January 31, 2018 A publication of the Pennsylvania Association of Mutual Insurance Companies
Senate Bill 1031 Aims To Regulate the Insurance Department Laurie A. Kamaiko Joins Saul Ewing Arnstein & Lehr Pennsylvania Legislative Update
Pamic@pamic.org
1017 Mumma Road, Suite 202 Wormleysburg, PA 17043
(717) 303-0197
Contents Laurie A. Kamaiko Joins Saul Ewing Arnstein & Lehr, Further Strengthening the Firm’s Practices in Cybersecurity & Privacy and Insurance
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Senate Bill 1031 Aims To Regulate the Insurance Department Senate Bill 1031 (Laughlin-R- Erie) is being considered the Senate Banking Insurance Committee on January 30. The Bill has its genesis in HB 1335/SB 956 and HB 1851 related to Insurance Department transparency on the use of outside vendors for exam related work and exam best practices. HB 1335, a PAMIC initiative, passed the House unanimously late last year and is in the Senate Banking & Insurance Committee for consideration. HB 1851 (PAMIC supports his Bill), has not been considered by the House Insurance Committee.
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Pennsylvania Legislative Update 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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NEWS The R Street Institute: 2017 Insurance Regulation Report Card.......................................................................................................... 8 Last Chance to Register for the Pipeline Virtual Career Fair................................................................................................................ 9
REGULATION Governor Wolf to Modernize Outdated Overtime Rules to Strengthen the Middle Class and Provide Fairness for Workers...................................................................................................10 PA Bulletin Notice Update........................................................................................................................................................................12 Maryland Insurance Administration Issues Bulletin Requesting Information in the Event of a Disaster..................................12 PCCJR: Civil Justice Reform Bills to Watch.............................................................................................................................................13
RESOURCES General Regulatory Update......................................................................................................................................................................14 Legislation Tracker....................................................................................................................................................................................15
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EVENTS
Mutual Insurance Day When: February 5, 2018 Where: Hilton Harrisburg/PA Capitol Time: 8:00 a.m. – 4:30 p.m Info Join us on February 5, 2018, as we celebrate Mutual Insurance Day in Harrisburg, PA! Members will be given the opportunity to meet with their legislators, gain education on upcoming regulations, and network with members who have similar interests. Name
Date
Time
Location
Mutual Insurance Day
February 5, 2018
8:00 a.m. – 4:30 p.m.
Harrisburg Hilton
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
TBD
TBD
TBD
Claims Summit
April 10-11, 2018
TBD
Wyndham Gettysburg
PAC Cigars & Cognac Reception
April 10, 2018
Executive & Board Roundtable
June 13-14, 2018
TBD
Omni Bedford Springs
111th Annual Convention
August 5-7, 2018
Multiple
Baltimore Waterfront Marriott
9:00 p.m. – 11:00 p.m. Wyndham Gettysburg
For more information on PAMIC events please visit our website. Special Thanks to our 2018 Premium Gold Sponsors
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NEWS
Senate Bill 1031 Aims To Regulate the Insurance Department Senate Bill 1031 (Laughlin-R- Erie) is being considered by the Senate Banking Insurance
Committee on January 30. The Bill has its genesis in HB 1335/SB 956 and HB 1851 related to Insurance Department transparency on the use of outside vendors for exam related work and exam best practices. HB 1335, a PAMIC initiative, passed the House unanimously late last year and is in the Senate Banking & Insurance Committee for consideration. HB 1851 (PAMIC supports this bill), has not been considered by the House Insurance Committee. Senate Bill 1031 combines the provisions of HB 1335/SB 956 and HB 1851 into a single bill that accomplished the provisions in each respectively. There is broad support form the General Assembly and the Insurance department for these bills. The provisions would require the PID to produce an annual report on their use of outside vendors performing and costs for
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regulatory work (both Financial & Market Conduct exams, and other related regulatory work). Additionally, the bill requires a written estimate of insurance company examination costs being given to the carrier along with an estimated timetable for exam completion. Furthermore, 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.
