June 6, 2018 A publication of the Pennsylvania Association of Mutual Insurance Companies
Pennsylvania Legislative Update Insurers Provide Stability To Financial Markets And The Overall Economy Frivolous Lawsuits Jeopardize Senior Care Pamic@pamic.org
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Contents Insurers Provide Stability To Financial Markets And The Overall Economy page 7
Pennsylvania Legislative Update This update provides quick insights into the PA legislature. Find out more about bills moving through committee, Workers Compensation, and current regulations issued by the Department.
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Frivolous Lawsuits Jeopardize Senior Care Skilled nursing facilities, personal care homes and assisted living facilities are under attack from predatory, out-ofstate lawyers.
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NEWS Pennsylvania Legislative Update............................................................................................................................................................................................................... 4 Insurers Provide Stability To Financial Markets And The Overall Economy..................................................................................................................................... 7 Cyber Actors Target Home and Office Routers and Networked Devices Worldwide........................................................................................................................ 7
REGULATION Frivolous Lawsuits Jeopardize Senior Care.............................................................................................................................................................................................. 8 Lawsuit Watch.............................................................................................................................................................................................................................................. 9 Maryland Notice on Policy Cancellations................................................................................................................................................................................................ 9
RESOURCES General Regulatory Information............................................................................................................................................................................................................. 10 Legislation Tracker.................................................................................................................................................................................................................................... 11
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EVENTS
Executive & Board Roundtable When: June 13–14, 2018 Where: Bedford, PA Time: 8:00 a.m. – 2:00 p.m. Info
The Executive & Board Roundtable features education to improve company operations and provides a forum for members to discuss current issues. For the first time, the 2018 Roundtable will be hosted at the Omni Bedford Springs resort. Name
Date
Time
Location
PAC Summer Golf Outing
June 13, 2018
1:00 p.m.
Omni Bedford Springs
Executive & Board Roundtable
June 13-14, 2018
8:00 a.m.
Omni Bedford Springs
International Tax Webinar
June 27, 2018
2:00 p.m.
PAMIC Online
111th Annual Convention
August 5-7, 2018
Multiple
Baltimore Waterfront Marriott
Financial Management Seminar
September 6, 2018
TBD
Hershey Country Club
Information Technology Seminar
October 2018
TBD
Sheraton Harrisburg Hershey
Underwriting & Loss Prevention Seminar
November 2018
TBD
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
Pennsylvania Legislative Update By Vince Phillips, Phillips Associates
Welcome to Budget Month June is Budget Month in Harrisburg where the hopeful believe that a balanced State Budget can be crafted and signed into law by month’s end. Despite hopeful comments from legislative leaders, there are still a number of pitfalls before reaching that goal: JUA Lawsuit -- $200 million shortfall: In the State Budget for the current fiscal year, the General Assembly took $200 million out of the reserves of the Joint Underwriting Association (JUA), the insurer of last resort for medical malpractice insurance. JUA sued, saying that the money in its reserves came from policyholders and that even though the General Assembly created the JUA, it had no authority to seize an insurance company’s reserves. So far, a Federal District Court Justice has agreed with JUA. What does that mean? It means there is a $200 million shortfall in this year’s budget that will have to be made up even as lawmakers ponder the numbers for FY 2018-19. One-time devices were used to balance the current budget. These include a $250 advance on future payments coming to Pennsylvania from the Tobacco Settlement, a $200 million equity loan taken out by the Wolf Administration on the Farm Show Complex, and a $300 million authority given to the Governor to pull monies out of dedicated funds at his discretion with no requirement to repay. What does that mean? It means that there are fewer one-time budget options. One option is borrowing from the reserves of the Underground Storage Tank Indemnification Fund (USTIF) which pays claims for oil and gasoline tank leakage or ruptures but PA has not paid the Fund back for ‘loans’ it took out years ago. Increase taxes: In an election year? Really? Cut spending on social services and don’t increase education in an election year? Really? Tax Marcellus Shale natural gas extraction: This is a long-term goal of Governor
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Wolf’s but it has thus far met with no success with the General Assembly. For those wanting an extraction tax, there is some encouragement from several House Republicans led by Rep. Gene DiGirolamo (R-Bucks) who have broken with their party’s leadership to advocate such a tax in House Bill 1401. Underlying these issues is whether revenue will meet levels required to balance the State Budget. On May 1, 2018, the Independent Fiscal Office projected a $244 million shortfall by June 30, the end of this fiscal year. The Revenue Department reported on June 1 that May revenues of $2.5 billion were $42.6 million off predictions but that for the first eleven months of the fiscal year, revenues were $121.5 million , or 0.4 percent above estimate.
