House and Senate Republican leadership met mid-week last week for their annual planning retreat. At the meeting, House Speaker Paul Ryan laid out legislative plans for the next 200 days. On the agenda is repealing and replacing portions of President Obama’s Affordable Care Act. Another big project — tax reform.

Ryan said ObamaCare’s target date for action is spring and taxes and tax reform will be done by August and the annual August recess. House Budget Committee Chairwoman Rep. Diane Black of Tennessee said, “It will be a repeal with some replacement in it for what we're able to do given the reconciliation process. Our goal is to make this a patient-centered healthcare system where we give people options.”

And she said in spite of what you hear, health care savings accounts are one of the positive pieces and is “something that people really do want.”

Senate Majority Leader Mitch McConnell — who’ll have a more difficult time pushing an ObamaCare replacement through the senate — is largely in agreement with Ryan’s timeline.

Not everyone in the Republican Party is all that happy with the rush to repeal. Many don’t think Republicans ought to move on anything without input from the president and others worried about how to get this going and asked questions like:

•  Don’t we need a replacement plan in place before repeal?

•  How do we avoid causing deep damage to the health insurance market?

•  Who will lose coverage?

•  Or who will pay more under a revamped system?

And then there are the political challenges says California Rep. Tom McClintock.

“We’d better be sure that we’re prepared to live with the market we’ve created. That’s going to be called Trumpcare. Republicans will own that lock, stock and barrel, and we’ll be judged in the election less than two years away,” he said.

Sen. Lamar Alexander of Tennessee agreed. “Our goal, in my opinion, should be not a quick fix. We can do it rapidly — but not a quick fix. We want a long-term solution that lowers costs,” he said.

Ryan punctuated the discussion with, “We have a responsibility to work for the people that put us in office. That’s the oath we take: to defend the Constitution, to fight for the people we represent, and this is a fiasco that needs to be fixed.”

The process begins in earnest on Thursday of this week as Oregon Congressman Greg Walden’s House Energy and Commerce Committee will hold a hearing titled The Failures of ObamaCare: Harmful Effects and Broken Promises. It is that committee that will construct most of the replacement for ObamaCare.

And Walden called it repair not replacement, “We need to work aggressively on the repairs to the individual market, to Obamacare. Some might call that replacement. I call that a rebuild. I call it repair.”

The House Ways and Means Committee will also hold a hearing on the individual mandate.

Source links: The Hill, The Washington Post — link 1, link 2

Arizona — Windshield Glass

 Arizona has a requirement that auto insurers must pay to replace cracked or broken glass for free for those insureds with full coverage. A high rate of heat and rock damage is why the Legislature made the requirement decades ago.

Insurers are finding it to be a huge expense and they want the requirement eliminated. Republican Sen. Karen Fann of Prescott agrees and has introduced legislation — SB 1169 — to at least let insurers charge a deductible.

The auto glass industry — and there are a plethora of auto glass shops in the state — say people will not fix or repair them when they need it because of the deductible. Representatives claim it will become a public safety issue and — at the very least — will put a lot of shops out of business and lead to higher unemployment.

Source links: The State, Insurance Journal

California — Jones Proud of Win

 This came to Weekly Industry News from the California Department of Insurance.

In a sweeping victory for consumers, Insurance Commissioner Dave Jones today announced the California Supreme Court, in a 7-0 decision, affirmed his authority against a major insurance industry legal challenge.

Rejecting the insurance industry's arguments, the Supreme Court ruled the insurance commissioner has broad discretion to adopt rules and regulations as necessary to promote the public welfare. The insurance industry lost their challenge to Jones' consumer protection regulations that require insurers replacement cost estimates actually reflect the complete cost of rebuilding a policyholder's home after a fire.

"We have won an important victory for California consumers over the insurance industry with the Supreme Court's decision today upholding our consumer protection regulation," said Insurance Commissioner Dave Jones. "The Supreme Court rejected the insurance industry's effort to strike down the department's regulation, which protects consumers from misleading insurer estimates of home replacement costs, which left homeowners without adequate coverage or ability to rebuild their homes after fires."

"Climate change, years of drought, and more devastating wildfires have changed the landscape of California and led to a year-round fire season. This regulation offers homeowners peace of mind, should disaster strike," Jones added.

The regulations were needed because insurance companies were misleading consumers by giving them incomplete home replacement cost estimates, sometimes by removing key components from the actual estimates they calculated, in order to undercut competitors with lower premium. The practice unfairly left consumers who relied on their insurers' estimates unaware they were underinsured, and many could not rebuild after fires destroyed their homes.

