From The Chairmen...
On behalf of every member of the National Association of Mutual Insurance Companies, we thank you for being a part of the largest property/casualty insurance trade association in the country.
Our industry has a great story to tell, and it is up to each of us to tell it. It begins with our reason for being: to help people protect what they have, and to recover what they have lost in times of disaster and catastrophe.
We are indeed fortunate to have an industry workforce of more than 533,000 dedicated men and women at more than 2,660 companies who not only make it possible to fulfill our purpose, but to also support our economy with more than $1 trillion annually in taxes, investments, and claims paid.
This huge economic impact is vital to the quality of life in the communities where we live and work, building (and in many cases rebuilding) roads, schools, hospitals, fire stations, libraries, community centers, and more. And let’s not forget the millions more in dollars and thousands of hours in service our companies and employees donate to numerous charities and causes.
As our industry contributes in these many ways to society, so too does NAMIC contribute to the success of each of our companies through a variety of robust advocacy activities, educational offerings, networking opportunities, and value-added products and services. This “Year in Review" is an interesting presentation of the many activities, challenges, and achievements NAMIC experienced in 2013.
During the past year, our association continued to grow and improve in its value to every member company. It is no wonder then that 99 percent of NAMIC member companies stay with us year after year – and that an overwhelming majority have said they would enthusiastically recommend NAMIC membership to others in our industry.
As we all know, NAMIC is unique and special. This is your association, with programs and benefits that are member directed and member driven, and where each member company has an equal voice.
As our motto says, “the difference is in the experience.®"We encourage you to continue experiencing that difference, and look forward to your continued and active involvement in the #1 property/casualty insurance trade association in America.
John J. Bishop, CPCU, CLU
Jerry G. Zenke, PFMM
From The CEO...
Unparalleled Leadership to Strengthen, Support Our Members
With 1,400 member companies serving more than 135 million policyholders, the National Association of Mutual Insurance Companies strengthens and support our members and the mutual property/casualty insurance industry through unparalleled leadership in advocacy, public policy, public affairs, and member services.
I am pleased to report that in 2013 that mission was once again fulfilled. This report describes not only the journey we shared and the challenges we faced as an association, but the successes that were also achieved.
Our advocacy efforts spanned numerous issues throughout the year. Among them were the battles over regulatory and legislative threats posed by Superstorm Sandy and our lawsuit challenging the federal government’s intent to regulate our industry using the controversial disparate impact theory, as well as navigating rate modernization issues in Alabama, Connecticut, Florida, Nevada, North Carolina, and Pennsylvania in addition to beating back proposals in 16 states that would have severely restricted the use of credit-based insurance scoring as an underwriting tool.
These were but a few of the many issues we took on at both the state and federal levels in 2013. Being the leader in the advocacy arena is just one way in which NAMIC offers real value to members.
Another is our educational programs and opportunities for networking. Member participation in events continued to grow – and even reached new levels – in 2013. Especially noteworthy is the attendance at the 118th Annual Convention in Seattle, which set a record for delegate attendance. Four other major conferences saw record highs as well. NAMIC educational programs and networking opportunities experienced growth in 2013 with a 5.5 percent increase in attendance over the previous year.
Nearly 1,200 farm mutual leaders were enrolled in NAMIC certification programs. These include more than 900 directors pursuing the Farm Mutual Directors Certification designation, an increase of more than 17 percent from the prior year, and nearly 280 managers working toward the Professional Farm Mutual Manager designation, up more than 6 percent for the year.
Finally, we continued to emphasize operational support to member companies with an ever-expanding menu of products and services designed to help you better serve policyholders more efficiently and effectively.
Our newest offering, unveiled during the Seattle convention in September, is D.rive – a uniquely designed driver telematics tool now available to NAMIC members that write auto coverage. We worked closely throughout the year with member companies and Deloitte Consulting in the development of this exciting new resource, and we believe it is a great example of the kind of innovation NAMIC can help bring to members that strive to succeed in the marketplace.
These are just some of the highlights of our past year. I hope you’ll take some time to go through this report and familiarize yourself with all that NAMIC did in 2013. And, as always, please do not hesitate to let me know how we can better serve you.
Charles M. Chamness
NAMIC President & CEO
IN THE STATES
There has never been a shortage of threats to confront property/casualty insurance companies. That was certainly true again in 2013, with NAMIC meeting the challenge no matter the state or source.
In the course of the year, we worked on hundreds of public policy proposals that, if enacted, had the power to change the regulatory environment for NAMIC members. Some initiatives at reform were good, while many others were troubling. In either case, NAMIC’s advocacy staff ensured members’ interests were effectively represented.
We worked with insurance departments to help them understand the implications of the regulations and regulatory practices they were seeking. We provided in-person testimony dozens of times in front of legislatures and regulatory bodies, and we submitted written comments on legislation and regulatory actions that were either beneficial or detrimental to member companies.
When legal cases arose that had the potential to significantly affect member companies, NAMIC filed amicus briefs in state and federal courts so that member concerns would be considered and jurists would better understand the broad consequences of their rulings. In 2013, NAMIC filed 17 such briefs, either singularly or in conjunction with one of our trade partners.
Fifty-five natural disasters were declared in the United States in 2013. There were rainstorms and floods, landslides and mudslides, winds and tornados, and snowstorms and blizzards – but not a single hurricane. Yet, the ravages felt by Superstorm Sandy’s landfall on the East Coast in October 2012 reverberated into last year’s state legislative sessions. The target of this one disaster, which just happened to be home to the country’s major media outlets and much of its population, guaranteed our industry would be faced with a barrage of legislative and regulatory proposals that would potentially result in fewer consumer choices for insurance.
