Property and Casualty Insurance

112 Pages·2017·2.7 MB·English

2017 Summer National Meeting
Property and Casualty
Insurance (C) Committee
August 8, 2017
Philadelphia, Pennsylvania
© 2017 National Association of Insurance Commissioners

Date: 8/7/17
2017 Summer National Meeting
Philadelphia, Pennsylvania
PROPERTY AND CASUALTY INSURANCE (C) COMMITTEE
Tuesday, August 8, 2017
1:00 – 2:30 p.m.
Philadelphia Marriott and Pennsylvania Convention Center—Grand Ballroom GH—Level 5
ROLL CALL
John D. Doak, Chair Oklahoma Mike Chaney Mississippi
David Altmaier, Vice Chair Florida Matthew Rosendale Montana
Jim L. Ridling Alabama John G. Franchini New Mexico
Katharine L. Wade Connecticut Laura Cali Robison Oregon
Jennifer Hammer Illinois Teresa D. Miller Pennsylvania
James J. Donelon Louisiana Raymond G. Farmer South Carolina
Al Redmer Jr. Maryland Larry Deiter South Dakota
Chlora Lindley-Myers Missouri
NAIC Support Staff: Aaron Brandenburg/ Kris DeFrain/Eric Nordman
AGENDA
1. Consider Adoption of its Interim Minutes—Commissioner John D. Doak (OK) Attachment One
2. Consider Adoption of its Task Force and Working Group Reports Attachment Two
—Commissioner John D. Doak (OK)
• Casualty Actuarial and Statistical (C) Task Force—Michael McKenney (PA)
• Surplus Lines (C) Task Force—Commissioner James J. Donelon (LA)
• Title Insurance (C) Task Force—Director Larry Deiter (SD)
• Workers’ Compensation (C) Task Force—Director Lori K. Wing-Heier (AK)
• Advisory Organization Examination Oversight (C) Working Group—Timothy Schott (ME)
• Auto Insurance (C/D) Working Group—Commissioner Allen W. Kerr (AR)
• Catastrophe Insurance (C) Working Group—Commissioner David Altmaier (FL)
• Catastrophe Response (C) Working Group—Paula Pallozzi (RI)
• Climate Change and Global Warming (C) Working Group—Commissioner Mike Kreidler (WA)
• Creditor-Placed Insurance Model Act Review (C) Working Group—Commissioner David Altmaier (FL)
• Crop Insurance (C) Working Group—Director Larry Deiter (SD)
• Earthquake (C) Study Group—Ron Dahlquist (CA)
• Medical Professional Liability (C) Working Group—Superintendent John G. Franchini (NM)
• Public Adjustor (C/D) Working Group—Commissioner John D. Doak (OK)
• Risk Retention (C) Working Group—David Provost (VT)
• Sharing Economy (C) Working Group—Commissioner Dave Jones (CA)
• Terrorism Insurance Implementation (C) Working Group—Martha Lees (NY)
• Transparency and Readability of Consumer Information (C) Working Group—Angela Nelson (MO)
• Travel Insurance (C) Working Group—Commissioner Al Redmer Jr. (MD)
3. Consider Adoption of the Catastrophic Event/Emergency Measures Regulatory Guidelines Attachment Three
—Paula Pallozzi (RI)
4. Consider Adoption of a New Charge for the Casualty Actuarial and Statistical (C) Task Force Attachment Four
—Commissioner John D. Doak (OK)
© 2017 National Association of Insurance Commissioners 1
5. Consider Adoption of an Extension for Revisions to the Creditor-Placed Insurance Model Act (#375)
—Commissioner David Altmaier (FL)
6. Hear a Federal Update—Brooke Stringer (NAIC)
7. Hear from States Regarding Legislation or Other Activities Related to the Private Flood Insurance
Market—Commissioner John D. Doak (OK)
8. Hear Presentations Related to Private Flood Insurance Attachment Five
—Steve Clarke (ISO)
—Joe Gunset and Sabrina Miesowitz (Lloyd’s)
—John Dickson (NFS Edge Insurance Agency)
9. Hear a Presentation on Consumer Tools—Warren Byrd (LA), Brenda J. Cude (University of Georgia)
and Birny Birnbaum (Center for Economic Justice—CEJ)
10. Hear a Presentation on Mitigation Discounts—Charles Angell (AL), Amy Bach (United Policyholders) Attachment Six
and Kendall Buchanan (SC)
11. Discuss Modernization of Commercial Lines Regulation—Commissioner John D. Doak (OK)
12. Discuss Any Other Matters Brought Before the Committee—Commissioner John D. Doak (OK)
13. Adjournment
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Attachment One
Consider Adoption Interim Minutes
© 2017 National Association of Insurance Commissioners
Attachment
Property and Casualty Insurance (C) Committee
8/--/17
Date: 8/3/17
Property and Casualty Insurance (C) Committee
Conference Call
July 28, 2017
The Property and Casualty Insurance (C) Committee met via conference call July 18, 2017. The following Committee
members participated: John D. Doak, Chair (OK); David Altmaier, Vice Chair (FL); Jim L. Ridling represented by
Charles Angell (AL); Katharine L. Wade represented by George Bradner (CT); James J. Donelon (LA); Al Redmer Jr. (MD);
Chlora Lindley-Myers represented by Rebecca Helton (MO); Mike Chaney (MS); Matthew Rosendale represented by
Marissa Stockton (MT); John G. Franchini represented by Ana Krylova (NM); Laura Cali Robison (OR); Raymond G.
