At the Austin meeting of the National Association of Insurance Commissioners (NAIC) the NCIGF presented its position on guaranty fund coverage related to claims that might arise from business that is restructured pursuant to statutes in several states. These statutes, which are described as either Insurance Business Transfer (IBT) or Division statutes, permit a company to divest itself of certain blocks of business. The transferring company has no liability should the assuming entity be ordered into liquidation. Further, the statutes permit various lines of business to be transferred including workers compensation and other personal lines.
The NCIGF expressed concern that under current guaranty fund law many claims presented to guaranty funds would not be considered “covered claims” – that is claims eligible for guaranty fund coverage should the assuming entity be liquidated.
To address this matter the NCIGF announced a multi-state effort to revise guaranty fund statute to afford claimants who are entitled to coverage before the restructuring transaction to have such coverage after the transaction. Further, the law adjustments will not permit claims to be covered if the claimant had no guaranty fund coverage before the transaction. This would include products written on a surplus lines basis or written by risk retention groups and the like which are excluded from coverage under current law.
On November 1, Amanda Barbera officially became the Executive Director for the Oklahoma Property & Casualty Insurance Guaranty Association. Notably, Ms. Barbera was the past Executive Director, serving in Oklahoma from 2015 to 2018. Now based out of Indianapolis, she has been the Executive Director for the Indiana Insurance Guaranty Association since 2018. “It is incredibly rewarding for me because I can continue in my capacity in Indiana but also have the opportunity to work with Oklahoma, a state where I still have several ties and a strong appreciation for the work they do after serving there for so many years,” Ms. Barbera said in a statement to NCIGF.
The decision was made in Oklahoma after the association’s board met in September to review a proposal from Barbera outlining the contractual relationship where she would liaise with them, oversee the office operations and help lead and fulfill the mission of the Oklahoma organization, including insolvency management. “My role will be to represent both states’ interests when necessary. For instance, if I’m on a coordinating committee where both Indiana and Oklahoma have claims, I will be on the committee on behalf of each entity.” (Contractually, any conflict of interest would be raised to the board level.)
One key to Amanda’s success is the quick turnaround with her onboarding process. Since the work of guaranty funds is specialized, the utilization of Ms. Barbera’s expertise ensures that there will be no lulls in service for the Oklahoma Property & Casualty Insurance Guaranty Association, as she already understands the employees as well as the relationship with the receivership office.
Ms. Barbera will remain based out of Indianapolis but plans to return to Oklahoma regularly to manage as well as meet and coordinate with the Oklahoma association board.
“This is the Essence of What the Guaranty Funds Exist to Do…” – Brad Roeber
One of the highlights of the 2019 Fall Workshop was a panel entitled, Disaster Sight: Listening to History for Creative Problem Solving. Among the panelists was Brad Roeber, Executive Director of the California Insurance Guarantee Association (CIGA). Mr. Roeber gave a brief overview regarding a creative solution he employed in late 2018 when it came to the liquidation of Merced Property & Casualty Company, a small California Central Valley insurer impacted by the California wildfires. This is a closer look at that situation as well as a challenge from Mr. Roeber to all Guaranty Funds to secure the future of the system by leveraging creativity as well as compassion.
Robin Webb, NCIGF Communications & Member Support Manager: Brad, you’re the current Executive Director over at CIGA, tell me about stepping into that role as a former Industry representative.
Brad Roeber, Executive Director, CIGA: I served on the NCIGF Board as an industry member for a number of years so I have a fairly unique point of view, especially given that I ended up choosing to work with the guaranty funds for a living, now being the CIGA executive director. I believe in the mission very much and I thought that, at this time in our history, there was an opportunity to lead in a different way. We exist solely to serve consumers who have no place else to go. Everything that I’m doing and everything I’m encouraging my employees to do is to think about the people that are sitting there with nothing…whether it’s an injured worker in the comp world or it’s a claimant of a non-standard auto insured who has gone down or the folks up in Paradise, California who, in one day, lost everything and then a few weeks later, lost their insurance too.
Robin: And you’d only been in your role a short time when the California wildfires tore through this heavily wooded area in the Butte County? Tell me about getting creative when it came to helping those claimants from Merced who lost their homes.
