A.M. Best, Moody's Reportedly Foresee Slowdown In Rate Increases

CarrierManagement.com reports that A.M. Best and Moody’s foresee a slowdown in rate increases over the coming months, with commercial property rates declining due to increased capacity and competition.

While the article notes that the market is currently stable—a condition that a recent SLA assessment of the California market also identified—it is expected that standard commercial insurers will push to retain existing business and moderately expand their risk-taking.

For the full article, click here.

U.S. Senate Passes TRIA Bill, Including NARAB II Language

Andrew Simpson of Insurance Journal reports that the U.S. Senate overwhelmingly passed a TRIA extension bill, the Terrorism Risk Insurance Program Reauthorization Act of 2014 (S. 2244), on July 17^th. The bill includes language creating NARAB II.

The Senate passed the legislation 93-4. The four no votes included: Marco Rubio (R-Fla.); Lamar Alexander (R-Tenn.); Tom Coburn (R-Okla.); and Pat Roberts (R-Kan.).

The Senate bill calls for a seven-year extension and increasing the insurer co-pay from 15 percent to 20 percent. Click here for the Insurance Journal article.

S. 2244 differs from a House bill currently under consideration—the TRIA Reform Act of 2014 (H.R. 4871)—which would extend the program for five years and phase out a federal backstop beyond nuclear, biological, chemical and radiological (NBCR) risks, as reported July 17^th by Arthur Postal of PropertyCasualty360.com; the House bill also includes NARAB II. However, Postal reports that the House bill, backed by leading conservatives on the Financial Services Committee, appears to be a non-starter with moderate Republicans from more urban districts, and that it may not have the votes to pass the House. Rep. Peter King (R-N.Y.), a moderate Republican from Queens, reportedly claims that as many as 30 House Republicans will oppose the conservative proposal backed by Reps. Jeb Hensarling (R-Texas) and Randy Neugebauer (R-Texas). If this is true, the legislation will fall well short of the 218 votes needed for passage. Click here for the PropertyCasualty360.com article.

If the Hensarling-Neugebauer proposal cannot overcome opposition by Democrats and moderate Republicans, it becomes likelier that the House will have to accept the Senate bill or draft something very close to it. The key for NARAB II backers will be to ensure that a new House proposal includes the NARAB II provisions. A similar House disconnect between conservatives and moderates on the flood bill earlier this year resulted in NARAB II being left out of the final legislation.

The internal politics of the Republican House caucus are also likely to come into play. Majority Leader Eric Cantor (R-Va.), who was instrumental in blocking the more conservative flood bill, suffered a shocking primary loss against a conservative challenger in June, resulting in California’s Kevin McCarthy (R-Bakersfield) becoming the new majority leader effective August 1^st. It may be very difficult for House Republican leadership to broker a TRIA bill that simultaneously keeps moderates from bolting and mollifies conservatives. An impasse in the House could seriously endanger the prospects of reauthorizing TRIA prior to the program’s expiration at year’s end.

The SLA will keep its members informed as new developments occur on this important issue.

Ride-Share Coverage Bill Moves To Assembly Floor

A few weeks ago, I wrote about the attention the ride-share insurance issue had begun to receive this year in the wake of a fatal crash that killed a six-year-old girl in San Francisco on Dec. 31, 2013. There has now been legislative activity to address this issue. Assembly Bill 2293, introduced by Assemblymember Susan Bonilla (D-Concord), would require a transportation network company (such as Uber or Lyft) to disclose the coverage and liability limits provided by the company; the company’s coverage would be the primary coverage in the event of loss or injury when a participating driver is logged on to the company’s application program.

On May 7, the Assembly Insurance Committee passed AB 2293 by an 11-0 vote, and it has now moved on to the full Assembly for its consideration. To read the full bill, go to: http://www.leginfo.ca.gov/pub/13-14/bill/asm/ab_2251-2300/ab_2293_bill_20140221_introduced.htm.

SLA supports the legislation in principle and is actively watching its progress. A number of leading admitted insurer associations also have expressed their support for the bill. We will keep our members informed about any news on this proposal.

SLIP Filing Increases 67 Percent Since Upgrade to 2.0

One of SLA’s primary responsibilities is to increase broker compliance, and it is also very important for us to make our brokers’ jobs easier and to be a good corporate citizen. The upgrade from SLIP 1.0 to SLIP 2.0, which is considerably more efficient and user-friendly, is helping SLA fulfill all these responsibilities.

After the nine-month, $275,000 project to upgrade to SLIP 2.0 concluded last August, there has been a major increase in the number of policies being filed electronically with SLA. As of the end of March, SLA is processing more than 15,000 items per month through SLIP, up from 9,000 in the final month of SLIP 1.0. That represents an increase of approximately 67 percent in items filed online.

