A couple months ago I wrote you about out-of-state staff i.e., when you have employees in states other than Michigan. Trying to avoid the 27-point test, I broke it down to a few simple points that work in nearly all cases. That article prompted many calls from you, and I think we answered your individual questions. With that topic mostly behind us, the next logical area is “when are my subcontractors (and their employees) MY employees?” Like the complicated list of test questions for an employee’s coverage state, the sub-contactor test is just as complicated and varies widely by state. I will focus on Michigan rules but use a couple other state examples to illustrate the state differences.

Is this the employee covered in Michigan, or another state?

Part of my daily tasks is answering member’s questions. When a particular question begins to surface weekly, it’s time to share the question and answer with all of our members. The recent regular question looks like this “Is my employee in Indiana covered by my MTM policy?” With more remote working going on especially in sales and clerical/engineering jobs it seems logical that this question is coming up more.

While the rules can vary by state, and in fact even in Michigan there is a complicated more than 15 question criteria that is used, there are three or four much more simple questions that answer the vast majority of situations. Because our members need quick reference answers, let me walk you through this simple criteria.

Safe and Sound

Normally each month I update you on changes in workers’ compensation law, operating environment, MTM news or questions I have recently received from members. An important item, that I should inform you about is how to we manage the money MTM members entrust us with. That ties into a very common question, tell me about MTM’s financial security. MTM is NOT a billion dollar national insurance company. We ARE a mutual insurer owned by 941 Michigan employers. One can argue that there is more stability in these large international companies, but events over the last ten years have shown that large does not necessarily mean stable. Financial stability also factors into how the MTM Board of Directors review our annual members’ dividend. Over the last seven years, the MTM Board of Directors has returned $27 million dollars as owner member dividends. That equates on average to 30% of the annual premium. Dividend payments starts with financial stability. It does not do any good to return monies to member owners only to say that we’ve come up short and need more money to pay claims. So while the dividend part of the member equation is critical, making sure that the financial stability of MTM comes first.

A Look Back – 2020

Every quarter the MTM Board of Directors meet. No surprise the MTM management team prepare a variety of reports for Board review. The 11 MTM Board members are just like you, shop owners, CFOs, plant managers, safety managers, H.R and the like. For the upcoming meeting, I thought the Board would be interested in a big picture of what we learned from the completed payroll/premium audits for 2020 policies. Those audits often take 3-6 months before all is finalized.

Back in January/February of 2020 there was some chatter about a contagious disease, but nothing much changed until mid-March. Then most everything was locked down. MTM had just begun delivering member dividend checks and we found we had to slip the check under the door if someone was at the shop at all. With a rapid decrease in shop payroll, we offered to make premium payment adjustments, knowing that some shops were closed or operating at very reduced staff. To our surprise, we had fewer shops requesting that assistance than we expected. That gave us the feeling that more shops were operating as essential than we first thought.

Finally, back to some normalcy. It’s been over a year, but finally MTM Board and Committee members are together again. Maybe 2/3’s of the members were at the MTM office and 1/3 via Zoom. It was great to see our Board and Committee members. It was like a family reunion. At the May 20th Board meeting Joe Keppler, MTM Chairman of the
Board welcomed our new Board member Barry Kavanagh. Barry might hit a memory cell for you because about 3 years ago I introduced him as a new Board Finance Committee member.

Here’s a refresher: Barry received his bachelor degree from Waterford Institute of Technology in his native Ireland. He is a Fellow of the Association of Chartered Certified Accountants (ACCA), the main accountancy body in the United Kingdom, Europe, and Asia. He also holds a certified management accounting certification from the U.S. Institute of Management Accountants. Barry has been involved with MTM for nearly 15 years. At the beginning we worked with Barry when he was the Controller at a Lansing member’s shop. For the last 8 years, Barry has been the VP of Finance at Avalon & Tahoe Mfg. Inc. That company name might sound familiar too. Avalon & Tahoe is a high end Michigan manufacturer of pontoon boats. They make virtually everything on their boats except the motors and gauges. It is a fascinating company. The company won the Michigan Manufacturers Association “Michigan Manufacturer of the Year” award for 2019.