Brad: Yes. Whether you call it creative solutions or just finding answers where maybe there are no obvious ones, to me that’s what we need to do. I’m not the first person who’s hired existing staff to handle an insolvency, but it goes beyond that. Now we’re leveraging those people [from Merced] who did a great job for us to do more work and keep them on the payroll longer, so there is an economic value to how we handled it. And, talking about Merced specifically, we are going to handle that estate with an administrative expense load that’s exceptionally low. And that is because we didn’t have to pay southern California salaries to those folks, and we didn’t have to pay the overhead of southern California. We paid the overhead in a little farm town in the middle of the agricultural part of the state. There are all kind of little savings like that just from being open to new possibilities. And like I’ve said, utilizing existing staff is not a new idea, but I think the way we leveraged it in this particular case was a little different.
Robin: Take us back to the very beginning. What happened with Merced?
Brad: The story of Merced is a pretty simple one. I had gotten here at the end of September 2018 and on November 8th, the fire starts. We got a call saying that there was this little central valley carrier that was a hundred years old and it was likely to go under. Most of their book of business was property and so it was pretty clear that something was going to go down. As it turns out, some of their employees knew within a week that they were done because the company had about $30 million in assets and the exposure was within the $100million range. So, we knew…it’s going to go.
Robin: In your time in the insurance world, had you ever experienced a disaster like this?
Brad: One of the things that was interesting here, and it’s a good lesson for the future of the guaranty funds, was I was among just a few people at CIGA that had ever actually been involved in a property disaster and had adjusted property claims. My experience, a lot of which was in the Midwest, was with tornadoes and things of that nature. I had been on site in multiple places where a tornado had ripped through and the houses were completely gone. There was one that happened a little east of Peoria a few years back where people were sitting at home on a Sunday morning eating breakfast and the next thing they know, the alarm is going off, they are running to the basement and the house is just gone. So, I had some pretty unique experience around those types of situations and adjusting those property claims.
Robin: When you heard about Merced, what was your first step?
Brad: I decided to go up there and see the people (and this was before the liquidation order). I went up to the Merced offices and talked with the claims staff and told them that it appeared that the company is in trouble but that the guaranty funds are the backstop for it and at CIGA I didn’t have anybody that knows how to adjust claims on property…so, would you be willing to work with us? We tried to be creative about engaging them and we set up a ‘stay bonus’ system to reward them if they stayed until the end of the insolvency.
We had our people lined up to handle everything and then it started. We went to work and began adjusting the claims. The fire had started on November 8th and right after Thanksgiving the fire finally got put out, so it burned fully for about three weeks. Then, on December 3rd the company was declared insolvent. Because of the pre-planning we had done and the fact that there was not a huge number of claims, we actually started issuing checks on that Friday, December 7th. The next week, in earnest, we were producing more checks for those folks, allowing the coverage gap to be minimal, almost nonexistent.
Robin: You mentioned specifically some creative solutions in regard to claim caps, tell me more about that.
Brad: The CIGA statute says that we could pay a maximum of $500,000 per claim for non-workers compensation claims. We talked in advance with our counsel and discussed the option of looking at the caps differently. Instead of one homeowner’s claim, we look at the homeowner’s policy in multiple parts where there are four basic coverages – dwelling, structures, contents and additional living expenses. We developed the option of treating this as four claims as opposed to one single claim.
Robin: Why was this solution so important to you?
Brad: This is the lens I was looking through: If we don’t find a creative way to deal with this part of it, then we will not represent the insurance industry as a safety net. Because of this four-coverage approach, we were able to cover the entirety of people’s claims with the exception of just a few (maybe 30-40 whose domicile exceeded the $500,000 cap). It created a productive solution out of a situation that was really awful for these people. It allowed them to move on with their lives.
Robin: And there was another area, the contents portion of the coverage, that you dealt with pretty swiftly as well, right?
Brad: Yes. When you adjust a property claim and there is contents damage, typically it’s handled by the consumer providing an inventory and the adjuster going through the list of all of the homeowner’s items and coming up with a cash value for all of those items. Then, when the consumer actually goes out and purchases those items, they provide proof, and only then can they be paid the difference. Obviously, it’s a pretty arduous process. Well, we decided to offer to pay eighty percent of whatever the contents coverage amount was, without an inventory. No questions asked. Again, that piece of it, that type of solution had been done before but not very often and not so efficiently or at such a high percentage amount. And with the exception of just a handful of claimants, we have had no complaints.
Robin: Where did the Merced employees end up?
Brad: We’ve given them additional work to do. We have other work that had been done by third-party administrators and I’m starting to feed them additional files to adjust. It saves us money and also keeps them employed. We wanted to reward them for being loyal to us and seeing this insolvency through to the end.