To hear some elected officials and regulators tell it, Sandy’s hurricane-like wrath warranted expansive government intervention. In New York, 12 potentially damaging legislative proposals were introduced, with the biggest threat being one to ban the use of anti-concurrent causation clauses. A similar proposal was averted in Maryland. Thanks in part to NAMIC’s efforts, New Jersey legislative and regulatory overreaction was replaced with a single law requiring insurers to better educate policyholders on hurricane deductibles and notable coverages.
NAMIC state affairs representatives worked diligently in these and other states to help thwart from immediate consideration the most egregious of the proposed measures by reminding policymakers that property/casualty insurers performed remarkably well under the most challenging conditions. In both New Jersey and New York, 90 percent of claims were paid in fewer than six months and consumer complaints lodged with regulators amounted to less than 2 percent of claims filed.
Nothing benefits insurance consumers more than healthy competition among many insurance providers. And nothing contributes more to that competition than a modern rate and form review system that allows insurers to get products to market more quickly and efficiently.
In 2013, NAMIC was active in rate modernization efforts across the country, playing a role in the enactment of modernization proposals in three states. In Florida, legislation was adopted that expands the number of commercial lines products that are exempt from the rate filing and review requirements. In Nevada, the prior-approval waiting period was reduced from 60 days to 30 days. In Connecticut, legislation was adopted to extend the flex-rating statue for another two years.
NAMIC worked successfully in 16 states last year to defeat efforts to ban or severely restrict the use of credit-based insurance scores. We testified before many legislative committees, submitted written testimony, and worked to educate legislators about the pro-consumer benefits of this well-established underwriting tool.
In Nevada, legislation was averted that would have created burdensome disclosure standards regarding a company’s use of insurance scoring. And in Alaska, we continued to work with legislators and regulators to expand the use of insurance scoring for policy renewals.
Throughout 2013, NAMIC devoted significant time and attention to the issue of insurance accounting. Responding to initiatives by both the International Accounting Standards Board and the Financial Accounting Standards Board, we worked with members of the NAMIC Accounting Committee and other companies to advocate against new international reporting for insurance contracts that would deviate significantly from current statutory accounting reporting requirements.
As a part of these advocacy efforts, we met with National Association of Insurance Commissioners staff and assisted with its analysis of the IASB and FASB exposure drafts. We also coordinated our involvement with the Federal Insurance Office and other federal agencies. Late in the year, we helped NAMIC member companies submit extensive comments on exposure drafts to both IASB and FASB, and in December, we participated in a FASB roundtable discussion on the issue. By year’s end, NAMIC’s efforts appeared to be having an effect as FASB seemed to be taking a different path.
As a result of revisions made by the NAIC to the Model Holding Company Act, 24 states and Puerto Rico have adopted the revised model in some form. The goals of these revisions were to add requirements for annual reporting on material enterprise risk; financial reporting requirements from an examination authority over non-insurance affiliates; and authorization for U.S. regulators to coordinate with their counterparts around the world on matters related to the specific companies doing business in their jurisdictions.
Concerned about the lack of a provision to protect the confidentiality of information as well as the impact of the Enterprise Risk Report requirements would have on smaller companies, NAMIC staff met with 23 state regulators in 2013 to push for improvements to the act. Because of our efforts, Kansas joined Texas with a $300 million compliance threshold while Idaho and Maine added language to their laws providing regulators with clear flexibility to grant exemptions.
Adopted by the NAIC in the fall of 2012, the Own Risk and Solvency Assessment Model Act requires companies to file an annual ORSA Summary Report that includes a description of the enterprise risk management framework, an assessment of risk exposures, an evaluation of the capital available to address the risks, and a prospective solvency assessment.
By the end of 2013, the model act was adopted in seven states, with legislation pending in three more. NAMIC advocated that states enacting ORSA should also include confidentiality language to protect sensitive information; include an exemption from the filing requirement for companies with less than $500 million in direct written premium and for groups less than $1 billion in DWP; and preserve the use of unique ERM methodologies and reporting formats.
Throughout 2013, NAMIC continued direct involvement with the NAIC’s discussions on market regulation reform. We joined with other insurance trade organizations in a letter to the NAIC/National Conference of Insurance Legislators’ working group that identified the issues we considered to be most significant. These priorities include adherence to the processes outlined in the Market Regulation Handbook: elimination of duplicative and excessive data calls; deference to other state market regulation actions; and clarification of the purpose and scope of the Market Conduct Annual Statement. In concert with member companies, NAMIC has been active in the process of revising the annual MCAS data call and definitions by providing specific modifications.
With the objective of limiting the potential impact on member companies, NAMIC also focused on efforts at the NAIC to adopt new corporate governance requirements. The year ended with deliberations of the new requirement centered on disclosure concerns and no new regulatory requirements for insurers.
NAMIC was alert to tort reform activities throughout the year, working without fanfare to help kill legislative measures that were deemed especially troublesome for members. Where several proposals merited NAMIC support, we endorsed their passage. In Florida, for instance, legislation was adopted to allow expert testimony in the form of an opinion as to facts at issue in a case. In Louisiana, legislation was enacted to deny a class action if the court would be required to look at the merits of any individual class member’s claim to determine whether the individual would fall within the defined class. In Texas, legislation was passed that provides a mechanism for asbestos and silica courts in the state to dismiss long-dormant claims on the inactive docket while preserving a claimant’s ability to re-file a dismissed case should the claimant develop an impairing condition.
At NAMIC’s urging, NCOIL in 2013 introduced model legislation to effectively regulate third-party litigation lenders. And because of NAMIC, most of the 12 legislative proposals introduced during the year would have subjected litigation lenders to a state’s fair lending laws and cap the interest rates that could be charged. Many of the proposals would have also required that a plaintiff disclose the existence of a litigation loan to the opposing party.