Well, back to Barry. After two and a half years of successful work on the Board Finance Committee, the Board asked him to join them on the full Board. Consistent with Barry’s enthusiasm on the Board Finance Committee, he agreed to the new position as long as he could retain his Board Finance Committee assignment. The Chairman of the Board of MTM approved his request. Barry has been a valuable contributor to the Board Finance Committee, and we are expecting that same solid contribution to the full MTM Board.

Lastly, with many of our in person activities resuming, we are planning the Annual Member’s Meeting October 21st (11 a.m. – 2 p.m.). As it has been for the last 6 years, the get together will be held at The Inn at St. Johns, Plymouth, Michigan. The Inn is a first class location and there is no “convention food” served. All Board and Committee members attend this meeting as does the entire MTM staff. We hope you can join us.

MTM Annual Members Meeting is October 21, 2021 at the Inn at St. John’s. We are pleased to have Kristi Stepp, a partner with Sigred Solutions as our keynote speaker presenting, Leading With a Growth Mindset. Kristi has over 25 years of human resources experience in the automotive, healthcare, food/beverage and workforce solutions industries and has a broad international and multicultural expertise.

Before joining Sigred Solutions, Kristi served in strategic human resource roles at several leading global organizations including General Motors, Kelly Services, Pepsi-Cola and Volkswagen. Kristi holds a bachelor’s degree from the University of Michigan and master’s degrees from Central Michigan University and Fielding Graduate University. In addition, she is a certified Global Professional in Human Resources (GPHR), holds the Master Human Capital Strategist (MHCS) designation, and is a Senior Certified Human Resources Professional (SHRM-SCP). Kristi gives back to the community as a board member of Focus: HOPE and as a board trustee for Pewabic Pottery, both based in Detroit, Michigan. 

Normally, each month, I tell you about MTM member ownership benefits, a workers’ comp update, or some change in the legislative or workers’ comp arena and how MTM is responding to it. I can’t remember over the last eight years ever giving you an update about MTM internal operating systems. So, this report is a first.

Like many of our members when MTM finds a good I.T. system we stick with it for many years. Our policy accounting/underwriting system gets regular updates, but it is the same basic system we have had for 12 years. The other major system we have is our claims system and we acquired it from a separate vendor from our premium accounting system. To increase functionality and obtain long-term enhancements we felt tying our premium accounting/underwriting and claims systems together would be the best way to achieve this. Another benefit would be to bring more information, more quickly to our member portal (which happens to presently reside in our premium accounting/underwriting system.)

The most important item at the February MTM Board Meeting is the review of the prior year’s financial results to determine the MTM members’ dividend. That clearly is the most important task of the year for our MTM members. However every three years a second important task occurs at the February Board meeting. That is the election by the Board of the Board leadership. This year, after the dividend tasks were taken care of, the Board discussed and then decided on its leadership for the next three years. For the next three years, the new MTM Chairman is Joe Keppler (Shuert Technology). The Vice Chairman is Mark Mullen (Griggs Steel Company). And the Chairperson of the Board Finance Committee is Teena Kolwalski (Repair Clinic). And for the Board Marketing and Underwriting Committee the Chairman is Brad Lawton (Star Cutter). All of these leaders are experienced manufacturing business men and women and veterans of the MTM Board. These leaders give MTM continuity during these challenging times.

MTM prides itself on offering some of the best service in the insurance industry. That commitment to service includes working with our policyholders to fit their premium payments to their individual needs. Recently we did an analysis of the ways policyholders make their premium payments and were rather surprised at what we found.

The most used payment method was Pay in Full, where the policyholder pays the entire year’s estimated premium up front and gets a 3% discount. Even though only 97% of the year’s premium is paid up front, 100% of the estimated premium is credited when the final audit is processed. In 2020 over 1/3rd of our policyholders took advantage of Pay in Full with savings of almost $143,000.

