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February 14, 2018 A publication of the Pennsylvania Association of Mutual Insurance Companies

Emotional Quotient Matters

Pennsylvania Legislative Update

Aaron Elected to Brethren Mutual’s Board of Directors

Pamic@pamic.org

1017 Mumma Road, Suite 202 Wormleysburg, PA 17043

(717) 303-0197


Contents

Pennsylvania Legislative Update

Emotional Quotient Matters Since the mid-1990s numerous books and articles have been written on emotional intelligence (EQ) as a driver of individual and organizational success. Authors Daniel Goleman, Travis Bradberry, and Richard Boyatzis have all written on the key components of EQ and the positive impact it can have in our personal and professional lives. Goleman defines EQ as, “The capacity for recognizing our own feelings and those of others, for motivating ourselves, for managing emotions well in ourselves and in our relationships.”

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This update provides quick insights into the PA legislature. Find out more about bills moving through committee on Workers Compensation, and legislators who are not currently seeking re-election.

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Aaron Elected to Brethren Mutual’s Board of Directors page 9

NEWS Millville Mutual Announces Corporate Structure Changes.................................................................................................................................................................. 8

2018 Cyberrisk Landscape........................................................................................................................................................................................................................ 10 Insurers Gingerly Test Bitcoin Business with Heist Policies............................................................................................................................................................... 11 Consumer Groups Seek Insurance Rate Reduction with New Tax Law............................................................................................................................................. 11

REGULATION NAIC Releases Strategic Plan — State Ahead......................................................................................................................................................................................... 12 SB 936 Workers’ Comp Drug Formulary Falls in State House............................................................................................................................................................ 13 Insurance Department Requests that Rate Filings Account for 21% Federal Income Tax Rate.................................................................................................... 13

RESOURCES General Regulatory Update...................................................................................................................................................................................................................... 14 Legislation Tracker.................................................................................................................................................................................................................................... 15

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EVENTS

Succession Planning Webinar When: February 22, 2018 Where: PAMIC Online Time: 2:00 p.m. – 3:00 p.m Info One issue that is currently facing all PA Insurers is Corporate Governance Annual Disclosure. A crucial aspect of this mandate includes succession planning and talent management. Join us at 2 p.m. on February 22, 2018, for a webinar covering Succession Planning. Name

Date

Time

Location

Succession Planning Webinar

February 22, 2018

2:00 p.m. – 3:00 p.m.

Web

Annual Spring Conference

March 7-8, 2018

7:45 a.m. – 3:00 p.m.

Nittany Lion Inn

PAC Spring Golf Tournament

April 9, 2018

11:30 a.m.

Links at Gettysburg

Claims Summit

April 10-11, 2018

8:00 a.m.

Wyndham Gettysburg

PAC Cigars & Cognac Reception

April 10, 2018

9:00 p.m. – 11:00 p.m. Wyndham Gettysburg

Human Resources Seminar

May 9, 2018

8:00 a.m. – 4:00 p.m.

Sheraton Harrisburg Hershey

PAC Summer Golf Outing

June 12, 2018

1:00 p.m.

Omni Bedford Springs

Executive & Board Roundtable

June 13-14, 2018

8:00 a.m.

Omni Bedford Springs

111th Annual Convention

August 5-7, 2018

Multiple

Baltimore Waterfront Marriott

For more information on PAMIC events please visit our website. Special Thanks to our 2018 Premium Gold Sponsors

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NEWS

EQ Matters

By Dr. John Park, Baker Tilly

Since the mid-1990s numerous books and articles have been written on emotional intelligence (EQ) as a driver of individual and organizational success. Authors Daniel Goleman, Travis Bradberry, and Richard Boyatzis have all written on the key components of EQ and the positive impact it can have in our personal and professional lives. Goleman defines EQ as, “The capacity for recognizing our own feelings and those of others, for motivating ourselves, for managing emotions well in ourselves and in our relationships.” He emphasizes that IQ and technical competencies get us into the game; however, a high level of EQ elevates our ability to lead and manage organizations.

