisiana. House Financial Services Committee Chairman Jeb Hensarling, one of four Texas Republicans who voted against the entire package, said an extension was the "best option" lawmakers could make under the current circumstances. Chairman Hensarling is pushing for the creation of a competitive private market to relieve the financial burden on the program, which was $25 billion in debt even before Hurricanes Harvey and Irma.


The combined effect of Harvey and Irma could result in more than $290 billion in damage across the south and southeast United States. With damage exceeding 1.5% the country's Gross Domestic Product of $19 trillion, the surging effects of the past 30 days are not expected to recede quickly. We'll continue to track these developments.

Labor Market and Turnover


Last week President Trump announced the termination of the Deferred Action for Childhood Arrivals (DACA) program. Leading human resource analysts anticipate the administration's policy decision will impact the labor market, even though DACA beneficiaries will not be affected until after March 5, 2018. No new DACA applications will be considered, but applications filed on or before Sept. 5 will still be processed. Current DACA recipients whose permits expire between now and March 5, 2018, have until Oct. 5 to apply for renewal. There are some 800,000 DACA beneficiaries in the United States today.


Following President Trump's announcement, a coalition of 15 states, including New York, Illinois, Pennsylvania, and Virginia, along with the District of Columbia, filed a lawsuit seeking to overturn the administration's decision on DACA. The lawsuit, filed in federal court in the Eastern District of New York, argues that President Trump's decision to terminate the program violated due process and amounted to a discriminatory Executive action. The suit also argues that rescinding DACA would impact states economies, impair college educational systems, and harm business. In fact, one advocacy group estimates that the DACA rescission will cost employers $6.3 billion in employee turnover costs, including recruiting, hiring, and training over 720,000 new employees.


Making our way around the country


In a bipartisan move this week, Representatives Jared Polis (D-CO) and David Schweikert (R-AZ), co-chairs of the Congressional Blockchain Caucus, introduced the Cryptocurrency Tax Fairness Act. The Act would create taxation guidelines for purchases made in cryptocurrencies. The Act would treat the transactions like foreign currency and allow consumers who make purchases up to $600 in cryptocurrencies to avoid reporting requirements. Since leading blockchain experts signal the entry of cryptocurrency into the insurance marketplace, we're keeping an eye on this legislation.


The California Department of Industrial Relations (DIR) launched its third public comment period related to the state's proposed workers' compensation prescription drug formulary. The DIR will accept comments from stakeholders through September 22nd. The regulatory changes up for comment this month include the following: clarifying language around compounded drugs containing active ingredients listed as "exempt" on the formulary drug list; and a provision to remove repackaged drugs. The California drug formulary is slated to take effect on January 1, 2018.


Workers' compensation rates will drop again next year for most Tennessee businesses, as safer work sites and non-judicial settlements of workers' compensation claims continue to positively influence the cost of insurance. The National Council on Compensation Insurance (NCCI) will seek a loss cost reduction of 12.6% for Tennessee workers' compensation, which will bring down insurance rates, effective March 1, 2018. The new filing represents the seventh consecutive reduction and reflects a continuing trend of reduced workers' compensation insurance premium prices since the Tennessee General Assembly moved the Volunteer State into a mandatory administrative system for WC claim resolution in 2014.


North Dakota lawmakers are advancing on a proposed North Dakota ballot measure, which would augment the rights of volunteer first responders and expand coverage to workers who suffer mental health issues or chronic pain related to their jobs. Lawmakers are seeking to establish the statewide ballot initiative supporting first responders by the 2018 mid-term elections.


This Monday marked the 16th anniversary, and a National Day of Remembrance, of the attacks of September 11, 2001. We honor the heroic first responders who ran into harm's way on valiant search, rescue, and recovery missions. Today, thousands of those first responders are battling illnesses as a result of their exposure to toxic dust. More than 30 of those first responders died this year from an illness connected to the attacks. We pause this week, as we do each year, to remember the heroism on display in the days, weeks, months, and years since the tragic events of September 11th. To all those affected by the events of that day, united we stand.


The Way is Gallagher Bassett's weekly governmental briefing on state and federal affairs that affect our industry. We thank you for starting your Wednesday morning with us. Please be sure to follow #GBTheWay for additional news and updates as we make our way throughout the country on the issues affecting our industry. For more information, please connect with GB on LinkedIn, follow us on Twitter, or contact the authors, Greg McKenna or Cari Miller, directly.



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