Farmer (SC); and Larry Deiter (SD).
1. Adopted Changes to the Committee’s Charges
Commissioner Doak said the Committee had explained on its July 18 conference call that there would be a proposal to reduce
and consolidate working groups reporting to the Committee. He explained the Committee currently has 15 working groups
and four task forces reporting directly to it. He explained the first recommendation in the proposal is to disband three
catastrophe-related working groups and move their charges under the Catastrophe Insurance (C) Working Group. These
groups are: the Consumer Outreach and Assistance Post-Disaster (C) Subgroup; the Catastrophe Response (C) Working
Group; and the Earthquake (C) Study Group. Commissioner Doak said the work of the Consumer Outreach and Assistance
Post-Disaster (C) Subgroup and the Catastrophe Response (C) Working Group should be completed next year. The
Catastrophe Response (C) Working Group has been regularly receiving reports at national meetings from states concerning
recent state responses to disasters. He recommended that work continues under the Catastrophe Insurance (C) Working
Group at national meetings.
Commissioner Doak said the second recommendation is the elimination of the Crop Insurance (C) Working Group and the
Risk Retention (C) Working Group and the movement of their charges to directly under the Property and Casualty Insurance
(C)Committee. He said if federal issues arose that would require these groups to be reconstituted, that action could be taken
quickly. He said risk retention group (RRG) work focusing on financial issues would continue to be handled by the Risk
Retention Group (E) Task Force.
Commissioner Doak also explained several future recommendations, including that the Public Adjuster (C/D) Working
Group, the Sharing Economy (C) Working Group and the Medical Professional Liability (C) Working Group should
complete their work by end of 2017 and plan to not be reconstituted in 2018. He also said he would separately ask the chairs
of the Auto Insurance (C/D) Working Group, the Creditor-Placed Insurance Model Act Review (C) Working Group, the
Transparency and Readability of Consumer Information (C) Working Group, and the Travel Insurance (C) Working Group to
report back to the Committee on whether they can complete their work by the 2018 Summer National Meeting. He said if the
changes are implemented, the number of working groups reporting to the Committee would be reduced from 15 to eight by
the end of 2017, with another four groups hopefully completing their tasks in 2018.
Commissioner Doak explained a document was distributed showing the immediate changes to the Committee charges,
including the consolidation of the catastrophe-related groups and movement of Crop Insurance (C) Working Group and Risk
Retention (C) Working Group charges to the Committee. Commissioner Chaney said the reduction of working groups would
be a good thing. Lisa Brown (American Insurance Association—AIA) said the AIA supports the proposal as it should
provide administrative efficiencies. Paul Tetrault (National Association of Mutual Insurance Companies—NAMIC) said the
proposal is welcome as it may lead to a more efficient process. David Kodama (Property Casualty Insurers Association of
America—PCI) said the PCI strongly supports the proposal. He also asked if there would be interest in consolidating the
Climate Change and Global Warming (C) Working Group into the Catastrophe Insurance (C) Working Group as there has
been overlap between the two groups.
