July 18, 2018 A publication of the Pennsylvania Association of Mutual Insurance Companies
InsurTech: An Opportunity for Growth Through Collaboration
Tuscarora Wayne Group of Companies Maximizes Leadership to Advance Corporate Strategy
Updates from the Pennsylvania Coalition for Civil Justice Reform
Pamic@pamic.org
1017 Mumma Road, Suite 202 Wormleysburg, PA 17043
(717) 303-0197
Contents
Tuscarora Wayne Group of Companies Maximizes Leadership to Advance Corporate Strategy On behalf of the Boards of Directors, Jay W. Chadwick today announced a strategic reorganization of executive teams...
InsurTech: An Opportunity for Growth Through Collaboration Insurance technology (InsurTech) is often regarded as external companies disrupting the insurance industry. The real landscape of InsurTech is driven by traditional insurance companies directly creating, investing in or...
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Updates from the Pennsylvania Coalition for Civil Justice Reform page 12
NEWS Schroyer Named VP of Information Services/Chief Information Officer.......................................................................................................................................... 9
Pennsylvania Legislative Update............................................................................................................................................................................................................ 10 Petzoldt Joins MBG’s Insurance Analytics Department...................................................................................................................................................................... 11 Maryland Insurance Bulletins of Note................................................................................................................................................................................................... 11 Pennsylvania Insurance Fraud News..................................................................................................................................................................................................... 11
REGULATION Arbitration Modernization Enacted...................................................................................................................................................................................................... 12 House Action on Protz Fix....................................................................................................................................................................................................................... 12 Long Term Care Still Under Siege From Out of State Lawyers.......................................................................................................................................................... 13 Letter to editor: Where will lawyers strike next?................................................................................................................................................................................ 13
RESOURCES General Regulatory Information............................................................................................................................................................................................................ 14 Legislation Tracker................................................................................................................................................................................................................................... 15
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EVENTS
The Future of Insurance Law? Restatement of Law Liability Insurance When: July 26, 2018 Where: PAMIC Online Time: 2:00 p.m. - 3:00 p.m. Info
The Restatement of Law – Liability Insurance. If you have not heard of this before, it will certainly become part of your vocabulary in the near future. But what is it and why should insurers take notice? Join us for this upcoming webinar to learn more! Name
Date
Time
Location
Restatement of Law Webinar
July 26, 2018
2:00 p.m.
PAMIC Online
111th Annual Convention
August 5-7, 2018
Multiple
Baltimore Waterfront Marriott
Financial Management Seminar
September 6, 2018
8:00 a.m. – 4:00 p.m.
Hershey Country Club
Information Technology Seminar
October 24, 2018
8:00 a.m. – 4:00 p.m.
Sheraton Harrisburg Hershey
Western Group Meeting
October 2018
TBD
Indiana, PA
Eastern Group Meeting
October 2018
TBD
Danville, PA
Underwriting & Loss Prevention Seminar
November 8, 2018
8:00 a.m. – 4:00 p.m.
Hershey Country Club
For more information on PAMIC events please visit our website. Special Thanks to our 2018 Premium Gold Sponsors
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NEWS
InsurTech: An Opportunity for Growth Through Collaboration By Phil Schmoyer, Baker Tilly Insurance technology (InsurTech) is often regarded as external companies disrupting the insurance industry (e.g., Lemonade, MetroMile, ClearCover, Kin, etc.). The real landscape of InsurTech is driven by traditional insurance companies directly creating, investing in or partnering with technology companies. This environment makes new InsurTech companies ripe for collaboration with insurers to provide enhanced customer experience, new insurance offerings, increased analytics and streamlined processes.
1. Customer Younger generations are demanding easier, more accessible and better ways to conduct business. Many incumbent insurance organizations, products and distribution channels have not changed as quickly as the consumer base. In fact, older generations are adopting this agile mentality as well demonstrated by some of the InsurTech companies’ average age of policyholder being in the 40’s.