The insurance industry, led by the Association of California Insurance Companies and the Personal Insurance Federation of California, used its lawsuit challenging the regulation to challenge the Insurance commissioner's authority to adopt regulations that protect consumers from insurers' unfair and misleading practices.

While the insurance industry did not argue, insurers would have difficulty complying with the regulation, or that the general rule requiring all insurers' replacement-cost estimates include all costs necessary to replace a home is a bad idea, the industry argued that the regulation was overreaching by the commissioner.

Today, the Supreme Court rejected the challenge and affirmed the commissioner has broad authority under the Unfair Insurance Practices Act to adopt regulations prohibiting insurers from unfair practices, like misleading consumers into believing they have replacement-cost insurance coverage that is not intended to cover all costs of replacement.

New Mexico — NIPR: The National Insurance Producer Registry (NIPR) recently added New Mexico and Guam to the Contact Change Request (CCR) software application. The application allows individuals to electronically update contact information with the Producer Database (PDB) and state insurance departments.

Producers, agents, adjusters, navigators and other insurance licensees use CCR as a one-stop shop to update email, telephone and fax numbers, in addition to physical addresses on file with state insurance departments. Additionally, CCR allows contact changes for designated home state licensees (agents without a resident license) and inactive or expired licenses.

"The NIPR is proud to implement CCR in 100 percent of our states and jurisdictions, making it easier for individual licensees to comply with state insurance regulation," said Karen Stakem Hornig, NIPR Executive Director. "This is a step toward fulfilling the NIPR's mission to make the producer licensing process more cost-effective, streamlined and uniform."

Since the initial rollout in January 2015, the NIPR has processed more than 3.8 million CCR transactions. The final stage of the CCR project will add the capability for business entities to change contact information stored on the PDB.

Oregon — Big Budget Troubles

 Oregon Senate President Peter Courtney expects the Legislature will not be able to solve the state’s $1.8 billion shortfall by Sine Die and will have to go into special session.

“We have until midnight July 10. If we don't balance the budget by then, we have to come back. In my opinion, we're going to be here all summer,” He said.

Courtney is the alone in his pessimism. House Speaker Rep. Tina Kotek thinks they can get it done but agrees it’ll be a challenge since just under 3/5ths of the supermajorities in the House and Senate have to vote yes. That means they’ll need some Republicans to cross the aisle.

Both Kotek and Courtney are looking at corporate taxes to solve the problem. Republicans aren’t anxious to raise those taxes and say the real problem is PERS.

Source link: OregonLive.com

Oregon — From the Oregon Department of Insurance

Oregon Division of Financial Regulation - Rates & Forms New Wrap-up Projects Filings

Wrap-up filing information and documents

The Oregon Division of Financial Regulation - Rates and Forms unit is excited to announce the launch of a new website location for everything wrap-up. The pertinent Oregon statutes, wrap-up filing instructions, two trust agreement templates, and a document on mini-wraps are all linked to the new site. As an additional resource, we will be adding a list of active wrap-ups which will be updated periodically.

•  Wrap-up filings webpage — http://dfr.oregon.gov/rates-forms/Pages/wrap-up-filings.aspx

Please contact our wrap-up analyst, Jan Vitus, at 503 947 7278 or jan.vitus@oregon.gov  if you have any questions, comments, or require more assistance than our new site provides.

Proposed Rulemaking

Repeals market assistance plan for construction contractors

The Oregon Division of Financial Regulation recently announced the following Proposed Rulemaking:

Repeals market assistance plan for construction contractors general liability insurance

Repeal: OAR 836-014-0400

In 2002, the department learned of difficulties in the construction contractors market. Contractors, required to have general liability insurance were having difficulty obtaining coverage. The department determined that there was a likelihood of consumer harm if contractors were unable to acquire general liability insurance coverage to support their license. The department and the Construction Contractors Board (CCB) formed a workgroup to develop possible solutions. The workgroup developed an outline for the Market Assistance Plan (MAP) website. The website was hosted by the CCB from 2004 until 2016. In 2016 CCB identified the site as unsecure and took it off-line. During discussions about the website, the department and CCB, in conjunction with an advisory committee, determined that the site was outdated and might not be continuing to serve the purpose for which it was first developed. The department determined that the market for general liability coverage for contractors is now well developed. This repeal is necessary to remove the rule related to the successful, but now unnecessary, market assistance plan related to construction contractor general liability coverage.

Public hearing: A public rulemaking hearing may be requested in writing by 10 or more people, or by an association with 10 or more members, within 21 days following the publication of the Notice of Proposed Rulemaking in the Oregon Bulletin or 28 days from the date Notice was sent to people on the agency mailing list, whichever is later.

