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November 2, 2010
The other day when I was refilling my car with gas I noticed that the charge exceeded $50.00. I have had the same car for quite some time and it had been a few years since it cost $50 to fill up, so my curiosity was tweaked.
I checked the business gauges and noticed that the price for a barrel of crude has reached $82.55. Not quite were it was in late 2008 when oil topped out at close to $150 a barrel, but considerably up from the February 2009 price of $31.04 a barrel. Supply, demand and the relative value of the dollar are all contributing factors in the crude oil price equation.
The recent global recession and decline in demand, curtailed oil production by its’ largest percentage since 1982. BP estimates that global oil reserves at year end 2009 were 1,333bn barrels. What is remarkable is that reserves are 23% higher than a decade earlier, despite 300bn barrels of consumption during the period.
Hubbert’s Peak, when oil reserves begin to fall, and prices begin to rise relentlessly, however has not been reached. M. King Hubbert, a geologist, predicted US oil production would peak in 1970, and it did. What Hubbert did not predict or account for however, was the growth of global trade or the improvements in oil industry technology and geological knowledge. Iraq recently disclosed that it has 25% more proved oil reserves than the last time it looked. Brazil says that one of its recent discoveries could be 8bn barrels, twice what was originally estimated. Hubbert’s Peak will no doubt be reached some day, but it remains a moving target, continuously delayed by new discoveries and data.
Oil industry concerns today are different: the rising cost of extraction, the impact of the recent BP Gulf of Mexico accident and resource nationalism. Seven of the top 10 source countries have shut out western oil companies (Canada, Iraq, Kazakhstan are the exceptions). The demand for oil shows no sign of peaking according to the International Energy Agency which forecasts that daily demand will increase by 20m barrels a day by 2030. Fundamentally though, the rising price of oil can be attributed to rising Chinese consumption and to the rising investment demand of extraction. More peak oil scares are most likely on the horizon.
October 25, 2010
The Wall Street Journal published an article on Sunday comparing L&I in Washington and Oregon.
Key highlights from the article.
Average time loss claims in Washington is 270 days which is twice the national average and compares to 70 days in Oregon which has private insurance.
In 2007 and 2008 Washington granted lifetime pensions to 3,600 workers compared to 24 in Oregon.
Last year there was a 7.6% increase in L&I premiums. Oregon hasn’t raised premiums in 2 decades and this year returned $100 million to employers.
In West Virginia which transitioned to a competitive market 5 years ago approximately 200 insurers moved in the market and premiums dropped 30%.
We ask that you consider voting yes on I-1082
Read the full article here
October 13, 2010
The IRS released a 2011 Draft W-2 form yesterday, October 12, 2010, which can be used by employers to report wages and employee tax withholding. They also announced the deferment of the new requirement for employers to report the cost of coverage under an employer-sponsored group health plan. The reporting by employers will be optional in 2011.
The IRS continues to stress that this reporting is for informational purposes only. The amounts reportable are not taxable. They are to be used to provide employees with greater transparency into overall health care costs.
For a copy of Notice 2010-69, please go to: http://www.irs.gov/pub/irs-drop/n-2010-69.pdf
A more detailed update can be found at: http://www.irs.gov/newsroom/article/0,,id=228881,00.html
Please contact your PS&F Benefits Team if you would like additional information.
October 4, 2010
I just returned from a business conference in Washington DC. In all my travels, this is the first time I have spent more than a few hours here, and although I didn’t get the chance for serious exploring, I was able to take in some of the sites. Regardless of your impressions of what’s happening in the country, or your politics, it’s still inspiring to visit DC and to think about all that has occurred in the shaping of our country.
The discussions around politics today often center on the frustrations about the polarization, and resulting paralysis, that seems to have gripped the legislative process. Too often, key discussions tend to divide down party lines, with each side seemingly more interested in promoting or protecting political ideology than enabling legislation that will move the country forward.
A critical issue currently is increasing jobs, especially among small businesses. Small businesses are the heart of the US economy. Small business employs the majority of Americans and pays the majority of taxes. This year’s November 2 election in Washington State has a number of critical initiatives being put before the voters that could have dramatic impact on jobs and the small businesses that create them. One in particular is important to me and to Parker Smith & Feek. Washington State’s Initiative 1082 would end the Department of Labor & Industries monopoly on workers compensation. I support the initiative and urge you to seriously consider the issues.