In The Emotional Intelligence Quick Book: Everything You Need to Know to Put Your EQ to Work, Bradberry suggests that “EQ is the single biggest predictor of performance in the workplace and the strongest driver of leadership and personal excellence.” Bradberry goes on to make the case that leaders with a high EQ are 80 percent more productive than their low EQ counterparts, and this productivity translates to higher income and success in leadership roles. There is a sound business case for understanding EQ and focusing on its development. EQ can be developed and improved over time when we are willing to push ourselves outside of our comfort zone, are humble enough to ask for and receive feedback, and take the time to slow down, reflect, and think through what we say and do.

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Assessments, training programs, and “I am a great believer in luck, the harder I work the more luck I have.” workbooks have been created to encourage the development and use of EQ. You can develop Thomas Jefferson Jefferson’s quote is particularly relevant to the improvement and development of EQ. Behaviors can be changed when we are willing to practice, adapt to our surroundings, and seek out trustworthy mentors willing to take the time to help move us forward. Bradberry breaks EQ down into personal and social competence – the ability to be aware of emotions and recognize certain tendencies and behaviors that help or hinder effectiveness. He also emphasizes the importance of social competence – the ability to manage relationships, understand and empathize with others, and recognize how the environment can influence both our own and others’ behaviors. For those who watch the detective show Foyle’s War, actor Michael Kitchen provides some wonderful examples of EQ through his ability to use the power of observation, empathy, and self-management to solve crimes. Foyle, has the ability to manage his emotions and nonverbal communication in a manner that allows him to keep criminals guessing. The power of EQ is in the ability to maintain focus and cultivate powerful habits that help leaders bring out the best in themselves and others.

your EQ through structured training, coaching, and a desire to improve and grow. Multirater 360 degree EQ assessments can provide us with a realistic snap shot of how others see us in a variety of settings and compare that feedback to our self-perceptions. This can be positive and validating at times, and it can also be uncomfortable. I have experienced the feedback of 360s, and regularly work with others to help them understand how the feedback can be used to drive them in a positive and beneficial manner. 1. Bradberry, T. & Greaves, J. (2005). The Emotional Intelligence Quick Book: Everything You Need to Know to Put Your EQ to Work. New York: Fireside. 2. Goleman, D. (1998). Working with Emotional Intelligence. New York: Bantam Books. This article was previously published by the Pennsylvania Institute of Certified Public Accountants. Dr. John Park joined Baker Tilly in 2012 and has focused on the identification and development of Baker Tilly’s high potential leaders and as a director in the consulting practice working with clients to facilitate their strategic planning and risk management activities, developing customized leadership development programs and facilitating 360 feedback assessments. His undergraduate and master’s degrees are from Shippensburg and his doctorate in education is from Penn State.

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Pennsylvania Legislative Update By Vince Phillips

Speaker Turzai Suspends Governor Effort Shortly before the PA Republican State Committee formally endorsed Senator Scott Wagner (R-York), Speaker of the House Mike Turzai (R-Allegheny) suspended his candidacy for Governor. This means that he will continue as a candidate for re-election to the PA House of Representatives. Assuming Republicans maintain a majority in the November election, he would seek another term as Speaker. The decision leaves two other candidates vying with Wagner for the GOP nomination, Paul Mango and Laura Ellsworth, both from western PA. House Insurance Committee Set to Move This week the House Insurance Committee is slated to take up three bills. First are Senate Bills 877 and 878 sponsored by Senator Don White (R-Indiana). The two would allow for rebates and inducements when marketing insurance policies. Up to this point, Act 205 (Unfair Insurance Practices Act) and other laws specifically outlawed rebates and inducements

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except where the item was ‘de minimus’, dependent on the Insurance Department’s judgment as to whether the item was truly of minor value. This legislation sets the cap at $100 of value. They apply both to insurance producers and companies. The second bill is House Bill 1851 sponsored by House Insurance Committee Chair Rep.


