HEMIC helped transform Hawaii’s workers’ comp system. Today, it puts safety first for its clients, who are also its owners.
Jason Yoshimi remembers starting work 20 years ago for the newly founded Hawaii Employers’ Mutual Insurance Co., better known as HEMIC. It had only about six employees then and the company was renting a cramped space from First Hawaiian Bank.
“We were pulling it together. How do we get systems? How do we start this thing up?” Yoshimi says. “In those early years, it was running as fast as you possibly could to try and keep up. It was exciting.”
The privately owned company celebrates its 20th anniversary this June, has grown to 85 employees statewide and ranks No. 107 on Hawaii Business magazine’s Top 250 list of Hawaii’s biggest companies in 2016 (No. 19 on HB’s Most Profitable Companies list). Yoshimi, who started as the company’s CPA, is now president and CFO.
HEMIC was the brainchild of the 1996 state Legislature, with strong backing from Mazie Hirono, who was then Hawaii’s lieutenant governor and is now a U.S. senator (she even named her cat, Hemic, after the company). It was founded to help stabilize Hawaii’s workers’ compensation marketplace by ensuring coverage to local small and higher-risk businesses.
The Hawaii Territorial Legislature first required employers to give their injured and disabled workers medical treatment and fixed reimbursement back in 1915, but getting coverage was challenging for small or higher-risk companies in fields such as construction, maintenance and farming.
“You had a lot of small businesses being turned away because it wasn’t worth the time for a carrier to pick them up,” says Yoshimi. “It put them in a tough spot: They were required to have this coverage, but they couldn’t get it.”
Eventually, a complex pool provided coverage, but rates were often high, so lawmakers looked to other states for a better solution. HEMIC was modeled after Maine’s mutual insurance program. “By forming a private corporation, the benefit to the state, taxpayers and businesses here, was that essentially the state didn’t provide any funding,” says Yoshimi. “It had that clear wall of separation.”
As its name implies, the mutual insurance company is owned by its policyholders –more than 6,000 today. HEMIC is the state’s largest workers’ compensation insurer, with revenue of more than $72 million in 2015. In 2016, HEMIC gave back $3 million to its policyholders. It was the 10th consecutive year a dividend was paid and the highest yet. In all, the company has returned $28 million in dividends to members.
“Our owners and our customers are the same. It’s that alignment of our financial interest that I think really makes it important in this business,” adds CEO Martin Welch, who joined HEMIC in 2012. “It rewards safety and loyalty and we think that’s a great way for our mutual members, our customers, owners, to share in that success.”
Companies who have been with HEMIC more than one policy year and have demonstrated safety records, qualify and get back about 7 percent of their premiums, says Yoshimi. He estimates that about 80 percent of HEMIC policyholders receive annual dividends and around 70 percent of HEMIC’s members pay an annual premium of less than $5,000.
HEMIC incentivizes safe workplaces and helps instill better company cultures among its members. “We want to look at (each) client as a whole,” says Tammy Teixeira, VP of agency management and service. “Our underwriting, our claims, our safety departments come together regularly to talk about customers and what some of the issues are we’re seeing, how we can help them, what their needs are and then put a plan in place … No (department) works in silos.”
HEMIC also has six prevention loss consultants statewide, who are trained and certified, some with backgrounds in industries such as hospitality and construction. The consultants visit and talk to local businesses about workplace safety. The company also holds safety seminars called Pathway to Safety, each tailored for a specific group, such as restaurants or hotels, with information on reducing workplace injuries.
Timon Leong, director of operations and human resources at Kualoa Ranch, says one of HEMIC’s loss prevention consultants joins the company’s monthly safety committee meetings.
“It’s great to have an expert set of eyes looking at our operations and providing additional feedback,” he says. “They’re there listening to the unique experiences we have and they also provide additional ideas to incorporate a safe workplace.”
Welch says each conversation, workplace visit and seminar is about empowering employers. “I think the most important thing for our customers to understand is that at the end of the day, this is their responsibility,” he says. “As employers, they’re the ones responsible for making sure their workplaces are safe for their employees and customers. We’re certainly here to help them and encourage them.”
As HEMIC rolls into its third decade, Welch says, staying competitive also means diversification. HEMIC’s wholly owned subsidiary, HEMIC Insurance Managers Inc., or HIMI, provides specialty insurance coverage. Welch says HIMI brings in about $8 million annually, less than 5 percent of HEMIC’s overall revenue today, but it’s been growing 15 to 20 percent a year for the past three years.
Yoshimi says the company has changed over the decades, but some things remain the same, including that the majority of HEMIC’s policyholders are still small businesses. “You know Hawaii, we have a lot of mom-and-pop places, a lot of businesses with two or three employees,” he says. “But there’s no differentiation (of service) if you’re a small or big policyholder.”