Although none of these proposals were enacted into law, there was a noticeable shift in momentum toward the regulation of litigation lending. Indiana, for instance, passed legislation requiring the Legislature to further study the issue while Oklahoma moved forward on a proposal that may allow regulators to place reasonable restrictions on these lenders.
Since 2010, NAMIC has been part of efforts to defeat no less than 17 attempts by litigation lenders to pass legislation codifying their ability to continue charging exorbitant interest rates.
We last saw debates over no-fault insurance reform in Florida and Michigan, with reform or repeal efforts underway in Minnesota and New Jersey. NAMIC was actively engaged in each state.
We joined with the Personal Insurance Federation of Florida in filing an amicus brief urging a state appellate court to reverse an injunction that suspended the enforcement of Florida’s no-fault personal injury protection reforms enacted in 2012. The appellate court ruled in our favor, saying that the plaintiffs in the original lawsuit did not have standing to assert their case on “access to justice" grounds.
As the battle in the courtroom was waging, the Florida Senate Banking and Insurance Committee held hearings to discuss the possible repeal of the PIP system altogether, but no legislative measured advanced.
In Michigan, NAMIC joined members and trade partners in advocating the adoption of a package of reforms proposed by the governor that would, among other things, cap benefits at $1 million. The reforms would hold insurers responsible for the first $500,000, with the remaining funds coming from the Michigan Catastrophic Claims Association up to its conclusion or the cap. NAMIC also backed a media campaign to counter misinformation from opponents of the reforms. The year ended without any further action.
In Minnesota, we helped defeat a House-passed proposal that would have greatly expanded no-fault benefits. And in New Jersey, NAMIC helped fight off a legal challenge by trial lawyers and healthcare providers over the adoption and implementation of amendments to the PIP rules and the medical fee schedule.
Over the past decade, NAMIC has assisted farm mutual member companies in multiple states in enacting changes to their governing statutes that help to ensure farm mutuals can continue to grow and compete. In Montana, NAMIC worked with industry partners for the passage of legislation in 2013 that will make it easier for farm mutual insurers to secure competitive reinsurance.
A number of states addressed workers’ compensation reforms in 2013. Opioid abuse, drug repackaging, and fee schedules continued to be of great concern to NAMIC member companies writing commercial insurance, and debate of these issues increased across the country.
The Florida Legislature adopted a bill revising the requirements for determining the amount of reimbursement for repackaged or relabeled drugs. In Oregon, legislative language was approved to allow for rules providing for electronic transmission of filings, reports, notices, and other documents. In Vermont, legislation was passed that will allow workers’ compensation benefits to be paid through the use of an electronic pay card. In Indiana, NAMIC worked with industry partners to successfully adopt workers’ compensation reforms that included a fee schedule. And in California, medical treatment/pharmacy billing legislation supported by NAMIC and the industry was signed into law in August. A bill that would undo some of the more sweeping aspects of last year’s workers’ compensation reforms failed to achieve any traction.
Efforts by auto body repair trade groups to prohibit insurers from informing policyholders about direct repair programs were ongoing in 2013. NAMIC continued to fight these efforts, and expressed support for legislation at the state and federal levels to allow competition in the aftermarket parts market.
Rhode Island was a major battleground state where legislation was introduced to limit customer choice in where and how vehicles could be repaired. Measures that had proposed a private right of action against insurers and the creation of a tiered classification of body shops by state regulators died.
Still reeling in 2013 from a sluggish economy and reduced budget revenues, hard-pressed cities and towns throughout the country continued to consider imposing accident response fees on motorists. In Arkansas and Virginia, legislation that would have codified the authority of municipalities to bill individuals for emergency response to vehicle accidents was defeated.
IN THE NATION'S CAPITAL
Though a divided government in 2013 more often than not resulted in gridlock in the federal corridors of power, NAMIC forged ahead in pursuit of numerous policy goals. With active member support for our advocacy efforts and involvement in activities such as the Congressional Contact Program and NAMIC PAC, our voice was heard and our causes were advanced.
Regulatory agencies in Washington – those created by the Dodd-Frank Wall Street Reform and Consumer Protection Act as well as existing ones further empowered by the laws – continued flexing their muscles in the fourth year since the massive legislation became law.
Throughout 2013, NAMIC led the effort to protect our industry from needless, duplicative, federal regulation. Although insurance was never the cause of the financial meltdown (nor was it the focus of the Dodd-Frank law), federal proposals that touch the industry can push insurance oversight into bank-centric models and erroneously brand insurance as an economic risk. On the third anniversary of Dodd-Frank being signed into law, NAMIC issued a report detailing the law’s impact on the property/casualty insurance industry now and in the future.
In December, as the year drew to a close, the FIO released its report with specific recommendations for state and federal action it believes would improve the insurance regulatory system. While much of the report focused on actions the states and insurance regulators could take, it also argued that a regulatory system that is solely state-based would be incapable of fully meeting the challenges our industry faces.
In April, the Financial Stability Oversight Council issued its final rule outlining the process by which companies could be designated as systemically important financial institutions, or SIFIs. In an apparent response to NAMIC-voiced concerns that the overly broad standards would have unfairly swept property/casualty insurers under the jurisdiction of a federal regulator, the FSOC selected a designation criteria much more limited than what industry critics favored.
On Capitol Hill, NAMIC worked in support of legislation to protect insurers that own banks from a bank-centric, one-size-fits-all capital standard. The Federal Reserve was granted supervisory authority over savings and loans holding companies, including those affiliated with insurers, and charged with oversight of nonbank financial companies, which may include insurers designated systemically important financial institutions by the FSOC. By July, two measures – one in the House and one in the Senate – had been introduced that address our concerns.