Tina Pickett (R-Bradford). It answers longstanding objections by insurance companies and especially by the PA Association of Mutual Insurance Companies (PAMIC). Somewhat similar to Senate Bill 1031 referenced above, HB 1851 goes into more detail about Insurance Department and its subcontractor insurance company examiners’ responsibilities regarding transparency and estimated costs of an examination. It says that the Department must tell the insurer of an increase in the cost or changes in examiner staffing. In addition, it specifies that an invoice must contain detailed descriptions of charges on a quarter-hour basis. Senate Banking & Insurance Committee Moves Bills On January 30, the Senate Banking & Insurance Committee amended and reported out two bills. Senate Bill 1031 (Laughlin-R-Erie) would require a written estimate of insurance company examination costs being given to the carrier along with an estimated timetable for exam completion. In addition, there would have to be a meeting held before the formal examination starts to explain to the carrier the scope of what is to be examined and discuss alternatives to reduce the cost and time the exam takes. This addresses a standing issue by both property/casualty companies (particularly Mutual Insurance Companies) and health

insurers. The second bill was Senate Bill 780 (Vogel-R-Beaver) regulating telemedicine, important to underserved rural areas, and requiring insurer coverage of telemedicine treatment. The Insurance Department Budget The Insurance Department is not on the chopping block since its revenue stream is largely separated from the General Fund with Department revenues coming from licensing fees ($48.1 million). This is split into two parts with about ½ going into the General Fund and the other $28.886 going to fund the Insurance Department’s general government operations budget. This is an increase to the Insurance Department of $1.77 million above the current fiscal year. Since this is a dedicated fund, there is still some danger that the Governor will take part of it to help balance this year’s State Budget. The General Assembly gave the Governor authority to take up to $300 million from a slew of dedicated funds of which the Insurance and Regulatory Oversight Fund is one. Staffing: Insurance Department currently has 227 employees and 14 vacancies. In this proposed budget, it can have 248 employees. 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.

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Millville Mutual Announces Corporate Structure Changes The Board of Directors of the Millville Mutual Insurance Company, Millville, PA is pleased to

announce several important changes to the management structure. Eric Raski has been named Chief Operating Officer and will assume responsibility for leading and directing daily operations of the Company. Eric earned a BS degree in engineering from Penn State and an MBA degree from Bloomsburg University. He is also a licensed professional engineer. Liesl Kreischer has been appointed to the position of Director of Marketing, Business Development and Human Resources. Liesl will be responsible for supervising field marketing and business development, agency appointments and relations and Human Resource programs. Liesl earned BS and MBA degrees from Bloomsburg University. Mary LeValley has been named to the position of Director of Underwriting, responsible for supervising the underwriting department, implementing product changes and acting as a liaison between underwriters and producers. Mary earned a BS degree in Communications from Shippensburg University.

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These three individuals, working in conjunction with M. Paige Raski, President, will comprise the organization’s senior management team. Identified as a key component of the Company’s ongoing Strategic Planning process, the team will provide depth and continuity within the management structure and will align with the Board of Directors in fulfilling a sound and sustainable vision for the Company’s future. Millville Mutual Insurance Company, formed in 1875, has enjoyed 142 years of continuous operations. The Company currently markets a broad range of insurance offerings through 230 independent agencies in Pennsylvania and New York and services over 72,000 policies. For more information regarding the Millville Insurance Companies visit their website.

Aaron Elected to Brethren Mutual’s Board of Directors First Female Board Member in the Company’s 121 Years of History

The Brethren Mutual Insurance Company recently elected Tammy Aaron to the

Company’s Board of Directors. Aaron is honored to be elected Brethren’s first female Board member in the Company’s 121 years of history. She is also the youngest Board member currently serving on the Board of Directors. Aaron joined Brethren Mutual as an Accountant in August 1993. In 1995, she was promoted to Assistant Treasurer and later elected as Board Treasurer in 1999. Aaron was named Vice President of Finance in April 2002 and later promoted to Chief Financial Officer. In 2015, Aaron earned the title of Chief Risk Officer. In 2017, she was elected to serve as both Board Treasurer and Corporate Secretary. (continued on next page...)