Robin: Thank you for sharing that story. It’s incredibly compelling.
Brad: It’s important to remember that this is not a tale of woe. This is not a story about a bunch of greedy insurance companies who try to do the wrong thing. This is a group of really well-intentioned people who have gotten educated and want to do a better job for the policyholders. The guaranty funds were there. We served these people who literally had no place else to go.
Robin: How do you balance the idea of going above and beyond to some who maybe have the mindset of not being a charity organization or taking up the mantle that their job is, in fact, to minimize the claims they pay?
Brad: I’m compelled because I’ve been on a disaster site before. The first time I went to a disaster site and looked into the eyes of one of my customers who had lost everything, that was a seminal moment for me almost fifteen years ago. At the time, I had forgotten why I’d gotten into the business – I had gotten caught up in making money and driving combined ratio and cutting claims cost and all of those things. I realized then that it wasn’t about any of that. It was about doing the right thing and taking care of these people. That was the promise. When you think about NCIGF, it’s about the promise. The promise isn’t that we make a lot of money…if it happens, then that’s great. But the promise is that we take care of people when they’ve lost everything and have no place else to go. It is a noble business.
In September, the Michigan Property and Casualty Guaranty Association announced that Jeffery Jenkins would become their new executive director. Their official announcement is below.
NCIGF reached out to Mr. Jenkins now that he has begun in the new role and he stated, “I am excited that I have started a new journey in my life here at MPCGA and look forward to being an integral part of the greater GF community. I really enjoy my new role! It has been a warm, comfortable and inviting feeling during the transition. It is extremely encouraging to see the teamwork that all of the organizations display and it is nice to see that we all are in this together with a family-like atmosphere.”
Michigan Property and Casualty Guaranty AssociationAnnounces Selection of New Executive Director
“Jeff has a wealth of industry knowledge and business acumen,” said Margaret Scheske, chairman of the MPCGA board. “The board is confident that under Jeff’s leadership the MPCGA will continue to fulfill its duty to protect policyholders and claimants against financial losses.”
In his new role, Jenkins will be responsible for the overall direction, coordination and evaluation of MPCGA’s operations and employees. He will serve as the face of MPCGA and will represent the interests of the organization, its member insurers and the welfare of impacted insureds in the state of Michigan.
“Jeff’s strong background in the property and casualty industry, passion for transparent leadership, and problem-solving approach will undoubtedly prove valuable assets to MPCGA,” said Milkint.
Jenkins most recently served as director of field property claims for The Hanover Insurance Group. He has more than 20 years of experience in the property and casualty sector. Jenkins earned a Bachelor of Arts in business administration from the University of Findlay in Findlay, Ohio, and has also earned a production management and leadership principles certificate.
“What an exciting opportunity to implement advances in new technology at MPCGA,” said Jenkins. “I look forward to working with this talented team to enhance our organization’s long-standing vision, and I am confident our collaborative work environment will serve us well to tackle new challenges in the future.”
About Michigan Property and Casualty Guaranty Association:
MPCGA is an unincorporated association of all property and casualty insurance companies authorized to transact insurance in Michigan. Membership in MPCGA is a condition for doing business in the state of Michigan. MPCGA was created by the Michigan Legislature in 1969 to protect the public against financial losses to Michigan policyholders and claimants as a result of insurance company insolvencies. MPCGA is not a state agency. It pays certain claims of insolvent insurance companies that were licensed to do business in the State of Michigan. A seven-member Board of Governors, appointed by the Director of the Department of Insurance and Financial Services (“DIFS”), oversees MPCGA. Additional information is available at http://www.mpcga.com/.
Michigan Property and Casualty Guaranty Association
The 2019 Fall Workshop took place in New Orleans on October 2-3. The educational event kicked off on that Wednesday at the historic Roosevelt Hotel and featured John Wells welcoming the membership to his home state of Louisiana. After introducing James Donelon, Commissioner of Insurance for the state, Mr. Wells handed things over to Trey Boone from eSOURCES who presented on organizational culture.
Throughout day one of the event, the NCIGF program highlighted opportunities for interaction among the community members, which included a rousing game of Jeopardy!, hosted by Chad Anderson (AKA Wink Wollery) as well as lunchtime roundtable discussion groups that covered important guaranty fund topics – Claims, IT, and Challenges for New Fund Managers. Said one participant who joined the IT roundtable, “Not only did Andrew and Jeremy answer our questions, the group of people at the table was varied and I enjoyed getting to know them better.”