Efforts to repeal the McCarran-Ferguson limited antitrust exemption are a constant in Washington, D.C. Four pieces of legislation were introduced in 2013 that would repeal the exemption and give the Department of Justice and the Federal Trade Commission the authority to enforce federal antitrust laws and regulations for health insurance companies. NAMIC helped educate members of Congress and successfully stopped any movement of these bills.
Though aimed at health insurers, these bills contained broad language that could be interpreted to include medical malpractice liability and other lines of insurance. One measure expressly included medical malpractice insurance in addition to health insurance while another, H.R. 911 sponsored by Rep. Paul Gosar, R-Ariz., was tailored to include only health insurers after NAMIC staff met with the congressman.
In the wake of the attacks of 9/11, Congress passed the TRIA – and twice passed extensions of it – to ensure that our nation could recover and rebuild in the event of any future catastrophic attacks. TRIA is currently set to expire at the end of 2014, with reauthorization again a top NAMIC priority. Our TRIA Task Force developed the strategy for building our case for reauthorization amid a very challenging legislative environment.
As early as February, NAMIC worked with Rep. Michael Grimm, R-N.Y., of the House Financial Services Committee on the introduction of H.R. 508 for a “clean" five-year reauthorization with no changes to the current program. This was immediately followed by the introduction of a 10-year “clean" reauthorization by the ranking member of the Housing and Insurance Subcommittee, Rep. Michael Capuano, D-Mass. A third bill, H.R. 1945, introduced by Rep. Bennie Thompson, D-Miss., would also reauthorize the program for 10 years, but would move it to the jurisdiction of the House Homeland Security Committee. Together, the three bills are sponsored by 130 lawmakers from 29 states and the District of Columbia.
And though its leadership has been skeptical, the House Financial Services Committee held a TRIA hearing Sept. 19, which resulted in an unbiased setting for debate and opportunity for witnesses to speak in favor of reauthorization. NAMIC also worked to secure a second hearing, held on Nov. 13, in the House Financial Services Subcommittee on Housing and Insurance. Prior to both hearings, NAMIC generated letters and written testimony from key stakeholders urging reauthorization. The year ended with the promise of a Senate hearing, where support for reauthorization is both strong and bipartisan – and where the question is not whether TRIA will be reauthorized but whether the program will incur any significant changes.
On Feb. 8, HUD formally issued its final rule that would allow any homeowner insurance underwriting factor to be challenged under the Fair Housing Act if it produces statistically disproportionate outcomes among particular demographic groups, regardless of intent.
HUD’s action came as no surprise to NAMIC, as we had already spent two years voicing our concerns and opposition to the rule. From meeting with HUD officials and White House policy staff to proposing legislative action by Congress, we sought every opportunity to educate federal policymakers on the negative consequences this would have on insurers that write homeowner policies.
Left with little choice, NAMIC filed a federal suit on June 26 with the American Insurance Association in the U.S. District Court for the District of Columbia that directly challenges whether disparate impact claims can be made under the FHA. The suit was filed after the Supreme Court agreed to take up another case examining the issue, Mount Holly v. Mt. Holly Gardens Citizens in Action, Inc. While many experts believed the Mt. Holly case would resolve the issue, a similar case had been withdrawn shortly before being heard by the Supreme Court after the Department of Justice brokered a settlement. Because a settlement was also reached in the Mt. Holly case, our lawsuit became the primary legal challenge to disparate impact.
The adoption and enforcement of stronger statewide building standards became a national issue in 2013 because of NAMIC’s leadership in promoting the federal Safe Building Code Incentive Act.
By early May, the legislation was introduced in the House and Senate with growing bipartisan support. To coincide with the bill’s introduction, the NAMIC-led BuildStrong Coalition hosted a forum to raise the issue of building codes and disaster mitigation on Capitol Hill with the Congressional Fire Services Institute bringing thought leaders and key stakeholders. NAMIC was also invited to testify at a Senate Homeland Security Subcommittee hearing on private sector assistance in in disaster mitigation and cleanup. Michael Merwarth from NAMIC member USAA highlighted the work done by the BuildStrong Coalition in support of the SBCIA. Sen. Mark Begich, D-Alaska, the chairman of the subcommittee, sought further discussions with the coalition as a result of the hearing.
Demonstrating our progress on Capitol Hill, Rep. Bill Shuster, R-Pa., chairman of the House Transportation and Infrastructure Committee, lauded the SBCIA during an October meeting. Shuster expressed his belief that savings from preventing future losses should outweigh any immediate costs of the legislation. Other committee members from both sides of the aisle echoed the praise.
NAMIC also hosted a roundtable with the BuildStrong Coalition at the Insurance Institute of Business and Home Safety. Five key lawmakers toured the facility and participated in a roundtable with industry experts, including representatives from NAMIC member companies. Shuster led the delegation accompanied by Reps. Lou Barletta, R-Pa.; Mario Diaz-Balart, R-Fla., who introduced the bill; and Mick Mulvaney, R-S.C. South Carolina Gov. Nikki Haley also visited the facility and pledged her support for the SBCIA.
Established by NAMIC in 2011, the BuildStrong Coalition’s efforts to promote disaster mitigation through a campaign advocating for modern building codes gained momentum in 2013.
BuildStrong’s membership has grown to include national business and consumer organizations, companies, architects and engineers, and first responders. The key focus of BuildStrong is to work for congressional passage of the SBCIA.
In building this coalition, NAMIC has made building codes a part of the disaster mitigation and response agenda in Washington, positioning the SBCIA as wise public policy that not only can help to save property and lives but taxpayer money as well.
Less than a year after the federal flood insurance program was reformed and reauthorized with broad, bipartisan support in a rare display of common sense and courage, lawmakers who once praised the move of flood insurance to risk-based pricing decided in 2013 to seek ways to delay implementation of the Biggert-Waters Flood Insurance Reform Act in the face of complaints by affected constituents.