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In addition to her Board duties, Aaron currently oversees Brethren Mutual’s Accounting and Human Resources Departments. Aaron is a 1984 graduate of Clear Spring High School (Clear Spring, MD). She earned a

Bachelor’s degree in Accounting with a minor in Mathematics from Shepherd University (Shepherdstown, WV) in 1989. She became a CPA (Certified Professional Accountant) in 1991. Aaron resides in Clear Spring, MD.

2018 Cyberrisk Landscape As risk awareness increases, cyberthreat actors get more advanced and stay several steps ahead

of risk managers. Cybersecurity experts expect Ransomware to be the top concern for 2018. Ransomware sales increased 2,500 percent last year and the low cost makes it accessible to all levels of cybercriminals.

Regulation is needed to enforce cybersecurity failures, companies all over the world will need to closely monitor their security efforts. In the EU, the General Data Protection Regulation (GDPR) will go into effect in May, 2018. GDPR is a regulation that requires businesses to protect the personal data and privacy of EU citizens for transactions that occur within EU member states, and non-compliance will result in heavy fines. Notification is expected to be a topic in new regulations. GDPR and the NY State Department of Financial Services rules requires that relevant authorities are notified within 72 hours of a breach and a full investigation be completed within 30 days. Experts expect other states to include these requirements in future legislation along with notifying consumers in a timely manner. Business Email Compromise schemes, Bitcoin and other cryptocurrencies and Internet of Things (IoT) devices all face increased risk of threat of cybersecurity. Data breaches caused by supply chains, also known as Third-Party Software Supply Chain attacks, have never been higher. Organizations need to ensure that their suppliers’ security protections are up to par. Disruptions to power grids, industrial control systems and other infrastructure attacks are on the rise. North Korea remains a major threat to worldwide financial security. In 2016, North Korean hackers managed to steal $81 million from the New York Federal Reserve. Tuttle, Hilary. “2018 Cyberrisk Landscape.” Risk Management, 1 Feb. 2018

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Insurers Gingerly Test Bitcoin Business with Heist Policies Cryptocurrencies are the wave of the future

as more companies and countries accept them as valid forms of currency. As with any new rapidly growing technology, the potential for risk and error is common. Insurers are beginning to offer protection against cryptocurrency theft. Only a few insurers have taken on selling insurance to this loosely regulated business, but its a step in giving this growing industry mainstream acceptance. Digital currency risks include: theft directly from employees, cyber hackers or other outside parties, and unauthorized access as well as fraud and technical errors. In 2017, cryptocurrency sales increased by more than $5 billion, but there are no estimates on how much of that was insured or what amount of premiums were collected. At the moment, many insurers are not convinced that the digital coin industry is large enough for premiums to cover potential losses. Baryln, Suzanne. “Insurers Gingerly Test Bitcoin Business with Heist Policies.” Reuters, Thomson Reuters, 1 Feb. 2018

Consumer Groups Seek Insurance Rate Reduction with New Tax Law This week insurance commissioners in all 50

states received a letter from the Consumer Federation of America and the Center for Economic Justice requesting they ask for a 5% rate cut to insurance coverage, mainly property and casualty coverage. The NAIC has also been in touch with state regulators regarding the reduction.

The request comes after President Trump’s federal tax overhaul. The decrease in tax rates should give insurers a higher profit allowing for a comparable rate decrease. State insurance commissioners must ensure companies lower their rates or consumers will overpay for their auto, home and business coverage by an estimated $25 billion. Ondrusek, Tony. “Consumer Groups Seek Insurance Rate Reduction with New Tax Law.” IFAwebnews.com, 26 Jan. 2018

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REGULATION

NAIC Releases Strategic Plan — State Ahead Plan outlines technological investments to meet changing regulatory needs

The National Association of Insurance Commissioners (NAIC) announced the release of State

Ahead, the organization’s strategic plan. State Ahead highlights specific investments the NAIC will be making the next three years to support state insurance regulation. “State Ahead provides the roadmap for the NAIC and state insurance regulators in our rapidly changing environment to put the states in a leadership role on key issues, position the organization ahead of the curve in developing areas, and to provide the organization and its members with the tools, talent and technology needed to effectively regulate in this dynamic landscape,” said Julie Mix McPeak, NAIC President and Tennessee Commissioner of Commerce and Insurance. State Ahead is organized into three core themes: 1) Safe, Solvent and Stable Markets; 2) Consumer Protection and Education; and 3) Superior Member Services and Resources.