Politics: Scott Wagner Resigns PA Senator Scott Wagner (R-York) resigned his position in the PA Senate effective immediately in order to focus on his campaign for Governor. Recently, he came under fire for missing a number of Senate votes on child protection issues and his resignation may have been prompted to prevent a recurrence. That leaves York County without an elected Senator for now, although Governor Wolf could call a special election. Wagner was completing his first term as senator. The resignation was met with mixed reviews with supporters applauding his decision and Wolf supporters chiding him for not completing his elected term of office. An immediate consequence is that Senate leadership will have to fill Wagner’s seat as Majority Chair of the Senate Local Government Committee. It is uncertain if other Senators will fill his other Committee slots (Appropriations, Intergovernmental Operations, Labor & Industry, and Transportation).
Unlicensed Retail Insurance Sales Bill to Governor Wolf On May 23, Senate Bill 630 (Reschenthaler-R-Allegheny) was sent to the Governor after passage by the Senate 48-0 (concurring with House amendments). The bill allows unlicensed travel agency employees to sell travel insurance. The term ‘travel insurance’ includes trip cancellation, loss of luggage/personal effects, sickness (less than six months) or accident while traveling. The travel agency must have a licensed limited lines insurance producer under whom the unlicensed retail travel agents work. There are training requirements on types of travel insurance, ethical sales practices, and consumer disclosures in this legislation.
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Senate Concludes Busy Insurance Week The PA Senate acted on a number of pieces of insurance legislation this past week. Highlights: On May 21, the Senate passed Senate Bill 1031 (Laughlin-R-Erie) to establish transparency standards for when the PA Insurance Department utilizes a third-party contractor to conduct fiscal examinations of insurance companies. It requires an Insurance Department scheduling pre-exam meeting where estimated time and cost are discussed as well as what other exam options could be less costly. The Department is also required to meet with the insurer if the actual costs exceed the exam budget estimate by more than 10% and must notify the insurer if there is a material change in examiner staffing. The Department will also prepare specified reports on monies billed to the Department by the examination contractors. SB 1031 is now before the House Insurance Committee. The Senate passed Senate Bill 1101 (Stefano-R-Fayette/Somerset/Westmoreland) on May 23. For recovered stolen vehicles, the owner would have to get a recovered theft title only if the cost of repairs exceeds one-half of replacement value. It is now before the House Transportation Committee. Also on May 23, the Senate passed Senate Bill 257 (Ward-R-Westmoreland). Called the Eye Equity Act, the bill had three sets of amendments during its Senate tenure. Among other things, SB 257 allows a policyholder receiving vision care from an in-network provider to use an out-of-network vision care supplier (supplies including an optical lab) provided that there is notification that the vision care supplier notifies the patient. Also, a health insurance policy with a discount program for non-covered services shall permit an insured receiving care from an in-network vision care provider to receive a non-covered service from an in-network provider without the discount. SB 257 was referred to the House Insurance Committee on May 23. The Senate Appropriations Committee reported out Senate Bill 655 (Yaw-R-Lycoming) May 21 to establish an advisory committee under the Department of Health to develop opioid prescribing guidelines. NOTE: The bill does not specifically The legislative update is provided by mention insurance although health insurers Vince Phillips of Phillips Associates. For would certainly adapt to new rules. Likewise, more detailed info on issues facing the SB 655 does not specify applicability of these PA legislature please contact Vince at new guidelines to Workers’ Compensation. xenobun@aol.com.