On Monday, March 22nd, I completed my deliveries of the 2021 dividend checks. As a refresher, the MTM Committees and Board of Directors met in February to review the profits from 2020 and then decides how to spend those profits. As has been the case for the last six years, the Committees and Board of Directors, which is made up of shop owners, shop CFO’s, and administrative managers, decide quickly to return the profits to the MTM Member Owners. That has been the consistent answer for the last six years. This year, the Board declared a dividend of $4.5 million. There was actually three parts of that dividend declaration:

1. A dividend of $1.6 million allocated to all members.
2. $2.4 million that goes to members that had a three-year loss ratio that was outstanding, i.e. they’re the ones that made the profit for the year.
3. $500,000 that is used to make sure that every member gets a minimum dividend of 10%.

For me and the MTM Management Team February is a very busy time. During the first week, we work with our outside actuary to determine profit for the year. This is done by evaluating current report losses, development of existing losses over the future, and estimating losses that we may not yet be aware of. Once the loss evaluation is completed our CFO, Chris Doebler puts together the year-end financial statements. Then on February 4th we have a meeting with the MTM Board Marketing/Underwriting Committee. This committee is made up of 8 shop owners, CFOs, and plant managers. Management presents a dividend recommendation for them to adopt or amend for 2020 results that is paid in March.

On February 11th, the MTM Board Finance Committee met to discuss the financial condition of the company based on the 2020 financial results, evaluate the MTM members dividend recommendation and determine what changes they would like to see. The Finance Committee is also made up of 8 member owners.

We often hear companies say “our people make the difference”. And that is clearly the case at MTM. The special skill sets of MTM staff are shown in Loss Control when an immediate accident analysis is conducted after a severe plant injury. It is shown when MTM claims staff is handling a plaintiff attorney on a litigated claim. It is shown every day when the MTM marketing staff is helping a member with a question and when MTM accounting staff are problem solving for members. All of these staff skills are highlighted even more when we are in a disruptive period caused by COVID. The MTM staff knows that if our members are open, MTM is open.

Not long ago, I was reporting that at my 7 year anniversary, I was still MTM’s newest hire. That says a lot about MTM staffing and stability. What the statement did not cover is that in the background we had 2 temporary staff members working on projects. They are Melanie English and Djon Ljuljdjuraj. After 5 years of temporary work, I made the leap that they have earned the badge to be an MTM employee. With some of the present MTM staff members close to possible retirement, preparing for the next generation of staff makes sense. After 5 years, we are positive that Melanie and Djon have the MTM DNA. Rather than me tell you about Melanie and Djon, please see their comments below.

At the normal October MTM member’s meeting, a couple important Board of Director items take place. First is the election of Board members. Board members serve three year terms. Those terms are staggered so that in any one year no more than four Board members are up for reelection. This year we had four members up for reelection. They were: Jerry Decker – Precision Boring Company, Teena Kowalski – Repair Clinic LLC, Bobby Cox – Acorn Stamping Company and John Moll, Gemini Group – retired. I am pleased to report that all four were reelected by ballots from members. The direction of MTM starts at the top so it was my pleasure to confirm our continued work with these highly qualified individuals. Each of them brings special skill sets to MTM. We have been successful in mixing those skills together to achieve great results for our MTM members/owners.

The second important item at the October Board meeting is election of the Board Chair. This election takes place by the current Board members every three years. Long time Board member Jack Accardo – Haller International Technologies, has been MTM’s Chairman for 2018, 2019, and 2020. During his tenure, MTM paid dividends of $12.9 million dollars. This averages 23.6% of each member’s premium. During that same time period under Jack’s leadership, the MTM surplus account increased from $28 million to $33 million. Each of these two events is significant. From my 40+ years managing insurance operations, I give an “A” grade to the MTM Chairman, Board Committee heads, Board members, and Board Committee members.