Public comment: The agency requests public comment on whether other options should be considered for achieving the rule's substantive goals while reducing the negative economic impact of the rule on business.

Last day for public comment: March 24, 2017, 5 p.m.

For more information on this proposed rule, please visit the Division's website:

http://dfr.oregon.gov/laws-rules/Pages/proposed-rules.aspx

Federal officials renew health transformation in Oregon

The federal government approved Oregon’s federal Medicaid waiver application to continue the Oregon Health Plan—Oregon’s Medicaid program—for another five years. The Oregon Health Plan (OHP) covers over 1 million low-income Oregonians who are struggling to make ends meet. This is the largest health plan in the state and covers one in four Oregonians and almost 40 percent in some rural counties.

Highlights of renewed waiver

This approval enables Oregon to continue its innovative model of health care for OHP members and maintain the gains the state has made in the past five years to improve the integration, coordination and quality of care. These reforms have saved hundreds of millions of dollars in health costs for state and federal taxpayers.

Under the agreement, Oregon will continue to:

•  Integrate care: Provide integrated physical, behavioral and oral health care services to OHP members through coordinated care organizations (CCOs).

•  Advance the coordinated care model: The waiver maintains the coordinated care model and promotes payment for value rather than volume of services. These models will continue to allow Oregon to improve quality and outcomes and hold down costs to a sustainable rate of growth.

•  Promote increased investments in health-related and flexible services. The waiver provides clarity on how non-traditional services that improve health are accounted for in global budgets. CCOs will be encouraged to invest in services that improve quality and outcomes, and CCOs that reduce costs through use of these services can receive financial incentives to offset those cost reductions.

•  Approval enables Oregon to continue improvements in care and cost containment

In the past five years, Oregon has made significant progress toward the triple aim of better health, better care and lower cost:

•  Providing care at the right time and place: Avoidable emergency department use decreased by nearly 50 percent over five years.

•  Better outcomes and care: Hospital readmissions have been cut by a third. Substance misuse assessments, developmental screening and timely prenatal care have all increased.

•  Lower costs: Federal and state governments saved $1.4 billion in Medicaid costs just since 2012 and have avoided billions more since the inception of the Oregon Health Plan over two decades ago. Oregon’s health reforms are projected to save a total of $10.5 billion between 2012 and 2022 by holding down cost growth to not more than 3.4 percent per member per year.

•  Waiver provides stability and continuity for Oregon’s health system

•  Oregon initiated early renewal talks with federal officials last year, in anticipation of a new administration taking office. Normal waiver approvals take a year or longer to complete and this renewal was completed within six months. Governor Brown and her staff and Oregon Health Authority officials have worked intensively with Centers for Medicare & Medicaid Services (CMS) Administrator Andy Slavitt and his entire staff to get this done.

Renewal of Oregon’s waiver provides stability for the state’s health system. While Congress debates the repeal of the Affordable Care Act (ACA), today’s waiver renewal is a key validation and continuation of Oregon’s model of care.

Oregon Division of Financial Regulation

Rates & Forms Product Standards Update

Product Standards update

Revised product standards have been posted to the Division website. The current forms list (http://dfr.oregon.gov/rates-forms/Documents/current-filing-forms.pdf) will identify which documents are new or revised in red.

One form is new (Form 440-3172D) for Short Term Care.

Additional revised documents will be added as they become available.

Washington — From the Washington Department of Insurance

Prescription drug substitution process rule adopted

We adopted the prescription drug substitution process rule, effective February 12, 2017 (R 2016-22). The rule will align the Office of the Insurance Commissioner's regulations with the Health and Human Services Notice of Benefit and Payment Parameters for 2017 regarding drug substitution.

For more information, including the adopted rule (CR-103P) and the concise explanatory statement, please visit the rules webpage. — https://www.insurance.wa.gov/laws-rules/legislation-rules/recently-adopted-rules/rules-2017/2016-22/?utm_content=&utm_medium=email&utm_name=&utm_source=govdelivery&utm_term=

The Property Casualty Insurers Association of America (PCI) and ISO — a Verisk Analytics company — said the first nine months of 2016 wasn’t all that much fun for insurers. At least those months weren’t when compared to the same time period in 2015. And the reasons are many ranging from underwriting troubles to increased catastrophe losses to falling reserves.

Here’s some details:

•  The net underwriting loss hit $1.7 billion

•  That compares to a $7.3 billion underwriting gain from January to September the year before

•  The combined ratio is 99.5 compared to 96.9 for the first nine months of 2015

•  Net investment income fell to $33 billion from close to $35 billion

One of the big areas of concern — said PCI’s Robert Gordon — is auto. “Some of the poor performance is a result of increasing loss ratios in the auto lines, which were affected by rising accident frequency and severity,” he said.