Day one concluded after the group heard from NCIGF President & CEO, Roger Schmelzer and another panel entitled Disaster Sight: Listening to History for Creative Problem Solving. Mr. Schmelzer closed his President’s Report by stating, “In this version of NCIGF, with this composition of members who are so committed to the mission of the guaranty fund system, everyone can and should be heard.”
Day two of the workshop, emceed by Tom Streukens (FL), began with an interactive exercise constructed by the education committee: a cyber insolvency scenario. As members arrived in the morning, they were instructed to sit at round tables and Mr. Streukens explained the day. The scenario was rolled out, and each group took time to brainstorm, share experiences from their individual shops, and come up with next steps. The conclusion of the exercise involved each table sharing their ‘top takeaways’ with the large group. This was often met with applause and many took notes. “This exercise was excellent. The mix of experience and personalities at my table were perfect. There were many questions we could not answer, but at a minimum, this exercise drove the conversation and helped illustrate the need to keep talking about this topic and seek insight/clarification of how we would, collectively, respond to an insolvency with cyber policies”, commented one member via the 2019 Fall Workshop survey.
To see the notes from the scenario exercise as well as the PowerPoint presentations from all panels and speakers, click here.
NCIGF hosted its most recent board of directors meeting in Indianapolis last week. Among the board was Charles Renn, Executive Director of the Missouri P&C Insurance Guaranty Association. Mr. Renn attended this meeting not only as the most recent NCIGF past chairman but also marking this as his last ever NCIGF event. He presided over the board from 2017-2019, passing the gavel to Keith Bell from Travelers at the annual conference in May.
At the conclusion of the two-day board meeting, Roger Schmelzer, President & CEO of NCIGF, recognized Chuck for his 10 years of service on the board and for his incredible work overall for the guaranty fund community. As he received his certificate of appreciation, Chuck shared a powerful and heartfelt goodbye and was met with a standing ovation from all that were in attendance. He will be officially stepping into retirement on September 30 and will be succeeded by Tamara Kopp who also attended the August meeting.
Chuck wrote an open letter to the NCIGF Board of Directors and has agreed to share it here:
NCIGF Vice Chair Chad Anderson (WGFS) and NCIGF CEO Roger Schmelzer recently returned from the Asian International Forum of Insurance Guarantee Schemes (IFIGS) meeting held in Taipei, Taiwan. Both spoke to a roomful of 150 Public officials and academics from throughout Asia about the value of insurance guaranty funds.
Anderson delivered a robust briefing on how the U.S. property and casualty safety net works and the system’s place in state-based insurance regulation. It was an important presentation because most of the audience was not familiar with consumer protection for casualty products. Nearly all the topics addressed in the two-day meeting involved life mechanisms with an emphasis on avoiding failure altogether and efforts to assist regulators in achieving that end.
Delivering the keynote speech as chairman of IFIGS, Schmelzer outlined common objectives for all nations with policyholder protection laws; early involvement, prioritizing insurance customers and making sure regulators had a full and accurate understanding of how guaranty programs work, concluding by saying that meeting these elements will help to stabilize economies around the world.
Schmelzer pointed to deliberations anticipated later this year by international regulators (including representatives from the United States) on the ideal future state of guaranty systems worldwide. He cited these talks as a critical opportunity to help regulators generate a comprehensive body of knowledge and realistic expectations of insurance safety nets and their missions. Schmelzer also asserted that it was equally important to create an understanding that there is no single best way to protect consumers.
Update provided by the Missouri Insurance Guaranty Associations
Jefferson City, MO: Tamara W. Kopp has been named the new Executive Director of the Missouri Insurance Guaranty Associations by the Associations’ Executive Committee. Kopp takes the helm on October 1, 2019, when Chuck Renn retires after managing the Associations since 1992.
Kopp has spent her legal career with the Missouri Department of Insurance, most recently as receivership counsel representing the receiver for failed insurance companies. Kopp brings an understanding of government, insurance regulation, and company resolutions. She has served on the boards of directors for the International Association of Insurance Receivers (IAIR) and the Women Lawyers’ Association of Mid-Missouri (WLAMM). Kopp also represented the Missouri Department of Insurance on various National Association of Insurance Commissioners (NAIC) Committees, Task Forces, and Working Groups. As Executive Director, Kopp will continue her involvement with NAIC and IAIR while adding the National Conference of Insurance Guaranty Funds (NCIGF) and the National Organization of Life and Health Guaranty Associations (NOLHGA) to her schedule.