Laurie A. Kamaiko Joins Saul Ewing Arnstein & Lehr, Further Strengthening the Firm’s Practices in Cybersecurity & Privacy and Insurance Laurie A. Kamaiko, a
product development and policy wordings. By taking the lead for the Firm on matters cybersecurity and insurance involving cyber insurance, she is well attorney, has moved her practice to Saul Ewing Arnstein & Lehr from Sedgwick LLP. She positioned to provide advice when the areas is a partner in the Firm’s New York City office of cybersecurity, privacy, data protection and insurance intersect, and further strengthen and will be Chair of Cyber Insurance and join SEA&L’s Cybersecurity & Privacy Practice. both the Cybersecurity & Privacy group and SEA&L’s Cybersecurity & Privacy Practice the Insurance group. supports clients in their response planning for cyber-attacks, crisis management during an Laurie advises clients in a wide range of occurrence and operations after a cyber-attack industries on emerging and complex risks or breach occurs. associated with cybersecurity and works closely with them to limit their exposure to Laurie earned her law degree from cyber incidents and respond to data breaches Boston University School of Law and her and related investigations and litigation. undergraduate degree from Vassar College. She has extensive experience in counseling insurers and reinsurers on the handling Laurie has authored numerous articles and of claims and coverage issues arising from spoken frequently on cybersecurity exposures, these events, as well as from other types privacy risks and insurance for publications of catastrophic occurrences and emerging and organizations in the U.S. and U.K. risks, and works closely with them on new
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Pennsylvania Legislative Update By Vince Phillips
Workers’s Compensation Bills Move Through Committees Worker’s Compensation bills have advanced in both House and Senate. Senate Bill 936 (White-R-Indiana) was approved by the House Labor & Industry Committee January 23. The vote was 15-11, a party-line vote with Democrats voting no. The second piece of legislation seeks to re-validate a system used to determine the severity of workers’ injuries. Known as Impairment Rating Exam, enactment would counter a PA Supreme Court decision (Protz) which struck down the existing statute and resulted in a 6.06% increase in rates. Senate Bill 963 (Ward-R-Westmoreland) was approved by the Senate Labor & Industry Committee by an 8-4 vote with Democrats voting no.
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The List Grows Longer So far, Pennsylvania has seen significant indications of change both for the PA General Assembly and the PA Congressional Delegation due to retirements, forced retirements and seeking other offices. These changes mean new leadership and committee chairs in 2019. In the Congress, Rep. Bill Shuster’s departure means that PA will no longer chair the powerful Transportation & Infrastructure Committee. Below are the changes to the legislature: U.S. Congress Rep. Pat Meehan (R-7)
Retiring/Sexual Harrassment Allegation
Rep. Lous Barletta (R-11)
Running for U.S. Senate
Rep. Tim Murphy (R-18)
Resigned due to personal scandal
Rep. Bill Shuster (R-9)
Retiring
Rep. Charles Dent (R-15)
Retiring
PA Senate John Eichelberger (R-Blair)
Running for Congress
Chuck McIlhinney (R-Bucks)
Retiring
Stewart Greenleaf (R- Montgomery)
Retiring
Scott Wagner (R-York)
Running for Governor
PA House Rep. Bob Godshall (R-Montgomery)
Retiring
Rep. Scott Petri (R-Bucks)
Took another position; Special election in May
Rep. Brandon Neuman (D-Washington)
Elected to local Judgeship; Special election in May
Rep. Dan McNeill (D-Lehigh)
Died; Succeeded by his wife Jeanne
Rep. Marc Gergeley (D-Allegheny)
Resigned due to conviction; Vacancy filled
Majority Leader Rep. Dave Reed (R-Indiana)
Running for Congress
Rep. Katherine Watson (R-Bucks)
Retiring
Rep Eli Evankovich (R-Westm./Allegheny)
Retiring
Rep. Kristin Phillips-Hill (R-York)
Running for PA Senate
Rep. Ron Marsico (R-Dauphin)
Retiring
Rep. John Taylor (R-Phila.)
Retiring
Rep. Will Tallman (Adams/Cumberland)
Retiring
The legislative update is provided by Vince Phillips of Phillips Associates. For more detailed info on issues facing the PA legislature contact Vince at xenobun@aol.com.
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The R Street Institute: 2017 Insurance Regulation Report Card
The R Street Institute has released their latest Insurance Regulation Report Card. The report aims to determine which states best regulate the business of insurance. The annual survey looks to see which state regulatory systems “best embody the principles of limited, effective and efficient government” and which have the lowest cost to policyholders, companies, taxpayers and consumers.
a B- rating, New York, 42nd with a D rating, Ohio, 18th with a B rating, Virginia, 11th with a B+ rating and West Virginia, 40th with a C rating.