Washington is one of only four states in the country that does not allow private insurance companies to compete with a state-sponsored fund in providing workers compensation coverage. To put this in perspective, PS&F provides our Washington clients with property, auto, liability, healthcare and many other kinds of insurance coverage – but not workers compensation. By contrast, our Anchorage office provides a full range of services, including workers comp, and is able to serve all our client’s needs there.
The ‘no’ side in the 1082 debate would have you believe that if the initiative passes, insurance companies will take advantage of injured workers in Washington and not pay claims. There isn’t any evidence to remotely suggest this is true. As I mentioned, 46 states currently operate with an open competition system and insurance companies pay millions of claims each year. The best systems exist where there is a strong state fund option as well as private insurance and where competition has made everyone better. These programs are characterized by excellent safety education and strong claims management, with the result being fewer serious injuries, injured workers being returned to gainful employment more quickly, and lower workers compensation rates for everyone.
Unfortunately, the debate over Initiative 1082 is predictably falling down party lines. This should not be a D v R issue, but should be about what creates a healthy, vibrant environment for employees and employers – especially small businesses. A vote for 1082 will create much needed competition and will inevitably improve the operations of L&I’s State Fund. Government isn’t the problem, per se, and certainly government isn’t evil. But government is best at oversight and regulation, ensuring that the rights of all are protected. The proposed legislation will maintain government’s appropriate role as a watchdog and will allow them to continue to compete in the open market.
Please, consider a ‘YES’ for Initiative 1082, and let the competitive marketplace drive innovation and cost reduction, making Washington a better environment for business and jobs.
September 30, 2010
Last week, on September 24th, 16 individuals from Parker, Smith & Feek’s Bellevue office participated in the King County United Way Day of Caring, partnering alongside industry friends, Alaska National. Our firms’ combined efforts provided a day of labor and support to two local organizations, the North Seattle Family Center and our local chapter of the Humane Society. While some of our team collected pet food contributions from shoppers at local grocery stores, the bulk of our group got busy painting walls and reorganizing resource materials at the Family Center.
Although the groups worked hard and were physically exhausted by the end of our day, I think we all walked away feeling buoyed by our contributions. So tangible – a real before and after shot coming to life right before our eyes.
I am reminded of a quote by John Heywood, “Many hands make light work”. How true this is. In a mere five hours, our teams had managed to paint room after room at the Family Center; transform a resource center into a more welcoming and user friendly environment; and collected a significant amount of food and funds to care for the numerous animals who find their way to our local shelters.
We also saw firsthand the good work these organizations perform day in and day out with limited resources and could see how vital volunteerism is to their success. I know I personally walked away that evening thinking about how I could help the Family Center even more and am grateful to the Day of Caring program for having opened my eyes.
September 29, 2010
On October 6th 2010 Parker, Smith & Feek will be hosting its first ever Health Reform Tweet Chat.
Join us to discuss what "Healthcare Reform will mean for your organization".
To find out how to join the discussion and for more information visit: http://www.psfinc.com/heath-reform-twitter-chat
September 21, 2010
The following video from the Henry J. Kaiser Foundation provides a good overview of the Healthcare Reform Legislation. Though some of the content can be debated, we think this is a good primer and we welcome you to contact us to discuss it.
September 17, 2010
One of our employees was telling me today, how he uses Twitter to log his training for an upcoming Marathon. When I asked him why he uses Twitter, he said for “accountability mainly, but it also gives me the motivation I need”. Knowing that the information is public, and that anyone could find it, gives him extra motivation to run faster and train more consistently.
This got me thinking. Our employee is motivated by competing with friends. So what motivates you? Is tracking goals and seeing the result enough or do you need some other form of motivation?
Let us know by leaving a comment. Click here to comment.
September 14, 2010
On Friday September 10th, the Ted Spread closed with a value of 16.03 bps. Two years ago, on September 10th, 2008, the Ted Spread closed at 117.97 bps, and just five days later, after Lehman Brothers collapsed into bankruptcy, the spread closed at 201.38 bps. The global financial credit crisis tsunami was underway and soon reached ‘100 foot rogue wave’ proportions. The credit melt down moved rapidly toward its’ peak on October 10th when the Ted Spread reached 463.62 bps.