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The themes are supported by goals and objectives outlined in the plan. In addition, the document includes a summary of planned and anticipated financial investments.

transformation of the markets our members regulate.”

SB 936 Workers’ Comp Drug Formulary Falls in State House

years 2013-15 with respect to prescription drug and opioid dependence among injured workers – measuring 87 percent higher than the median study state.

“Technology and consumer expectations are shaping how insurance companies operate, and “The plan capitalizes on an opportunity to regulation must keep pace with this change,” provide a credible state vision for the evolution said Andy Beal, NAIC Chief Operating Officer of our regulatory support tools,” said NAIC CEO and Chief Legal Officer. “This plan makes sure Michael F. Consedine. “In the next three years, we are keeping up with the member support we are going to build an enduring and robust services our state insurance departments need regulatory framework that accounts for the in the face of this change.”

Legislation that would implement a

prescription drug formulary for workers’ compensation patients failed to pass in a 98-98 vote in the House last week. Senate Bill 936 is a top legislative priority for the PA Chamber and the insurance indutry this session because it would help to combat Pennsylvania’s opioid crisis and other prescription drug abuses related to injured workers. Formularies are standard across healthcare and have been shown to be successful when applied to workers’ compensation. A recent study showed the Commonwealth ranking second between the

Insurance Department Requests that Rate Filings Account for 21% Federal Income Tax Rate The PA Insurance Department issued an

informal email Feb. 13 requesting that trade associations notify their members that supporting information or exhibits included with rate filings must use the new 21 percent federal income tax in the rate indications. Filings using the former 35 percent rate will receive an objection. The department is experiencing a backlog of filings.

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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 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 1335

Tina Pickett

Amends Title 40 (Insurance), in preliminary provisions, providing for Insurance Regulation and Oversight Fund; and making a related repeal.

HB 1840

Rob Kauffman

Amends the Workers’ Compensation Act, in liability & compensation, further providing for schedule of compensation and for physical examination or expert interview.

HB 1848

Tina Pickett

Amends Title 40 (Insurance), in regulation of insurers and related persons generally, providing for corporate governance annual disclosure.

HB 1851

Tina Pickett

Amends the Insurance Department Act, in examinations, further providing for purpose & providing for scheduling conference, for budget estimate & revisions, for billing invoices and for annual examination & analysis report.

SB 936

Donald White

Amends the Workers’ Compensation Act, in liability and compensation, further providing for prescription drugs and the treatment of workrelated injuries; and, in procedure, further providing for peer review.

SB 956

Daniel Laughlin

Amends the Insurance Regulation and Oversight Fund Act, providing for annual report to General Assembly.

HB 1823

Kurt Masser

Amends the Insurance Company Law, in casualty insurance, further providing for billing.

HB 1841

Mike Tobash

Amends the Insurance Company Law, in general provisions relating to insurance companies, associations & exchanges, further providing for rebates and inducements prohibited, revocations of licenses, and penalties.

HB 1842

Mike Tobash

Amends Insurance Department Act, in insurance producers, further providing for rebates and for inducements prohibited.

SB 877

Donald White

Amends the Insurance Department Act, in insurance providers, further providing for rebates prohibited and for inducements prohibited.

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Save the Date: Upcoming PAMIC Events

Congressional Contact Program When: May 15–16, 2018 Where: Washington D.C. Time: 9:00 a.m. CCP is an excellent opportunity to meet with legislators in the U.S. Capitol to discuss issues affecting the mutual insurance industry.

PAC Spring Golf Outing When: April 9, 2018 Where: Links at Gettysburg Time: 11:30 a.m. Support the PAMIC PAC while enjoying a nice day on the course. This event will be hosted in conjunction with the Claims Summit.

Pamic@pamic.org

1017 Mumma Road, Suite 202 Wormleysburg, PA 17043

(717) 303-0197

PAMIC 360 February 14, 2018  
PAMIC 360 February 14, 2018