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In today’s digital world, the pace at which we and the upcoming consumer generations are exposed to technology is unprecedented. While we all grow accustomed to near instant gratification when we have a demand for a product or service; consider it the Amazoneffect. This results in a desire, or a demand, that insurance organizations meet its new customers on the channels which they frequent the most and that they deliver real-time results. This has shifted (i.e., threatened) the traditional insurance distribution channels and brought on a host of new entrants to the insurance distribution networks; most of which are focused exclusively on enhanced customer experience and the use of data in efficient decision making. The platforms of which these entrants are operating and the agility in their core operations, gives an edge to the new entrants/disrupters. While the technology and customer-first mindset is a true upside provided by the disruptors entering the market place, these organizations have yet to fully deploy any revolutionary product that works on all risks, or in all regulatory jurisdictions. While there are new products focusing on the sharing economy, with many predicting these new products will continue to expand as robotics and autonomous transport becomes more prevalent, the fact remains that the legacy products are what is being sold. This, coupled
with the idea that experience can be changed with the right partner (i.e., collaborating), the sheer reach already maintained by incumbent insurers and brand awareness of their security/ value proposition is too instrumental that a slight edge in given to incumbents in this category.
2. Distribution The insurance contracting process has changed drastically over the last year for both incumbents and new entrants. While disrupters have spent billions of investment dollars finding a more digital and engaging way to interact with customers, incumbents have invested in streamlining its existing operations and better utilizing data/knowledge to deploy new technological advancements (i.e., automated underwriting, robotic process automation, etc.). These factors have led to vastly different distribution/contracting processes for insurance products. The disruptors tout themselves as being able to provide customers a quote in seconds, and being able to complete the entire process with a few thumb movements while waiting for an Uber to pick them up. On the other hand, incumbents have taken years of data collection and experience in underwriting/claims adjudication to provide better pricing and predictive models/decision trees in order to fully automate business processes and enable
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its employees to focus more effort on valueadded offerings. No matter which way people look at it, buying insurance is a tiring process and it seems people don’t know what coverage or caliber of a company they are getting until they have a loss, and at that point it’s too late. What has been seen over the last few years is a lot of personal preference, or comfort, which goes into the decision on how or why people are buying insurance. During an innovation workshop, senior leaders from a major incumbent indicated “Millennials want to buy things quick and easy when it’s only to fit a need. But when you’re buying a significant amount of life insurance to manage your wealth or cover their family in their absence, even they will want to speak to an agent and make sure they understand everything will be taken care of for them.” This further reinforced the notion that personal preference makes this too close to call, and since the industry created the rules, a tie seems like the best outcome here.
3. Technology
Technological advancements and improved customer experience are some of the key driving forces around this transformation. As such, it comes to no surprise that the new
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entrants to the marketplace typically have the most state of the art technology to flex and scale based on business and customer demand. On the flip side of this, the incumbents have seen its business(es) grow throughout the years through organic and M&A growth. This expansion, all supported by legacy systems, provides incumbents with a tremendous challenge, and therefore opportunity. Many times these legacy systems are built on old, outdated technology stacks which causes support, integration and enhancement issues throughout the life of the application. These systems house vast amounts of data and support business processes which makes quick, agile, iterative enhancements extremely difficult to plan and deploy. Alternatively, simply sun setting these systems for large enterprises is difficult due to the key role they play in day-to-day operations. Therefore it should come as no surprise that the edge on technology goes to the disruptors.
4. The Tiebreaker
Both disruptors and incumbents have ups and downs to its respective value proposition within the insurance marketplace. While choosing a real “winner” is what everyone is hoping to learn, this is unattainable since the future of the industry lies with collaboration.
It’s often spoken that following in the footsteps of leading, innovative and disruptive organizations is the best course of action. However, disrupting an entire industry is hard, especially a well-regulated one. There are no shortage of great ideas coming from the world of new entrants and incumbents alike. The true secret sauce will be in finding a delicate balance of where incumbents have weaknesses that new entrants can help improve, and where new entrants need the incumbents to prove a concept and/or develop critical
Phil is a senior manager in Baker Tilly’s risk and internal audit and cybersecurity practice, and has more than 10 years of experience. He provides internal audit and IT audit-related services to clients in the financial services, healthcare and life sciences, higher education, insurance, manufacturing, distribution, and technology sectors. He uses leading practices in risk-based consulting and auditing standards to maintain an effective and efficient approach to enterprise risk management. He also assists with internal audit engagements for a variety of clients, performing internal controls, general IT, application and business process controls reviews using a riskbased approach.
mass for long term success. The industry has already seen these collaborations happening throughout the industry and the creation of venture capital/innovation investment funds at large carriers (e.g., XL Innovate, Nationwide Ventures, etc.). Furthermore, expect the need for collaboration to increase as carriers deploy technology to better manage newly emerging products (e.g., pay-per-use, on-demand insurance, etc.) and where new entrants need data and policyholders to evaluate its business model and garner regulatory approval for new products/operations. In the end, collaboration always wins. We look forward to being part of this innovative journey.