For the next three-year Board leadership term, the Board elected Joe Keppler – Shuert Industries, as the new MTM chairman effective January 1, 2021. Mark Mullen – Griggs Steel, was elected by the Board as Vice Chairman. Both of these members know MTM history and I feel confident they will continue the MTM’s success even in challenging times.

By the way – we just closed another 2020 claims month. The results through October 31st are encouraging for a seventh dividend year in a row. With that said, we still have a couple of months to get through. However, with the October results just added to the first nine months, the positive profit/member’s dividend trend looks promising. Still with two months to go, be safe.

By John J. Walsh, MMA President & CEO

Spread Hope, Not COVID

Nearly eight months have passed since our industry, our families and the world were confronted by the health and economic challenges posed by COVID-19. As state and federal officials responded to the pandemic with various actions that included an economic shut down, financial support for businesses and individuals, as well as rules and regulations affecting how we live and operate our businesses, few predicted that the various economic limitations would have lasted this long. I remember sending MMA staff home to work firmly believing that we would all be back by early summer.

Regrettably, COVID-19 remains a serious threat to our society as many states, including Michigan, are witnessing an increase in cases on a daily basis. Based on the information available to me from the Michigan Economic Recovery Council, a group of health professionals and industry leaders with which I am working closely, much of the increase can be attributed to a change in the weather forcing more individuals from outdoor activities to inside where the risk of transmission is greater, and the impact of fatigue on our fellow citizens and their willingness to comply with what seem to be everchanging rules.

The current posters that have previously been distributed to you are up to date with the current state and federal requirements. The COVID poster is required until December 31,2020 and due to the potential for that date to be extended or new poster requirements, we have decided to postpone our annual poster mailing until Spring to make sure that the posters meet all requirements. In the event that there is a new requirement, we will send the update to you.

Annual MTM Members Meeting

The Annual MTM Members’ Meeting is held each October. Normally, 150 MTM members attend this event. The last few years, we’ve enjoyed the beautiful facility/room and a great buffet of beef, seafood, and vegetarian meals at The Inn at St. John’s. If the main courses did not fill you, the variety of salads and desserts did.

We’ve always had an interesting speaker as part of the two-hour program. A couple of smaller parts of the program are Chris Doebler, the MTM CFO, and I do a five-minute update on the results of the year to date and first look at the annual member dividend. At the end of the meeting, we have a wide variety of gifts that are drawn at random and given to our members. The MTM Chairman of the Board, Jack Accardo, presides over the member gift giving.

Today, I am reading the Governor’s Executive Order #152. I have read all 152 Executive Orders and want to be as up-to-date as possible when I talk with members. I must say that the Executive Orders are overwhelming, sometimes contradictory and difficult to understand. In my 49+ years in business I have never seen the environment being so fluid and challenging. We have all matured solving business issues, and now our experience and determination is being tested.

In the last three weeks I have visited more than a dozen customers. At each of these meetings information was exchanged, data updated and even a laugh or two. I can report that I left each meeting seeing that our members are doing all they can to keep employees safe and employed, eliminate hurdles and solve problems in the face of the current business environment.

Payroll renewal forms are in the process of being prepared for the January 1, 2021 renewal. While it seems like January is far off in the future, the renewal process begins months ahead of time. Once you receive the renewal form to update your payroll and locations please complete it to the best of your ability and return it to us promptly. If you have questions on completing the form, contact Glenda Moyle at Glenda.Moyle@mtmic.com or (248) 715-0015. 

Each year, we have an election for the MTMIC Board of Directors positions. Once a Director is elected they hold a three year term to serve the policyholders of the company and with that being said, we are preparing for our upcoming election. Ballots will be sent out next month and the Directors that are up for re-election are the following:

• Bobby Cox – President of Acorn Stamping
• Gerald (Jerry) Decker – President of Precision Boring Company
• John Moll – Retired, Gemini Group
• Teena Kowalski, Director of Finance, Repair Clinic