“On behalf of the Missouri Insurance Guaranty Associations, we want to thank Chuck for his 27 years of outstanding service to the guaranty associations and to Missouri consumers,” said Mike Voiles, Missouri Farm Bureau and Chair of the property and casualty guaranty association.
Tamara Kopp said, “Chuck has built a solid organization. I’m looking forward to continuing his level of excellent service for Missouri insureds to keep promises made.”
Kopp earned her law degree from the University of Missouri – Columbia and her bachelor’s degree from Northwest Missouri State University.
The Missouri Insurance Guaranty Associations provide protection within limits to insureds, beneficiaries, and claimants who are disadvantaged due to the insolvency of a member insurance company. Not all companies are member companies and not all types of insurance policies and coverage are subject to the protection provided by the Missouri Insurance Guaranty Associations. There are two insurance guaranty associations in Missouri that are jointly administered from one office. However, they have distinct responsibilities under their respective statutes. One association is responsible for insurance company insolvencies among the member life and health insurance companies, and the other association is responsible for insolvencies occurring among the member property and casualty insurance companies.
The Board of Directors of the National Conference of Guaranty Funds (NCIGF) has elected D. Keith Bell of The Travelers Companies, Inc., as the NCIGF’s new board chairman.
Bell assumed the two-year board chairmanship at the NCIGF’s 2019 Annual Meeting in Chicago on May 1. He has served on the NCIGF board since 2003. He was the NCIGF board’s vice chair from 2016 to 2018. Keith Bell is Senior Vice President, Accounting Policy, Corporate Finance at The Travelers Companies, Inc. He is responsible for setting accounting policy, monitoring the development of accounting standards, and interacting with insurance accounting standard setters. Prior to joining Travelers, he held similar responsibilities for Aetna, Inc. (formerly Aetna Life & Casualty). Bell has worked in the insurance and financial services industry for over twenty-five years. He has a B.S. degree in accounting from Illinois State University and is a certified public accountant. He is a member of the American Institute of Certified Public Accountants and the Rhode Island Society of CPAs. He has co-chaired the insurance industry committee on statutory accounting for the last ten years. Bell is a contributing author to the IASA Property-Casualty Insurance Accounting textbook and has authored several articles in insurance trade publications. Additionally, he has been active on several NAIC advisory committees, the American Council of Life Insurance’s Accounting Committees, and is currently chairman of the American Insurance Association Committee on Financial Management Issues.
Keith Bell has served with NCIGF for many years and, along with his role on the NCIGF board, he is currently an active member of the Accounting, Finance, and Public Policy Committees and Vice Chair of the Executive Committee. During his presentation at the 2019 Annual Conference where he was voted in as the new chairman, Bell highlighted the history of the guaranty fund system as well as where he believes the system is headed in the future and how the community will continue to achieve its top priority of keeping the insurance promise.
The 2019 NCIGF Annual Conference was held in May at the historical and centrally located Intercontinental Chicago. The hotel, situated along the famous Magnificent Mile, was a great spot for NCIGF’s 90+ attendees, special speakers and exhibitors.
The conference opened with a welcome from the Director of the Illinois Department of Insurance, Robert Muriel, and the first day saw presentations representing the passing of the torch from the outgoing board chairman, Chuck Renn, Executive Director of the Missouri P&C Insurance Guaranty Association, to his successor, D. Keith Bell, from The Travelers Company, Inc. Both men made comments regarding the ever-important issues that the guaranty fund community continues to face, noting specifically the importance of the continued funding of the system, cyber security and relationships with receivers. The first day of the conference also included panels on important topics such as operational readiness, international issues and IT security.
Panels and presentations on staffing, media relations and the challenges and discoveries of being a newer fund manager rounded out the second day of the conference.
Survey satisfaction ratings of both Chicago and The Intercontinental were high and several
comments were made about taking the information from the educational program back to offices and teams for review. When asked, ‘What ideas did you hear from the presentations that you are most excited to take back to the office?’, the responses were a great testimony that the educational event gets the wheels turning on important issues:
“Several great ideas on cyber security.”
“Claims training to be prepared for the future, and how claims are the most integral part of operations for all guaranty fund offices.”
“Different ways funds hire and train employees and use outside temps or vendors.”
“Communication best practices for media relations.”
“Great takeaways for staffing issues and solutions.”
Registration for the next NCIGF educational event, the 2019 Fall Workshop, will open in a few months. This conference historically focuses on the issues specific to IT, Accounting and HR. For more information on NCIGF events, click here.