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Tuscarora Wayne Group of Companies Maximizes Leadership to Advance Corporate Strategy On behalf of the Boards of Directors, Jay W. Chadwick today announced a strategic reorganization of executive teams to capitalize on the rapidly changing insurance industry landscape. “The new structure positions our multiple holding and insurance companies for future expansion and aligns the business with our current growth strategies,” states Mr. Chadwick.
insurance products that capture the founders’ original mission of serving the underserved. “As our companies continue to grow in this digital age, it is important for us to leverage the traditional business practices that have been instrumental in our success with the power of the cutting-edge technology we have heavily invested in,” stated Mr. Salsman.
Core business operations-- Tuscarora Wayne Insurance Company, Keystone National Insurance Company and Lebanon Valley Insurance Company are now organized under the leadership of Todd E. Salsman, who after previously serving as Senior Vice President and Chief Operating Officer, has been elected President of the three companies.
In addition, Russ L. Oldham has been elected President of recently acquired Capitol Insurance Company based out of Lafayette Hill, Pennsylvania. Mr. Oldham joins an executive management team of industry experts who collectively bring over 150 years of extensive insurance experience. Capitol Insurance Company offers private passenger personal automobile and motorcycle insurance.
With roots planted in the agricultural sector of the insurance industry that date back to 1856, each company offers unique commercial
“Backed by the financial strength of the Tuscarora Wayne Group of Companies and the Insurance Capital Group, LLC, Capitol
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Insurance Company is now positioned to meet market demand with state-of-the-art insurance solutions. The future is bright for Capitol Insurance Company,” Mr. Oldham stated. Brian K. Bolinger, who after serving as Senior Vice President and Chief Financial Officer, has been elected to President of the holding companies, Tuscarora Wayne Mutual Group, Inc., Susquehanna Capital Corp., and Glacier Capital Holdings, LLC. Mr. Bolinger remains the Treasurer of the seven companies that comprise the Tuscarora Wayne Group.
“This is an exciting time for the Tuscarora Wayne Group of Companies as we continue to seek out new business opportunities to move us forward in this ever-changing insurance marketplace,” stated Mr. Bolinger. “In many respects, we possess the exuberance of a startup organization which happens to have more than 160 years of history behind us.” Jay W. Chadwick leads this exceptional executive management team as the Chairman and Chief Executive Officer of all companies.
Schroyer Named VP of Information Services/Chief Information Officer The Brethren Mutual Insurance Company congratulates Robin Schroyer on recently being named the Company’s Vice President of Information Services/ Chief Information Officer (CIO). Schroyer brings 30 years of experience to her position. She joined Brethren Mutual in 1988 as a Programmer and one year later was named the Company’s first Programming Manager. In 2015, Schroyer was promoted to Information Services Manager. In her role, Schroyer oversees Brethren Mutual’s Operations, Programming and Quality Assurance areas of Information Services. Schroyer is a 1985 graduate of Shippensburg University (Shippensburg, PA) where she earned a Bachelor’s of Science in Computer Science. Additionally, she holds the GISF (GIAC Information Security Fundamentals) certification. Schroyer serves on the Technology Committee of PAMIC (Pennsylvania Association of Mutual Insurance Companies), as well as CSC’s (Computer Sciences Corporation) Point In Operational Board. Schroyer resides in Waynesboro, PA.
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Pennsylvania Legislative Update By Vince Phillips, Phillips Associates
Pennsylvania’s New Insurance Laws оо Acts 22 and 23 (SB 877 and SB 878) regarding rebates and inducements up to $100 in value оо Act 26 (SB 630) allows unlicensed travel agency personnel to sell travel insurance оо Act 41 (HB 1851) provides greater transparency for Insurance Department financial examinations and market conduct examinations and eliminates the Joint Underwriting Association (JUA) as an independent entity and places it under Insurance Department control оо Act 48, House Bill 152 which spells out annuity suitability criteria and provides a life insurer search resource for beneficiaries оо Act 74 (SB 1101) providing title in case of minor damage recovered stolen car
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Maryland Lists 2018 Insurance Laws
The Maryland Insurance Administration has issued Bulletin 18-12, a summary of laws enacted during the 2018 Session of the Maryland General Assembly. View the bulletin as posted on the MIA website.
Delaware Legislative Summary
Delaware’s legislative session ended with a number of new insurance laws including ones on prescription drugs, confidentiality of personal financial information, etc. View the most recent bills from Delaware here.
