Harvey Impact
Sep 6, 2017


After steadily reducing production to 40%, the largest oil refinery shut down last Wednesday until the flood waters recede. The second largest oil refinery shut down just three days after Hurricane Harvey made landfall. At least thirteen oil refineries were offline due to the storm and other refineries throttled back operations affecting about 31% of the nation's refining capacity



In 2005, Hurricane Katrina knocked out about 30% of the U.S. refining capacity. It took one to two months for refineries to return to normal production. The storm caused $108 billion in damage, the costliest storm in U.S. history. Until now. Harvey might become the costliest natural disaster with a potential price tag of $190 billion. The combined cost of Hurricanes Katrina and Sandy.



As flood waters were rising, viral posts on social media were warning victims of Harvey to file any Texas insurance claims by September 1 claiming a new law will make it harder for consumers to get paid for property insurance claims related to weather. The new law was passed during the 2017 Texas legislative session. While it is true that the new insurance law became effective September 1, the insurance claim process does not change. It only changes how litigated claims are handled.



The Texas Division of Workers' Compensation (DWC) issued a bulletin requiring insurers to be flexible in handling workers' compensation claims. The DWC suspended multiple deadlines including filing, claim notification, and medical billing. It also directed insurers to reimburse emergency and non-emergency services obtained out of network, waiver of penalties and restrictions for out of network services, authorize 90-day prescriptions, and expedite change of addresses. We'll continue to report on Harvey's impact on our industry.



Hurricane Irma roars toward the northeastern Caribbean islands as a Category 5 storm. Florida Gov. Rick Scott already declared a state of emergency to prepare for any potential impact. We’ll keep you posted on any developments. Be safe.

Cyber Security


quarter of the White House's National Infrastructure Advisory Council (NIAC), which is responsible for overseeing the U.S.' response to emerging cyber threats, resigned in mid-August. Although several of those were Obama-era appointees and offered broad reasons for resigning, a main reason referenced President Trump's "insufficient attention" to possible cyber threats posed to American infrastructure, including election systems.



Just after the resignations, the NIAC issued a report about securing critical U.S. infrastructure against cyber attacks. The report warns that time is running short to organize effectively before a 9/11-level cyber attack. It called on government and industry to boost their efforts to protect critical infrastructure, such as the financial system or electric grids, and to create separate communication networks to support critical systems. One of the recommendations includes more rapidly declassifying cyber threat information gathered by intelligence agencies so it can be shared more broadly throughout critical infrastructure sectors.

Making Our Way Around The Country


The Trump administration halted a rule that would have required large companies to report to the Equal Employment Opportunity Commission (EEOC) what they pay employees by race and gender. The Obama-era policy aimed to close the gender wage gap. Starting next year, companies with more than 100 employees would have had to report more detailed salary data to the EEOC. The Trump administration called the rule overly burdensome to employers and would not yield the intended results to address the wage gap.



A federal judge struck down the Obama-era overtime rule that would have extended overtime pay to more than 4 million additional workers. The court ruled that the Department of Labor (DOL)improperly looked at salaries instead of job descriptions when determining whether a worker should be eligible for overtime pay. It also stated that the DOL set an excessively high salary threshold to determine which employees are exempt from overtime. It’s predicted that the Trump administration will not appeal the ruling but come up with a middle ground for the salary threshold.



The National Council on Compensation Insurance (NCCI) has filed a proposed 10.3% reduction in workers' compensation loss cost rates. This is the 13th reduction in 13 years. West Virginia employers will see a projected $21 million reduction in workers' compensation premiums in the coming year. The rate will become effective November 1, 2017.



Gov. Bruce Rauner vetoed another workers' compensation bill (H.B. 2525). The proposed bill would have created new penalties against employers and prohibited insurers from charging rates that produce profits that are "unreasonably high for the insurance provided or if expenses are unreasonably high in relation to the services". The bill would also have required insurers to submit their rates to regulators for prior approval.



While Chicago Public Schools, as well as schools across Michigan and Maryland, are just starting school this week, about 216,000 Houston students did not start school as planned last week due to Harvey. Click here on how you can help people affected by Harvey.

About The Way

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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