Commissioner Donelon offered a small change to add the word “the” within the charges of the Surplus Lines (C) Task Force.
Commissioner Redmer made a motion, seconded by Commissioner Chaney, to adopt the proposed reduction and
consolidation of groups within the revised charges document (Attachment A). The motion passed unanimously.
Commissioner Doak said the Climate Change and Global Warming (C) Working Group could be another candidate to move
under the Catastrophe Insurance (C) Working Group. He said there has been some duplicative work between the groups, and
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moving the charges under the Catastrophe Insurance (C) Working Group could allow for a streamlining of presentations and
activities. Mr. Bradner requested that the chair of the Climate Change and Global Warming (C) Working Group be consulted
before making any changes. Annalise Mannix (Fair Insurance Rates in Monroe—FIRM) said it is good to reduce the number
of groups, but climate change is too big of an issue to move under another group. Mr. Birnbaum also opposed moving
climate-related charges. He said there has been no notice, and he does not believe that the work between the two groups is
duplicative. Mr. Tetrault said he is in favor of consolidation as the Climate Change and Global Warming (C) Working Group
has mostly received presentations. He also noted that some of the charges of the Climate Change and Global Warming (C)
Working Group, such as those dealing with enterprise risk management (ERM), may fit best under the Financial Condition
(E) Committee. Commissioner Doak suggested the Committee postpone further discussion of the matter, possibly until the
Summer National Meeting.

Having no further business, the Property and Casualty Insurance (C) Committee adjourned.

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Attachment
Property and Casualty Insurance (C) Committee
8/--/17
Date: 7/26/17
Property and Casualty Insurance (C) Committee
Conference Call
July 18, 2017
The Property and Casualty Insurance (C) Committee met via conference call July 18, 2017. The following Committee
members participated: John D. Doak, Chair (OK); David Altmaier, Vice Chair (FL); Jim L. Ridling represented by
Charles Angell (AL); Katharine L. Wade (CT); James J. Donelon (LA); Al Redmer Jr. represented by Robert Barron (MD);
Mike Chaney (MS); John G. Franchini (NM); Laura Cali Robison (OR); Raymond G. Farmer represented by Darien Porter
(SC); and Larry Deiter (SD).
1. Adopted its June 8 Minutes
Commissioner Altmaier made a motion, seconded by Commissioner Donelon, to adopt the Committee’s June 8 minutes
(Attachment ). The motion passed.
2. Adopted a Request for NAIC Model Law Development Related to Lender-Placed Insurance
Commissioner Altmaier explained that the Property and Casualty Insurance (C) Committee previously tasked the Creditor-
Placed Insurance Model Act Review (C) Working Group with reviewing information from a 2012 public hearing on lender-
placed insurance to determine if changes were needed to the Creditor-Placed Insurance Model Act (#375). He said the
Working Group has spent a year-and-a-half looking at the hearing, as well as regulatory actions taken by Florida and
New York. He noted the focus of the hearing and state actions were lender-placed insurance that was placed on mortgage
loans. The existing Model #375 is focused on personal property, primarily creditor-placed insurance dealing with auto loans.
Commissioner Altmaier said the Working Group drafted a model that tried to address both personal property and real
property, but experienced challenges in doing this. Ultimately, the Working Group, on a July 6 conference call, decided to
seek permission to draft a new model focused on lender-placed insurance related to mortgage loans. Commissioner Altmaier
said the Working Group would continue to focus on potential revisions to Model #375 having to do with creditor-placed
insurance related to personal property.
Commissioner Doak asked whether the National Conference of Insurance Legislators (NCOIL) has drafted a model related to
lender-placed insurance. Birny Birnbaum (Center for Economic Justice—CEJ) said NCOIL has not drafted such a model.
Mr. Birnbaum said the charge was originally created in 2013 and he believes it was directed at both lender-placed home
insurance and lender-placed auto insurance. He said the same problems exist with both products. He said he is indifferent to
the Working Group moving forward with a new model or a combined model, but he would like the Committee to address
clear guidance to the Working Group that it should work on both issues. Commissioner Altmaier said the decision to move
forward with a new model focused on real property does not preclude the Working Group from addressing Model #375
related to personal property.