Regulatory Updates
August 20, 2018 will mark the end of a public comment period on Insurance Departmentproposed Regulation 11-257: Privacy of Consumer Financial Information. This updates the 2005 Rule regarding privacy safeguards on insurance client data to conform to the new NAIC model privacy rule. Text of the proposed Rule will appear in the July 21 PA Bulletin.
In Maryland, the Maryland Insurance Administration will convene a hearing on insurance companies’ proposed premium rates for 2019 in Baltimore July 30, 2018. A summary of the requests is found at Maryland Insurance Administration website. Besides testimony presented at the hearing, Public
comments will be accepted through August 15 to healthinsuranceratereview.mia@maryland. gov. The legislative update is provided by Vince Phillips of Phillips Associates. For more detailed info on issues facing the PA legislature please contact Vince at xenobun@aol.com.
Petzoldt Joins MBG’s Insurance Analytics Department
Maryland Insurance Bulletins of Note
Evan C. Petzoldt joined Mutual Benefit Group’s Insurance Analytics Department on June 25, 2018, as Senior Research and Development Analyst. Petzoldt holds a bachelor of science degree in actuarial science from Maryville University. Prior to joining Mutual Benefit Group, he was employed as an actuarial consultant with Willis Towers Watson for eight years. His professional designations include Associate of the Casualty Actuarial Society (ACAS); Member of the American Academy of Actuaries (MAAA); and Certified Specialist in Predictive Analytics (CSPA).
The Maryland Insurance Administration has released the following bulletins that may impact the PAMIC Membership. оо Variable Commissions on Commercial Policies (Bulletin 18-13, July 9, 2018) оо Flood Insurance (Bulletin 18-11, June 12, 2018) оо Coverage for Water Damage/ COMAR31.08.14 (Bulletin 18-10, June 12, 2018) оо Cancellations of Insurance Policies (Bulletin 18-09, May 29, 2018) оо Cancellations of Insurance Policies (May 23, 2018, Bulletin 18-07)
Pennsylvania Insurance Fraud News The PA Insurance Fraud Prevention Authorities recently released their June edition of the PA Fraud Stories. This report details the arrests and prosecutions associated with fraud that occurred in May. Member companies are welcome to sign up to receive these newsletters directly from the PA Insurance Fraud Prevention Authority. View the June edition by clicking here.
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REGULATION
Updates from the Pennsylvania Coalition for Civil Justice Reform Arbitration Modernization Enacted
The new arbitration provisions only apply to arbitration agreements executed on or after HB 1644, which is now Act 55, the Pennsylvania July 1, 2019. Collaborative Law Act (PCLA), allows for House Action on Protz Fix family members to resolve disputes outside the courtroom in matters such as divorce, HB 1840 made progress this spring, passing child custody, alimony, and other aspects of the House by a vote of 115 to 80 and has been family law. Amended into the bill, however, is referred to the Senate’s Labor and Industry a modernization and update of Pennsylvania committee. HB 1840 is a “Protz Fix” bill arbitration law based on the Revised Uniform which addresses the Supreme Court ruling Arbitration Act (RUAA). Pennsylvania joins 20 that invalidated a portion of the Workers’ other states to adopt the RUAA. Compensation Act allowing employers to Advanced by the Pennsylvania Bar Association, request an Impairment Rating Evaluation (IRE) after an injured worker has been paid 104 HB 1644 as amended is designed to provide more complete arbitration procedures to meet weeks of total disability benefits. Championed by Representatives Rob W. Kauffman and the needs of the modern information age.
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Garth Everett, the legislation restores IRE’s to Workers’ Compensation by providing for the use of the American Medical Association “Guides to the Evaluation of Permanent Impairment” 6th Edition (Second printing April 2009).