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Insurers Provide Stability To Financial Markets And The Overall Economy The Insurance Information Institute has released a white paper, How Insurance Drives Economic
Growth, which takes a look at the insurance industry’s contribution to the economy. In addition to providing protection against financial aspects of death, injury and loss of property, the industry also promotes growth in every modern economy. The paper provides 10 ways in which the insurance industry promotes growth under three separate categories: safety/security; economic/financial stability; and development. Kirchner, Kim. “Insurers Provide Stability To Financial Markets And The Overall Economy.” Facts + Statistics: Auto Insurance | III, 5 June 2018, www.iii.org/press-release/insurers-provide-stability-to-financial-markets-and-theoverall-economy-060518.
Cyber Actors Target Home and Office Routers and Networked Devices Worldwide Foreign cyber actors have used VPNFilter
malware to target home and small office routers and network devices worldwide. VPNFilter malware collects intelligence, exploit LAN devices and block actorconfigurable network traffic. The Department of Homeland Security and the FBI recommend that individuals and businesses reboot their routers and network devices to disrupt the malware.
Gelman, Jon. “Cyber Actors Target Home and Office Routers and Networked Devices Worldwide.” Workers’ Compensation, 25 May 2018, workers-compensation. blogspot.com/2018/05/cyber-actors-target-home-andoffice.html.
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REGULATION
Frivolous Lawsuits Jeopardize Senior Care Skilled nursing facilities, personal care homes and assisted living facilities are under attack
from predatory, out-of-state lawyers. Lawsuit abuse reform must be enacted in the 2017-18 legislative session to combat these attorneys and keep Medicaid dollars where they belong: at residents’ bedsides in Pennsylvania. In the next few weeks, we hope to see action on H.B. 1037, which would cap punitive damages for long-term care providers without limiting a person’s right to sue or be made whole. The bill simply extends the same protections that Pennsylvania physicians have had since 2002 – nothing more. Frivolous lawsuits affect the quality of care, the cost of providing care and the morale of hardworking staff. These high legal costs inhibit job growth, increase health-care costs and limit access to medical care. An issue brief on H.B. 1037 is posted on the PCCJR webpage, and we have joined with our member, thePennsylvania Health Care Association, to urge people to contact their state Representatives and ask them to support H.B. 1037.
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Lawsuit Watch PCCJR’s June edition of Lawsuit Watch included a recap of Governor Wolf’s veto of S.B. 936
and an interview with special guest Kevin Shivers, Executive State Director of the National Federation of Independent Businesses, Pennsylvania Chapter.
Kevin and PCCJR Executive Director, Curt Schroder, discussed the cost of lawsuits on small business and the growing threat of overly zealous litigation, including Penn State’s recent decision to bring an end to The Outing Club, Nittany Grotto Caving Club and the Nittany Divers Scuba Club because they were deemed too risky for potential lawsuits. You can hear the complete podcast by clicking 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 information at www.paforciviljusticereform.com.
Maryland Notice on Policy Cancellations On May 27, 2018, Governor Larry Hogan issued Executive Order 01.01.2018.14 declaring a State
of Emergency as a result of the severe storm and flooding that occurred. Because of this weather event, daily life for many Maryland consumers has been disrupted. To avoid cancellations for personal automobile insurance, homeowners insurance, and other personal lines of insurance; commercial insurance; and life and health insurance, the Maryland Insurance Administration encourages insurers to provide reasonable accommodations, including a grace period for premium payment, to policyholders that reside in and the businesses located in the following zip codes: 21041; 21042; 21043, 21045, 21228 and 21229. If you have any questions, please contact Joy Hatchette, Associate Commissioner, Consumer Education and Advocacy, by telephone at 410-468-2029 or by email at joy.hatchette@maryland. gov.
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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