In 2017, residual property insurance mechanisms continued to shrink. Premiums written by the nation’s residual property insurance plans have fallen from 3.32 percent of the market in 2011 to 1.72 percent of the The report seeks to find how free consumers market in 2016. Some states are looking to are to choose their insurance products, how privatize or phase out residual markets by free are insurers to provide those products and spinning their workers’ compensation fund off how effectively are states carrying out their into private mutual insurers. obligations to oversee solvency and stimulate competitive, private insurance markets. The report captures the changing regulatory landscape and its impact on the insurance Pennsylvania ranked 13th in survey with a B+ industry for the foreseeable future. rating with low politicization being the top strength and large runoff obligations as the This report card is featured by the R Street biggest weakness. Vermont came in at number Institute on their website. one due to low politicization, competitive auto market, competitive homeowners market, The article from the summary was originally small residual markets and broad underwriting published by The R Street Institute. The freedom. Delaware finished in last place due to original piece is available by clicking here. a highly politicized, concentrated auto market and little underwriting freedom. Others states Reiss, Megan, et al. “2017 Insurance Regulation Report Card.” R Street Institute, 29 Dec. 2017, www.rstreet.org/ worth noting are: Maryland which ranked policy-study/2017-insurance-regulation-report-card/ 30th with a B- rating, New Jersey, 24th with
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affiliation with Gamma Iota Sigma. With an estimated 400,000 jobs needed to be filled by 2020, the insurance industry is looking to hire and engage with students of all interests: risk management, finance, economics, information technology, data analytics, human resources, marketing and so much more! Spread the word, tell your friends…the Insurance Industry is HIRING!
Last Chance to Register for the Pipeline Virtual Career Fair
If you are interested in learning more about the Pipeline Virtual Career Fair please visit Gamma Iota Sigma’s event page.
This is the final call to register your company
for The Pipeline Virtual Career Fair, taking place on February 13th! Company registration is only $350, and FREE for Sustaining Partners. Recruit students from all majors at schools from all over the country, without having to leave your office. You don’t want to miss this incredible opportunity to find the industry’s up-and-coming talent! On the occasion of Insurance Careers Month, The Pipeline Virtual Career Fair brings employers together with college students pursuing a career in the Insurance Industry, providing access to companies seeking entrylevel and internship candidates. This event is open to ALL students regardless of their
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REGULATION
Governor Wolf to Modernize Outdated Overtime Rules to Strengthen the Middle Class and Provide Fairness for Workers
As part of his “Jobs That Pay” initiative,
Governor Tom Wolf announced a proposal to strengthen the middle class by modernizing Pennsylvania’s outdated overtime rules to increase the pay of nearly half-a-million people to ensure they are compensated fairly for their hard work. “Pennsylvania’s overtime rules haven’t changed in more than 40 years and workers are paying the price,” said Governor Wolf. “I am taking this action to ensure hundreds of thousands of Pennsylvanians who work more than 40 hours a week for the same job receive the overtime pay they have earned. “It’s simple, if you work overtime, then you should get paid fairly for it. This important step will put more money into the pockets of hardworking people and will help expand the middle class in Pennsylvania.” Governor Wolf made the announcement at The Fresh Grocer of Grays Ferry in Philadelphia, where he was joined by legislators, local elected officials, store management, staff, and local workers, who were quick to praise the governor’s
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announcement. “What the governor is proposing is common sense,” said Denise Kennedy, an Upper Darby resident and secretary at Garrettford Elementary School. “Paying workers fairly on the lower end of the pay scale will put more money in our pockets so we can spend it at local businesses. All I can say is, what can I do to help get this done?” The middle class is built on the idea of hard work and fair pay, but workers in Pennsylvania have not received a minimum wage increase in nearly a decade and overtime rules established in 1977 have not kept up with inflation. Many hardworking Pennsylvanians are not getting the overtime pay they deserve. Because
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the overtime rules have not been updated, employees are covered by an exemption to overtime that was intended for high-wage, white-collar employees more than 40 years ago. As a result, a salaried worker earning up to $24,000 a year, which is below the poverty line for a family of four, can work more than 40, 50, 60 or more hours a week and is not guaranteed overtime at time-and-a-half. “Four decades is far too long for Pennsylvania’s overtime regulations to remain stagnant,” said Acting Labor & Industry Secretary Jerry Oleksiak. “Updating the overtime rules to keep pace with our 21st century economy is the right thing to do for the hardworking men and women of the commonwealth. It will also generate competitive salaries and reduce turnover, helping to create and keep ‘Jobs that Pay’ here in Pennsylvania.” At the direction of Governor Wolf, the Department of Labor & Industry is finalizing a plan to modernize rules and clarify requirements. The new rules will phase in over four years to increase the salary threshold that requires employers to pay overtime to most salaried workers.
eligibility to 370,000 workers and up to 460,000 in four years. Starting in 2022, the salary threshold will update automatically every three years so workers are not left behind. Additionally, the duties for executive, administration and professional workers will be clarified to make it easier for employers to know if a worker qualifies for overtime. “This long overdue moment for thousands of struggling, hard-working employees in the 8th senatorial district and across Pennsylvania is saying this really is a happy new year,” Sen. Anthony Williams said. When fully implemented, modernizing overtime rules will increase the wages of an estimated 460,000 workers in Pennsylvania. That will lead to a stronger middle class. When workers earn more, they spend it in their local communities, which helps grow the economy throughout the state.