The growth of online filing by SLA members is crucial in terms of compliance for numerous reasons, and one of the most important is the fact that we know SLIP reduces filing errors and, therefore, reduces tags. We have found that the error rate for paper filings is consistently more than 30 percent, but for batches filed through SLIP, that number plummets below 3 percent. That in itself would be enough to justify the considerable time and expense involved in implementing SLIP 2.0, but consider also the other benefits to brokers:
          
·         Online filing is much more time-efficient than paper filing
·         Fewer tags means less time spent identifying and fixing errors
·         Tags can be answered online for faster resolution
·         Brokers can access data online for their brokerages
·         Online payments with credit cards for SLA invoices
·         Reports that allow brokers to choose their preferred format
·         Filings do not get lost in the mail
·         Batch confirmations are sent by e-mail
·         Status of submitted batches is available online

In short, by making SLIP easier and more user-friendly, SLA has gotten considerably more brokers to use the system, which in turn saves our members time, money and effort. With the difference in the error rate being so large, additional electronic filing means increased compliance with state laws and regulations, which in turn ensures that California’s insurance consumers are better protected.

It is also important to note that electronic filing ties in with SLA’s ongoing move toward a paperless association. Using less paper reduces our costs for paper products and ink, and every reduction of SLA’s operating costs helps SLA keep the stamping fee low. Because of this and other efficiencies in 2013, SLA was able to keep the stamping fee at 0.2 percent for 2014, and we continue to strive to ensure stability in the fees we must charge to continue processing your business.

Even more importantly, however, SLA’s paperless initiative is helping us to be a good corporate citizen. By using less paper, we are doing our part to help protect the environment; we require fewer trees and we produce less waste.

We are grateful to all of our members who have made the switch to SLIP, and we urge all California surplus line brokers to do so. To sign up for SLIP, please contact Michael Caturegli, our Information Technology manager, at (415) 434-4900, extension 164, or mcaturegli@slacal.org.

Ride-Share Coverage Becoming a Hot Topic in Sacramento

Undoubtedly, many of our members are aware of the tragic accident on New Year’s Eve in which an Uber driver struck and killed a six-year-old girl in a San Francisco crosswalk. I learned, in attending the Legislative Action Day for the Association of California Insurance Companies (ACIC) in Sacramento this month, that the fallout from this accident has come to the attention of the California Department of Insurance (CDI).

In the wake of the accident, both the driver’s commercial and personal carriers declined to cover the resulting claims. The commercial carrier declined due to the fact that the driver did not have a paying passenger at the time; the personal carrier declined because he was available to pick up customers and had his application active at the time of the accident.

CDI held a hearing on the issue and is seeking solutions to ensure that this kind of claims result does not recur, and this is certainly an area where surplus lines insurers and brokers may have a good opportunity to step in. We would advise our members to familiarize themselves with this case and to consider whether this is a line of business where they can provide solutions.

SLA Leverages Industry Partnerships to Support California Brokers in Hawaii

As executive director of SLA, one of my most important jobs is building relationships with key partners in the industry. Recently, this effort to build bridges bore fruit when we learned that a bill introduced in Hawaii, House Bill 2048, would impose onerous regulatory burdens on California surplus line brokers trying to insure interests in the Aloha State. The bill, if enacted, would have made it virtually impossible to write certain types of nonadmitted business there, by applying upwards of 50 statutory provisions to surplus line policies that previously had not been applied, in recognition of the fundamental difference between admitted and surplus line policies.

While SLA has no direct stake in the legislative process in Honolulu, a number of our brokers do place policies in Hawaii. Therefore, we provided advisory support to the National Association of Professional Surplus Line Offices (NAPSLO) and the Property Casualty Insurers Association of America (PCI), both of which testified against the legislation, in order to help look out for its members’ interests. Within days, the bill was postponed indefinitely. SLA will continue to monitor this legislation and will be ready to lend all necessary support to its industry allies in the event that Hawaii legislators decide to take it up again.

It is our job here at SLA to look out for our members’ interests wherever they may be. My staff and I will continue to build bridges with other leading insurance organizations so that we can be in a position to work for our members even in places where we do not have a seat at the table.

SLA Unveils New, Modern Logo

SLA’s Board of Directors recently approved a new logo reflecting a new, modern outlook at SLA, more in keeping with our association’s role as a bridge between brokers and CDI, and between the admitted and nonadmitted markets. We think it puts a new face on our association and creates an image of a forward-looking, thinking organization on the cutting edge of our industry.

SLA has begun using the new logo immediately on all new published products and will do so at SLA-sponsored events. In combination with our redesigned, more functional website, which we expect to have in place this year, our logo will project a fresher, state-of-the-art, user-friendly association that is more in touch with its members and its potential partners.