vulnerable than ever.” The vote was hard fought but in the end, the bill was defeated in the House by a vote of 91103. Take a moment to see who voted “yes” to save nursing home care and who voted “no” with the trial bar. Call your legislator and either thank them for their support of HB 1037 Long Term Care Still Under Siege From or ask the tough question – “Why did you vote no? Out of State Lawyers A major disappointment was the defeat in the House of HB 1037, which would have limited punitive damages awards to 250 percent of the amount of compensatory damages for long-term care facilities, including skilled nursing facilities, assisted living residences and personal care homes. “This legislation would have protected hundreds of providers and tens of thousands of seniors in long-term care facilities from frivolous lawsuits brought by out-of-state predatory law firms,” said W. Russell McDaid, President and CEO of the Pennsylvania Health Care Association after the legislation failed. “There are long-term care providers in Pennsylvania currently paying more to defend these lawsuits than on food for their residents,” McDaid continued. “There have been more than 130 nursing facilities that have either declared bankruptcy, been forced into receivership, changed ownership or simply left the state altogether in the last five years. This legislation would have helped put an end to this crisis—instead, providers will be more
Letter to editor: Where will lawyers strike next? Fresh on the heels of Penn State decertifying several long-standing campus organizations due to liability and lawsuit concerns, now we learn that the West Chester Area School District is cancelling the Pierce Middle School’s annual field trip to Cape Henlopen. According to district Superintendent Dr. James Scanlon: “From a management standpoint, it is a lawsuit waiting to happen.” (News report on WCHE, 1520 AM, June 11, 2018) While some are quick to blame the school district for being too cautious, the district is not the cause of the problem. View the full letter to the editor here. Written by Curt Schroder, Executive Director of PCCJR, a coalition dedicated to bringing fairness to Pennsylvania’s courts by elevating awareness of civil justice issues and advocating for legal reform. More info at www.paforciviljusticereform.com.
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RESOURCES
General Regulatory Information
Use this table to discover important links to information on Insurance Department’s that affect PAMIC members.
Pennsylvania Insurance Department Bulletins Notices SOP’s
Regulations
Title 40 Statutes Unconsolidated Statutes
Press Releases PID Newsletter Consumer Alerts News & Notes
Title 18 Statutes
News
Title 11 Statutes
General Info
Statutes
News
Title 38.2 Statutes
News
Delaware Department of Insurance Bulletins
Regulations
NJ Department of Banking & Insurance Bulletins
Regulations
Maryland Insurance Administration Bulletins
Regulations
Virginia SCC - Bureau of Insurance Admin Letters Admin Orders
Regulations
West Virginia Office of the Insurance Commissioner Info Letters
Regulations
Statutes
Consumer Advocate
Statutes
News Releases Newsletters
Ohio Department of Insurance Bulletins
Regulations
New York Department of Financial Services - Insurance Opinions Circular Letter
Regulations
Statutes
Press Releases Statements
Michigan Department of Insurance and Financial Services Bulletins
Regulations
Statutes
Press Releases
Maine Department of Professional & Financial Regulation Bulletins
Regulations
Statutes
Press Releases
Statutes
Press Releases
California Department of Insurance Bulletins
Regulations
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Legislation Tracker Legislative Tracking Information on PAMIC’s Website A significant and growing part of PAMIC’s mission is to provide advocacy (government affairs ) services to our members. The General Assembly is prolific in producing over 4,000 pieces of legislation during their 2-year Session covering all facets of life in Pennsylvania. Fortunately, only a handful of these bills actually make it into law. For example, Governor Wolf just signed Act 22 and Act 23 of 2018 into law last week (the latest bills to become law) and they happen to deal with the elimination on the prohibition on rebates and inducements in insurance transactions. However, there are many other Bills “in the hopper” that PAMIC is keeping an eye on. Below is a list of bills that the association is currently tracking. For a full list visit our PA Bill Information Page.
Bill #
Sponsor
Description
HB 409
Eli Evankovich (R)
Amends the PA Construction Code Act, in preliminary provisions, further providing for defs. & for UCC Review & Advisory Council & providing for review of sections; for changes in UCC; for education, training & applicability.
HB 544
Dan Moul (R)
Amends Act further providing for liability for landowners to recreational users.
HB 1335
Tina Pickett (R)
Amends Title 40 (Insurance), in preliminary provisions, providing for Insurance Regulation and Oversight Fund; and making a related repeal.
HB 1576
Tina Pickett (R)
Amends the Insurance Department Act providing for limited lines travel insurance.
HB 1840
Rob Kauffman (R)
Amends the Workers’ Compensation Act, in liability & compensation, further providing for schedule of compensation and for physical examination or expert interview.
HB 1846
Brian Ellis (R)
Amends the Breach of Personal Information Notification Act further providing for definitions, for notification of breach and for notice exemption.
HB 1840
Tina Pickett (R)
Amends Title 40 (Insurance), in regulation of insurers and related persons generally, providing for corporate governance annual disclosure.
HB 1851
Tina Pickett (R)
Amends the Insurance Department Act, in examinations, further providing budget estimate & revisions, for invoices and examinations
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Baltimore Marriott Waterfront August 5-7, 2018
111th Mid-Atlantic Mutual Advantage Convention
Info
Pamic@pamic.org
1017 Mumma Road, Suite 202 Wormleysburg, PA 17043
(717) 303-0197