Dave Snyder (Property Casualty Insurers Association of America—PCI) said he would like to comment on the letter
submitted by Mr. Birnbaum. He said regulators have done a good job of encouraging competitive markets and he hopes the
Committee closely watches the work of other groups. He stated the PCI has concerns with a potential auto insurance data
call, in addition to work being done by the Big Data (EX) Working Group and the Pre-Dispute Mandatory Arbitration
Clauses (D) Working Group. Mr. Birnbaum said the Committee should be aware of the work of other groups, but he
disagreed with the assertion that this work might harm markets.
Commissioner Altmaier made a motion, seconded by Commissioner Chaney, to adopt the Request for NAIC Model Law
Development related to lender-placed real property insurance (Attachment ). The motion passed.
3. Heard a Report on Private Flood Insurance Data
Commissioner Doak said NAIC staff had drafted a memorandum regarding private flood insurance data (Attachment ).
Aaron Brandenburg (NAIC) said the NAIC has supported legislative efforts to facilitate the growth of a state-regulated
private flood insurance market to help provide consumers with more choices and additional coverage features, potentially at
more affordable prices. State insurance regulators have a need to learn more about the private flood insurance market, which
has led to revisions to the annual financial statement allowing for the capture of private flood insurance premiums and losses
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on the State Page. This data was first required to be filed on the 2016 annual financial statement, filed in March 2017.
Mr. Brandenburg said the State Page requires data such as premiums, losses, and defense and cost containment expenses, to
be filed on a state-by-state basis.
Mr. Brandenburg said the initial results of the 2016 private flood filings indicate more than 50 insurers wrote private flood
insurance in 2016. The total direct premium written in the states and territories was approximately $376 million. Direct
earned premium reported was $216 million. Having less earned premium than written premium is indicative of a growing
market. For perspective, the National Flood Insurance Program (NFIP) had approximately $3.3 billion in earned premium in
2016. Mr. Brandenburg said eight companies wrote more than $10 million in private flood insurance in 2016, while
22 companies wrote at least $1 million. The top individual company wrote 45% of all business. The top 10 insurers wrote
more than 89% of all business.
Mr. Brandenburg said the national pure loss ratio was 42%. State loss ratios ranged from less than 1% to more than 800%.
The largest loss ratios were in the states that experienced large floods in 2016: Louisiana; Massachusetts; Mississippi;
North Carolina; and South Carolina. He also said the NAIC’s Market Share Reports for Property/Casualty Groups and
Companies by State and Countrywide was recently published, which shows the largest group writers nationally and by state.
Mr. Brandenburg said there are some limitations within the annual financial statement data. The first limitation is the reported
information is limited to only those insurers required to file a property/casualty annual financial statement with the NAIC.
The premium writings by alien surplus lines insurers are missing from the information contained in this report. In addition, it
is possible companies that should have filed private flood insurance data separately on the State Page failed to do so, or did
so inaccurately. Based on the history of other data additions to the annual financial statement, the quality of the private flood
insurance data is expected to improve in subsequent years. He also said the largest provider of flood insurance writes
primarily commercial coverage for businesses, rather than coverage for personal dwellings. The data collected does not
distinguish between commercial and residential exposures.
Mr. Brandenburg said NAIC staff recommend the Committee visit with its Surplus Lines (C) Task Force to request making
submission of private flood insurance data a condition for continuing to be listed on the Quarterly Listing of Alien Insurers.
The Committee should also consider recommending revisions to the annual financial statement that would indicate
differences between commercial and residential private flood coverage.
Mr. Porter asked whether the memorandum would be available to all parties. Mr. Brandenburg said it would be distributed
and posted online, and regulators who need additional data should contact the NAIC.
4. Discussed Consolidation of Working Groups
Commissioner Doak said recent NAIC member discussions have indicated there should be a reduction in the number of
working groups. He said he would like for the Committee to consider which of its working groups might be able to be
combined with other groups or eliminated once they finish their work. Mr. Brandenburg said the Committee has 19 task
forces or working groups reporting to it. He said some of the catastrophe-related groups could likely be consolidated and the
charges of other groups might be able to go directly under the Committee. Commissioner Doak asked NAIC staff to
formalize recommendations within 10 days and circulate it to the Committee for feedback. He said the Committee will meet
via conference call prior to the Summer National Meeting to discuss next steps.
Having no further business, the Property and Casualty Insurance (C) Committee adjourned.
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