“The Governor’s proposal will give many working families in PA an increase in their income and will make sure they are paid for the hard work they are doing,” Rep. Jordan Harris The first step will raise the salary level to said. “That additional revenue will help pay determine overtime eligibility for most utility bills, buy groceries, take vacations, and workers from the federal minimum of $455 just make life a little easier.” per week, $23,660 annually, to $610 per week, $31,720 annually, on Jan. 1, 2020. The threshold The Department of Labor & Industry will increase to $39,832 on Jan. 1, 2021, followed anticipates releasing the proposed to update the regulations for public comments in March. by $47,892 in 2022, extending overtime
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PA Bulletin Notice Update
On January 20, 2018, the Insurance
January 28, 2018 publication of the PA Bulletin. Department published a Bulletin Notice dealing PAMIC will keep you posted as information is developed. with Act 205 (Homeowner Cancellation and Nonrenewal). The notice was posted because the PID has been seeing numerous examples of The January 20, 2018 PA Bulletin Notice intended to provide the Department’s position Cancellation Notices that do not comply with the Act. With a couple of minor exceptions, the that the notice must be titled “Notice of Cancellation or Non-Renewal” or “Notice of notice essentially reiterates the requirements Cancellation or Refusal to Renew”, regardless of Act 205. of which action is being taken by the insurer. In other words, according to the Department, At a January 24, 2018 meeting with Dep. Sec. a notice of cancellation can’t be titled “Notice Mendelsohn and Monahan, Deputy Chief of Cancellation.” This is contrary to prior Counsel Frantz, and Legislative Director Barry guidance from the Department. Also, the along with PAMIC’s Counsel Saul Ewing, the Department is pointing out that there are Department related to legislative initiatives. no longer four Department regional offices, Deputy Secretary Mendelsohn advised that the and the notice should include only the Department will be rescinding the January 20, Department’s Strawberry Square address and 2018 notice to give them more time to consider delete any references to regional offices. related policy and consumer protection issues. (Thanks Joel Hopkins, Esq, Saul Ewing for analyzing the original notice) The rescission notice did not appear in the
Maryland Insurance Administration Issues Bulletin Requesting Information in the Event of a Disaster The Maryland Insurance Administration issued Bulletin 18-02 on Jan. 17 requesting that insurers
provide company contact information and other information in the event of a disaster or catastrophic event. The information must be provided to the MIA by the close of business on April 16, 2018. The categories of information requested include: оо Primary contact name and back-up contact name;
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оо Whether the company has a plan in place to assist policyholders in the event of a disaster that occurs in Maryland and the contact information for the plan; оо Whether the company has a continuity of operations plan that allows it to continue to provide service to your customers in the event of a disaster or other disruptive event and the primary contact for this plan; оо Whether the company has offices located in Maryland and, if so, where they are located and what functions are performed at these offices; оо Whether the company has a pandemic flu plan and the primary contact for this plan; and оо A Severe Event Data Call Contact. Instructions on how to provide the information to the MIA is included in the bulletin. Questions regarding this bulletin should be directed to Joy Hatchette, associate commissioner, at (410) 4682029 or ceau.mia@maryland.gov.
PCCJR: Civil Justice Reform Bills to Watch Bill Number
Description
HB 544
HB 544 limits the liability of landowners who open their land for recreational use. This bill passed the House and is currently pending action in the Senate.
HB 1027
HB 1027 establishes a state False Claims Act. The PCCJR opposes this bill. You may hear about this in the context of the state budget.
HB 1840 & SB 963
These bills re-establish Impairment Rating Evaluations under the Worker’s Compensation Act. The previous law was struck down by the state Supreme Court due to improper delegation.
SB 963
SB 936 establishes a prescription drug formulary for Workers Compensation. The bill passed the Senate and is scheduled for a vote in House Labor and Industry Committee on Monday, January 22.
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.
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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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Corporate Governance Webinar Series
Session 3: Succession Planning February 22, 2018
Info
Pamic@pamic.org
1017 Mumma Road, Suite 202 Wormleysburg, PA 17043
(717) 303-0197