Legislation to effectively undo the reforms of Biggert-Waters was introduced in the House and the Senate, with support coming mostly from members of both parties in flood-prone states along the Gulf Coast and Eastern Seaboard. NAMIC was the first insurance trade association to actively oppose delaying implementation of the program’s reforms. We have worked extensively to find an alternative to address the affordability of new premiums for low-income individuals while leaving the main tenets of the reform intact.
NAMIC believes a financially sound National Flood Insurance Program is better for all Americans than an insolvent program that is reliant on taxpayer-funded bailouts.
While many anticipated congressional action in 2013 to reform the federal tax code, the year was quickly consumed by partisan issues and conflict. Despite the lack of movement on this issue, NAMIC succeeded in positioning itself as a key voice of our members’ views on tax issues affecting the property/casualty insurance industry.
With both the House Ways & Means and the Senate Finance committees, we focused on major concerns over the deductibility of loss reserves, proration (municipal bond interest), and the small mutual tax treatment. NAMIC’s education efforts have also focused on general corporate tax code provisions, such as net operating losses and the corporate alternative minimum tax, that affect our industry.
We also continued to work in 2013 for the inclusion of the small mutual inflation update in any reform of the tax code. While property/casualty insurers with annual direct or net written premiums not exceeding $1.2 million can elect to be taxed on their net investment income, the amount has not been adjusted since the Tax Reform Act of 1986. Adjusted for inflation, the threshold today should be $2,121,208. There has been strong support to include this important update.
NAMIC worked with key legislators for the introduction of stand-alone legislation in the House, and several House Members expressed interest in serving as original co-sponsors. This effort, along with most stand-alone tax issues, stalled in the House. In the Senate, S.1346, the Small Mutual Inflation Update, was introduced in late July and awaited action as the year ended.
In April, NAMIC and the Quality Parts Coalition secured bipartisan introduction of the Promoting Automotive Repair, Trade, and Sales Act of 2013 in the House and Senate. The PARTS Act would provide a more reasonable window of exclusivity for original manufacturers on non-safety-related, cosmetic parts for automobiles.
We have continued to provide expertise to both the House and Senate judiciary committees through both coalition outreach and our CCP. The QPC has used the debate over broader patent reform to raise the profile of the PARTS Act, stressing that the U.S. patent system was intended to promote meaningful innovation and invention rather than a means to a protectionist end.
NAMIC has long supported the Furthering Asbestos Claims Transparency Act to combat fraudulent asbestos claims. It would require personal injury settlement trusts established by bankrupt asbestos lawsuit defendants to file quarterly reports with bankruptcy courts. It would also require the trusts to provide upon request any information related to claims made from a party to any legal action if the subject concerns liability for asbestos exposure.
In 2013, our work on this issue saw the passage of the FACT Act by the House in November. By the end of the year, NAMIC began work to advance the bill in the Senate.
NAMIC Political Action
Impact of Congressional Contact Program Felt on the Hill
Celebrating its 28th year in 2013, NAMIC’s CCP continued to be one of the premier grassroots campaigns for the property/casualty insurance industry. When NAMIC member company representatives visit Capitol Hill, lawmakers hear directly from their insurer constituents about the impact federal laws and regulations have on property/casualty insurers that are based on main streets throughout America.
The impact of our CCP was again felt in 2013, as representatives from 173 NAMIC companies in 35 states came to Washington. These 251 company officials met with more than 300 House and Senate offices and advocated our key issues.
Throughout the year, 90 members of Congress were presented with the NAMIC Benjamin Franklin Public Policy Award for their support of issues facing our members in the prior Congress.
Rep. Steve Stivers, R-Ohio, was honored as NAMIC’s Legislator of the Year in 2013 for being a champion for our industry. Stivers, a member of the House Financial Services Committee, served as a tireless advocate for NAMIC’s key issues as the 113th Congress began.
Because of the work done by these NAMIC members in 2013, there were significant gains in support of our top legislative priorities. More than 100 members of Congress have given their support for a reauthorization of the Terrorism Risk Insurance Act and support continued to grow for our building codes initiative.
Key Contact Program
The NAMIC Key Contract Program is our effort to build a more effective grassroots organization for the benefit of our members and is grounded in the mutual self-interest of the legislator, our member companies, and their constituent-customers. The number of our Key Contacts nearly doubled in 2013.
This program fosters long-term personal and professional relationships between elected officials at the state and federal levels and NAMIC members. By meeting and making contact with elected officials in several ways, our members achieve meaningful conversations about issues important to the profession – and can become a trusted advisor to the legislator when bills are drafted or considered. This program has shown success in helping to further educate legislators on the issues affecting our member companies and policyholders. It is an essential grassroots supplement to our efforts in Washington, D.C.
Public Policy Summit Evolves into Government Affairs Conference
In 2013, the property/casualty insurance industry confronted its most significant threat in recent memory: a proposed shift in the federal government’s long-held interpretation and enforcement of the Fair Housing Act. The government claims the FHA prohibits not only business practices that intentionally discriminate on the basis of race and other factors but practices statistically more adverse to some groups more than to others, regardless of intent. If the government succeeds in codifying the “disparate impact" theory of discrimination under the FHA, the ability of homeowners’ insurers to use many factors in rating risk would be vulnerable to charges of illegal discrimination.
Thus, the disparate impact rule the U.S. Department of Housing and Urban Development issued in February was a major focus of NAMIC’s public policy research and development in 2013. Much of that work found its way into detailed written testimony that the association submitted to the U.S. House of Representatives Financial Services Committee in connection with a November subcommittee hearing titled “A General Overview of Disparate Impact Theory." NAMIC was the only business trade group to use the hearing as a platform to educate members of Congress on this critically important issue.