The Ted Spread is considered an indicator of credit risk. It is the difference between three-month futures contracts for U.S. Treasuries (which are considered risk free) and three-month contracts for Eurodollars (which reflect the credit ratings of corporate borrowers) having identical expiration months. The Ted Spread has historically remained in a range of 10 to 50 basis points.
In the autumn of 2008 the economy was in frenzied freefall as liquidity in the markets disappeared. The Equity markets which had been at an historical high in late 2007 when the Dow Jones industrial average reached 11,400 were now at 8,400, and on the way to a 6,600 low in March 2009. Consumer and business spending declined sharply and employment collapsed. The nation’s unemployment rate went from 6.2% in September 2007 to 9.5% by June 2009.
On October 13th 2008, then Secretary of the Treasury Hank Paulsen and Federal Reserve Chair Ben Bernake and their consortium took dramatic action. Nine major domestic bank CEO’s were called to meet that weekend and all were asked to sign on to the ‘solutions’ term sheet with no CEO allowed to leave until all had penned their names to the ‘agreement’. The markets swayed and strained- Merrill Lynch, Wachovia, Countrywide, Fannie Mae and Freddie Mac were deemed unsinkable and ‘life boated’ by Bank of America, Wells Fargo and the U.S. Congress. A few weeks after the 2008 November general election General Motors and Chrysler were deemed too unionized to fail and transformed into Government Motors, auto executives were dismissed and company bond holders were considered forfeitable capital providers.
September 13, 2010
We in the insurance industry always wonder if our clients actually read their insurance policies. I realize this is not something that appeals to most normal people, but for most of us it is a necessity, whether it is in our personal or professional lives. With our personal lives, it’s fairly straight forward. We have property and car insurance for our belongings and liability insurance in the event a third party is injured on our property. However, within an organization, there can literally be hundreds of different risk exposures. As your insurance broker we spend an incredible amount of time examining the possible exposures you face and offer insurance and other risk transfer solutions that meet your individual financial and risk tolerance requirements. But in today’s economy it is not all that uncommon for a business to move into new markets and even entirely different businesses that add a completely new set of exposures. Such decisions are often time sensitive and your broker may not be notified in time or simply overlooked, so we are unable to do a full review of the new exposures. The secret I always tell my clients’ is that if they don't do anything with your insurance policies, at least read the exclusions. A simple review of the exclusions can often surface any unknown exposures or raise questions about if you are covered for a certain type of event. So before moving into new markets or businesses spend a few minutes and read over the exclusions in your policies and then communicate with your insurance broker/partner.
September 9, 2010
This week saw an abrupt change in the weather here in Seattle. Long gone are the 90 degree temperatures of summer and we have now settled down into the low 60’s that indicate that winter is just around the corner. Financial and economic reports over the last month have also brought new perspective to where our economy may be headed.
While news of slowing job growth has been alarming for most, I always try to look for the positive. A key indicator of global economic activity, and believe me when I say this, is the use of shipping containers.
There has been a sharp upturn in the use of shipping containers in 2010 as reported by Moller-Maersk and DP World, two of the world’s leading container companies. The upturn in traffic of goods to and from developed and emerging economies has been exceptionally strong and a surprise to shipping analysts. This indicates that international trade is on the rise, money is changing hands and there is demand for these goods.
With so much gloom around as we head into winter, we get consumed by the negative and forget to look at the positive.
September 1, 2010
One thing that I have seen over the last 18 months is that when it comes to wellness, every company is different. One wellness challenge or initiative may work for one company, but not achieve the desired results for another.
The key is to adapt each initiative and challenge to fit with your own company’s culture and resources. It also helps to empower your employees to use their creative side, and their talents that may not be necessarily related to their job function.
I have one client that has amazingly talented singer and video editor within their committee, and to launch their programs they produce these high quality videos to get there staff energized. While not every company has those skills many companies have other skills that can be equally impressive; Graphic designers, musicians or even budding actors that could roam the office hallways to promote an upcoming wellness event.
If you use and appreciate their talents, they too will feel energized and become your leading wellness cheerleaders.