The combined ratio for personal lines insurers dropped to an awful 102.9 because of auto losses resulting in rate hikes. Commercial loss ratios were also dismal. “As we move forward, it’s important for all the stakeholders — including consumers, insurers and policymakers — to take significant steps to reduce the growth of auto losses,” Gordon said.

Insurance Information Institute (I.I.I.) chief economist Steven Weisbart was also concerned. He said super low interest rates are putting pressure on insurers to maintain what he calls — healthy — combined ratio. “These days, with investment income below levels that would be produced if interest rates were at higher levels, P/C companies generally need to maintain combined ratios below 95 to earn their cost of capital in a still-challenging interest rate environment,” Weisbart said.

Despite the questions the report generates, Beth Fitzgerald of ISO said promising signs are in the future. “Policyholders’ surplus continued to grow and reached a record high of $688.3 billion. The Federal Reserve raised interest rates in December 2016 and is expected to increase rates further in 2017. Still, it will take time for insurers’ investment yields to improve,” she said.

Other things found in the report:

•  Earned premiums $390.7 billion — that’s a 3.6% jump over 2015

•  Net written premiums hit $403.8 billion and compares to $393 billion in 2015

•  Capital gains fell to $5.6 billion from 8.8 billion

•  Net investment gains fell to $38.6 billion from $43.7 billion

Source link: Carrier Management

The National Centers for Environmental Information (NCEI) said there were 15 disasters defined as weather or climate caused in the United States in 2016. The NCEI report further defines the 16 as causing $1 billion or more in insured and uninsured losses.

Worse, they killed 138 people and had serious economic impacts for those areas.

Breaking it down, the causes were:

•  4 floods

•  8 severe storms

•  1 tropical cyclone

•  1 wildfire

NCEI — a division of the National Oceanic and Atmospheric Administration (NOAA) — also said the events in 2016 is the second highest total of $1 billion or more in damages in the 37-years that it has been doing the tracking. It’s just one less than the 16 suffered in 2011.

The average per year from 1980 to 2016 is 5.5 events. In the last five years that number has almost doubled in average to 10.6.

Included as insured and uninsured direct loss components are:

•  Physical damage to residential, commercial and government/municipal buildings

•  Infrastructure like roads, bridges and buildings

•  Material assets within a building

•  Time element losses like business interruption

•  Losses to vehicles, boats, offshore energy platforms

•  Agricultural assets — crops, livestock, timber

What the losses do not account for is natural capital and assets, healthcare related losses or values that are associated with the loss of life.

Also in the NCEI report is weather related information:

•  The average temperature for the contiguous United States was 54.9 degrees — 2.9 degrees above the 20th Century average

•  2016 was the second warmest year in the 122 years on record

•  2012’s 55.3 degrees is at the top

•  And 2016 was the 20th consecutive warmer than normal year in a row

•  Precipitation averaged 31.7 inches — 1.76 inches above the long-term average

•  That made 2016 the 24th wettest year on record and the fourth consecutive above average precipitation year

One more point: 26% of the damages are not insured.

Source links: Insurance Journal, PropertyCasualty360.com

The industry is desperately worried about replacing the plethora of experienced insurance professionals that will retire this year. The loss of experience and know-how alone is frightening. Also of concern is the growing workload. As an industry, we’re all — or at least a huge percentage of us — are at job overload.

Many are begging bosses and managers in all walks to ease our burdens.

Don’t look at 2017 to be the year your pleas are heard. A survey from Pricewaterhouse Coopers (PwC) — who polled 1,379 CEOs in 79 countries — says:

•  Just 41% said they’ll be adding personnel

That’s down from 49% saying they’d add staff in 2016 and 50% in 2015. The 2014 figure was 59%. Also, disconcerting — to employees that is — is the downward hiring trend when the growth outlook for insurance is getting brighter.

•  38% of CEOs are very confident of short-term revenue growth in 2017

•  That’s up from 35% in 2016

That’s not all:

•  79% have organic expansion at the top of the planning for 2017

•  41% are going to do seek mergers and acquisitions this year

•  23% want to strengthen innovation capability to capitalize on new opportunity

PwC’s Bob Moritz who is the firm’s global chairman said, “Despite a tumultuous 2016, CEO confidence is moving back up — albeit slowly and still a long way from the levels we saw back in 2007. But there are signs of optimism right across the globe, including in the UK and US, where despite predictions of a Trump slump and a Brexit exit, CEOs confidence in their company’s growth are up from 2016.”

Source link: Insurance Business America