NAMIC’s extensive macro-level research into the historical underpinnings, as well as the economic and social consequences, of the disparate impact theory of discrimination served as the basis for numerous public presentations by NAMIC staff. In October, Robert Detlefsen, NAMIC vice president of public policy, participated in a U.S. Chamber of Commerce conference titled “Disparate Impact: Ensuring Common-Sense Lending" in Washington, D.C. He also delivered a presentation that month on disparate impact and insurance at the annual meeting of the Society of Insurance Research in San Antonio, Texas.
Other issues were also monitored and responded to by our public policy staff. These included efforts by critics of our industry to manufacture the existence of crisis in “affordable" automobile insurance allegedly affecting low- and moderate-income consumers. NAMIC rebutted each of the several flawed reports issued by critics and worked with the Insurance Research Council to minimize the influence of critics before the NAIC Auto Insurance Study Group.
The public policy staff also worked to update and refine the arguments in support of the Terrorism Risk Insurance Act, as well as to counter misconceptions about the program and the nature of terrorism risk in anticipation of the congressional debate over TRIA renewal.
Serious public policy issues deserve serious research and analysis
More than 30 NAMIC member company representatives attended the December 2013 Government Affairs Conference in Washington, D.C. Held annually since 2003 and formerly known as the NAMIC Public Policy Summit, the two-day conference brought together public policy experts, industry leaders, and representatives of member companies for five sessions on key insurance-related topics.
Sessions in 2013 were:
SEATTLE: NAMIC’s 118th Annual Convention
Our premier event was the 118th Annual Convention, held in Seattle with record delegate attendance. Widely recognized as the place where “the industry comes together," the NAMIC convention once again proved to be the ideal place for members to network with peers, meet with reinsurers and rating bureaus, hear updates on breaking news and trends in the industry, and learn the newest “best practices" in our industry.
The convention opened with a grand ceremony and official welcomes from NAMIC Chairman Jerry Zenke and President and CEO Chuck Chamness. Stan Slap, renowned leadership consultant and strategist, was the general session’s keynote presenter. He shared tales of his work to help companies such as Microsoft, HP, eBay, and Deloitte move forward in a rapidly changing world. After lunch, delegates had their pick of concurrent sessions to attend with topics ranging from Super Storm Sandy reactions to NAMIC’s mutual brand program to communicating mutual values globally.
The convention’s second day began with keynote speaker Robert Spector, a customer service expert who shared inspiring, real-life accounts of successful customer-service strategies. His most well-known story, “The Nordstrom Way to Customer Service Excellence," chronicles the superior customer service provided by the retail giant and became a best-selling book and a powerful guide for today’s multi-channel business environment.
Afternoon concurrent sessions on the second day reviewed NAMIC’s 2013 advocacy efforts in state legislatures and on Capitol Hill, an explanation of the Affordable Care Act and its looming rules and regulations, and a presentation shedding light on the secrets to building a more youthful talent base. Other sessions focused on preparing for a successful reinsurance meeting, board meeting procedures, and an industry update from Insurance Institute for Highway Safety and Institute for Business and Home Safety representatives.
The final day of the convention began with a breakfast for both the Property Casualty Conference senior executives and the Professional Farm Mutual Managers. These led into NAMIC’s annual business meeting where outgoing Chairman Jerry Zenke presented the gavel our new chairman, John Bishop. Chamness then gave a “state of the association" address before yielding to a lively discussion by the day’s keynote presenters, political pundits Mark Shields and Michael Murphy.
When not learning, networking, or attending business meetings, convention attendees discovered and investigated new business solutions and products from more than 120 exhibitors inside the Marketplace for Mutuals, which at 40,000 square feet of exhibit space was 20 percent bigger than the prior year’s showcase. Spanning 24 categories of products and services, the convention exhibitors were led by 22 companies offering software development and seven companies offering investment and asset management assistance.
These were, of course, just some of the highlights of the 2013 convention. Delegates and guests were enticed to venture beyond their hotels and the Convention Center to experience all that Seattle had to offer, from panoramic views atop the Space Needle to the bustling Pike Street Market on the waterfront.
NAMIC Awards Presented at 2013 Convention
John Bykowski, chairman and CEO of SECURA Insurance in Appleton, Wis., was the 2013 recipient of NAMIC’s Chairman’s Award during the annual convention in Seattle. He is the 50th recipient of the award, which was established to recognize leadership, accomplishment, and outstanding service to NAMIC and the property/casualty insurance industry.
Bykowski has worked in the property/casualty industry for 40 years. He joined SECURA in 1997. During his chairmanship of NAMIC, he sought to build on the sense of collegiality and mutuality among NAMIC members. He has also served as the head of the board of trustees for NAMIC PAC and on several NAMIC committees.
Four other industry leaders were recognized for their service to the property/casualty insurance industry. Receiving NAMIC Service Awards at the convention were Robert Forsythe, CIP, Adrian Lund, Christopher Shipe, CPCU, AIT, and Douglas Sullivan, CIC, PFMM.
Forsythe, senior vice president and a member of board of the Cambridge, Ontario-based Farm Mutual Reinsurance Plan, Inc., has served as a NAMIC director and as chairman of NAMIC’s Merit Society as well as chairman of the Canadian Association of Mutual Insurance Companies, president of the Ontario Mutual Insurance Association, and chairman of the Conestoga chapter of the Insurance Institute of Ontario.
Lund, president of the Insurance Institute for Highway Safety and the affiliated Highway Loss Data Institute in Arlington, Va., directed the development of the institute’s extensive vehicle testing program as senior vice president for research from 1993 to 2001. Throughout his career he has served on a number of governmental and nongovernmental committees, addressing ways to reduce the injuries, fatalities, and property damage from motor vehicle crashes.
Shipe, president and CEO of Loudoun Mutual Insurance Company in Waterford, Va., began working in risk management and safety for a construction firm before beginning a career in the property/casualty insurance industry. He began his NAMIC service in 1988 by serving on the NAMIC Underwriting Committee. More recently, he was a member of the NAMIC PAC board and is a past chairman of the NAMIC Property Casualty Conference board. Currently, he serves on the Virginia Association of Mutual Insurance Companies Executive Committee, the board of directors of NAMICO, and as a trustee of the NAMIC Group Retirement Trust.
Sullivan, manager and secretary/treasurer of Svea Mutual Insurance Company in Orion, Ill., has served as chairman of NAMIC’s Farm Mutual Conference and as a NAMIC director, as well as a member of various NAMIC committees, including Convention Planning, FMC Leadership Development, Loss Control, Membership, Nominating, and Underwriting. He is currently a director for the association’s Merit Society and serves on the Federal Affairs Committee. Sullivan was chairman of the Illinois Association of Mutual Insurance Companies in 2003 and has served as chairman of its underwriting committee.
NAMIC Members Aid Charitable Causes at Convention
The NAMIC Annual Convention gives members an opportunity to network, learn, and conduct some business. But it is also a time for members to give back. More than $31,000 was raised in Seattle for charitable causes during the course of five days.
The weekend before the convention officially opened, nearly 100 attendees took to the links for a charity golf outing in support of the Griffith Insurance Education Foundation. The foundation educates public policymakers on insurance fundamentals and promotes awareness of insurance career opportunities to students. The golf event raised $11,836 for the foundation.
On the convention’s second full day, a record 109 attendees participated in the annual Fun Run & Walk to benefit St. Baldrick’s Foundation. A total of $4,360 was raised for medical research in children’s cancer. Later that day, hundreds of conventioneers cheered on NAMIC Insurance Company President and CEO Tim Sullivan as he shaved his head – head-shaving is St. Baldrick’s most visible fundraising act – to raise an additional $15,275 for the cause.
Professional Farm Mutual Manager of the Year
Tricia Mickley, CPA, PFMM, secretary/treasurer of Mount Carroll Mutual Insurance Company in Mount Carroll, Ill., was chosen in 2013 from among more than 350 Professional Farm Mutual Managers in the United States and Canada as NAMIC’s Professional Farm Mutual Manager of the Year. She was recognized with the award at the association’s convention in Seattle.
Created in 2002, the award recognizes the achievements of a farm mutual manager who dedicates himself or herself to excellence in mutual insurance company management. Mickley was selected by her peers because of her excellence in marketing, administration, and financial ability as well as involvement in national and state associations as well as in her local community.
Mickley is a member of the NAMIC and Farm Mutual Conference boards, and she has been an active leader not only of her company but also in advocacy, working with the Illinois Association of Mutual Insurance Companies and participating in the NAMIC Congressional Contact Program in Washington, D.C.
Designed to Assist With Members’ Business Development
New Options Join Expanding Range of Programs
As the leader providing educational opportunities in the property/casualty insurance industry, NAMIC held a broad range of events targeted to a variety of aspects of insurance. In 2013, these events were individualized to reflect the broad-based NAMIC membership: the Property Casualty Conference serving multiline companies and the Farm Mutual Conference serving farm mutual or co-operative companies across the United States and Canada.
Attendance at our educational events remained strong in 2013, with several enjoying record participation. But strong participation is only meaningful when those attending our events find them valuable. Among those who responded to post-event surveys, 98 percent were satisfied with in-person events and 94 percent were satisfied with online events.
NAMIC hosted three webinar series for education and networking during the year: Lunch & Learn, Online Fundamental Training with an emphasis on underwriting, and IMPACT. Additional programs were available during the convention.
We also launched two new initiatives to help members improve and refine their leadership skills. Project Leadership is our new initiative focused on the future of the mutual industry by emphasizing leadership education and mentoring resources. T.E.A.M. certification (Train, Educate, Advance, Mentor) was developed to recognize industry professionals who are committed to developing and using leadership skills that are especially useful in group environments.
Program to Certify Farm Mutual Directors COntinues to Grow
NAMIC’s Farm Mutual Director Certification program requires director participation in a rigorous curriculum of educational courses specifically tailored to the unique needs of farm mutual operations that enhances directors’ knowledge and ability to provide strategic direction. In 2013, the program grew by more than 17 percent, with more than 900 active participants.
Consisting of three modules, the program focuses on management, operations and insurance, and finance and accounting. To receive the designation, a participant must complete four courses from each module within five years of enrollment and must complete an additional four hours of course work every two years to maintain their certification. Courses were offered throughout the year by NAMIC and different state associations.
Mutual insurers of all sizes and lines of business in 21 states and Canada participated in NAMIC’s mutual brand program in 2013, using the resources to better define themselves in their marketplaces and among their own policyholders.
Professionally designed and market-tested resources are available for use in a variety of media – print, broadcast, online, direct mail, and outdoor. Ten significant points of emphasis have been identified for use in the mutual brand messaging, with a tagline “Shared Purposes. Mutual Values.®" A special brand-on-demand website enables participating companies to access, customize, and initiate placement of brand resources.
Hundreds of mutual leaders participated in at least one of more than eight webinars or six in-person presentations conducted at state association and NAMIC events throughout the year to learn about the program.
Launched in the fall of 2012, the mutual brand program is managed by NAMIC public affairs as a voluntary, value-added program supported by licensing fees paid by participating companies.
For more than a quarter of a century, NAMIC Insurance Company and NAMIC Insurance Agency have provided customized, affordable insurance solutions to our member companies and their agents.
More than 85 percent of NAMIC members turn to NAMICO for some combination of D&O, ICPL, EPLI, fiduciary, fidelity, and – beginning in 2013 – cyber liability coverages. As a result, more mutual property/casualty insurers get their professional liability coverage from NAMIC Insurance Solutions than any other source. In addition, more than 2,000 agents are covered by our E&O program.
NAMICO reached a record with $13.1 million in earned premium in 2013, with a 6 percent increase of its surplus to more than $24 million. NAMICO assets closed the year at approximately $50 million while underwriting profit was about $300,000. This solid performance resulted in the company retaining its A.M. Best “A" rating.
NIA exceeded its 2013 new business goal of $325,000 in premium and also met its retention target for renewal business.
The new Willow application also went online, combining NAMICO and NIA underwriting quote functions with those for policy administration, claims, and accounting for the NAMICO pool. This set the stage for the portal, which permits online completion of renewal and new business applications, to be integrated with Willow to provide a more efficient and accurate processing system.
NAMIC Web Services, providing custom website design and development services to NAMIC members, their agents, insurance industry partners and affiliate organizations, exhibited a 12 percent increase in new business in 2013.
We currently serve nearly 200 customers in 25 states and two Canadian provinces. A portfolio showcasing actual project work can be viewed at NamicWebServices.com.
The NAMIC Arbitration Service, which provides a forum for low-cost resolution of subrogation disputes between property/casualty insurance companies in the United States, experienced a 4 percent increase in 2013. There were 827 filings for the year.
This NAMIC service is unique in that each decision is made by a three-person panel, consisting of claims management professionals (manager-level or higher) and includes a detailed written explanation of how the decision was reached. It has automatic nationwide jurisdiction over any subrogation dispute between signatory companies arising from, but not limited to: damage to or by motor vehicles, medical payments where permitted by state law, and third-party contribution claims.
This year marked the first full year that Transamerica, a recognized leader in the retirement planning industry, provided 401(k) services for NAMIC member companies and their employees. The Multiple Employer Plan grew to $11.1 million, which was a year-over-year increase of 43 percent.
Members benefit from economies of scale and reduced administration through participation in this program. With one Form 5,500 filing and one audit filed on behalf of all participating member companies, savings are realized quickly. As invested assets grow, breakpoints result in reduced expenses for participants.
Throughout 2013, NAMIC worked with Deloitte Consulting LLP to develop a user-based insurance platform for member companies. The result: D.rive, a telematics program unveiled at the Seattle convention in September.
D.rive is a uniquely developed telematics solution for NAMIC member auto insurers that want to effectively compete in the telematics-enabled market. It is an end-to-end solution designed for auto insurers to increase speed to market, and flexibility, promote greater policyholder engagement and limit up-front risk. D.rive provides NAMIC members with preferred pricing, transparency into scoring models, and a voice in product development. The collection and pooling of information from participating companies around the country through an accessible data bureau can provide more credible scoring that is more closely reflective of individual driving habits.
Unlike other telematics systems, D.rive provides transparency to both drivers and insurers. The system is designed to allow drivers to view and receive feedback on their driving behavior. D.rive will also use driving behavior data to provide relevant driving “scores" to the insurance underwriter. Our goal is to create safer drivers on the road – and provide an innovative product for NAMIC member companies.
NAMIC Earns National Recognition
NAMIC Communications Earn Major National Honor
NAMIC.org, the association’s 2012 “Year in Review" annual report, and a membership recruitment video each earned a national Award of Excellence from the Insurance Marketing & Communications Association at its June 2013 convention in Philadelphia
The competition attracted more than 400 entries – many from the largest insurance companies in the country – across 35 categories. IMCA represents more than 120 insurance and financial services companies throughout the United States, Canada, Mexico, and Bermuda, including the five largest property/casualty writers in the country. Members include senior-level management and professional staff in advertising, public relations, marketing communications, marketing and sales promotion, marketing research, and technology.
NAMIC’s website was one of only three insurance-related websites honored by the IMCA. NAMIC member Main Street America Group was also an award recipient for an interactive version of its annual report.
The current version of NAMIC.org was redesigned with the objective of having visitors be able to find what they need in three clicks or less. With more than 25,000 pages of content, that goal was daunting – but achieved. In 2013, traffic to the site was up 21 percent over the prior year, attracting an average of 18,000 visitors a month. The number of page views also grew, with a monthly average of 53,000, which was a 17 percent increase over the year before.
NAMIC’s “Year in Review" for 2012 was one of three industry annual reports honored. Member member Pharmacists Mutual Insurance Company was also honored with an award for its annual report.
NAMIC’s third IMCA award was for a video featuring NAMIC members taking about the benefits of association membership. The video is featured on NAMIC.org.
Welcome New Members in 2013
While mutual insurers are the only NAMIC members permitted to serve on the boards of directors and vote in the annual meeting, the National Association of Mutual Insurance Companies welcomes stock insurance companies, reinsurance companies, reinsurance brokers, and industry vendor companies as valued members of the association.
By providing positive contributions to our society through a financially sound, competitive, and ethical insurance industry, NAMIC member companies better serve their policyholders and the communities where they do business. We strengthen and support members and the mutual property/casualty insurance industry by leadership in advocacy, public policy, public affairs, and member services.
Through our advocacy programs, we promote public policy solutions that benefit member companies and the consumers we serve. Our educational programs enable members to become better leaders in our companies and the insurance industry for the benefit of our policyholders.
In 2013, we welcomed the following companies into the NAMIC membership:
American Farmers & Ranchers Mutual Insurance Company
CSAA Insurance Group
Irish Public Bodies Mutual Insurances Ltd.
Nicoletti Gonson Spinner LLP
West Wawanosh Mutual Insurance Company
CAMICO Mutual Insurance Company
Synergy Comp Insurance Company