LEG REG REVIEW
2017, 30th Issue *** September 18, 2017

LEG REG REVIEW is a periodic newsletter produced by PHILLIPS ASSOCIATES, a professional lobbying and consultant firm located near the State Capitol. It contains news on Pennsylvania legislation and regulations impacting the Insurance and Business Communities. Subscriptions are $100 per year and further information may be obtained by contacting PHILLIPS ASSOCIATES at 717/728-1217 FAX 717/232-7005 or e-mail at xenobun@aol.com. Please email jtrout2792@aol.com supplying both your name and e-mail address if you wish to be removed from or added to this list. Whether you need help meeting your CE or have a particular problem/question, please go to our web site to explore how PHILLIPS ASSOCIATES may be of service to you, your employees, and your clients. www.vphillipsassoc.com

AN IMPORTANT REMINDER TO PAHU MEMBERS
Since 2003, PHILLIPS ASSOCIATES has provided LEG REG Review to PAHU as a value-added member benefit. This arrangement has recently ended for HEALTH UNDERWRITERS who are not members of GPAHU. Ordinarily, this publication subscription is $100.00 per year. What this means is that PAHU members wishing to receive LEG REG Review will need to subscribe UNLESS THEY ARE MEMBERS OF GPAHU. By special arrangement, GPAHU members continue to receive LEG REG Review as a member benefit. If you find this newsletter to be of help in keeping you abreast of legislative and regulatory developments that affect insurance brokers and their clients, I ask that you subscribe. I look forward to hearing from you. Sincerely, Vince Phillips
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HOUSE PASSES NO-TAX REVENUE PLAN
On September 13, the PA House voted 103-91 to pass a revenue plan that relies on tapping $616 million from dedicated funds and one billion dollars in future payments from the Tobacco Settlement. All Democrats voted no. They were joined by 15 Republicans, all but one from southeast PA. The final vote was on a scaled back list of Funds, given intense pressure from numerous interests. For example, the Agricultural Community was able to stave off a hit to farmland preservation monies although the Conservation District Fund still lost $2.5 million (down from an original $3.33 million).

Insurance-related Funds are affected. Included in the House vote on House Bill 453 were:

$10 million from the Insurance Regulation & Oversight Fund, down from the original $20 million being sought.Approximately ½ goes into the Department’s operating budget of $27 million while the other ½ is siphoned off into the General Fund.

$100 million in a loan taken from the Underground Storage Tank Indemnification Fund (USTIF).USTIF collects a small part of state gasoline revenues in order to fund cleaning up oil or gasoline spills from PA below and above ground storage facilities. It also contains a specialized program to fund oil spills from household furnaces up to $5,000 – not covered by traditional homeowners’ insurance policies. This Fund has been “borrowed from” before. A $100 million loan taken out in Fiscal Year 2002-2003 has still not been paid back according to House Appropriations Committee Minority Chair Rep. Joe Markosek (D-Allegheny). He said that only $32.5 million had been paid back. Both the old loan and the new one this year must be paid back by 2029. (9/12/17 Budget Briefing from Rep. Markosek).
$25 million from the Banking Fund. This Fund provides General Government operations money for the PA Department of Banking & Securities.
$1.992 million from the PA eHealth Partnership Fund.This fund provides support to a state agency seeking to make medical records accessible electronically to health care providers so as to reduce duplicative tests which drive up the overall cost of health care borne by insurers.

Not included was a plan to take $200 million from the Joint Underwriting Association (JUA), the medical malpractice insurer of last resort. The bill goes back to the Senate which reconvenes in Harrisburg this week.
LEGISLATIVE UPDATES

PHC4 Reauthorization was approved by the House Health Committee September 13. House Bill 1613 (Cutler-R-Lancaster) reauthorizes the PA Health Care Cost Containment Council (PHC4). This entity’s main function is to compare cost and effectiveness data for specific hospital medical procedures. It also reviews proposed mandated benefits to identify market impact if requested by the General Assembly. Text of the bill follows: http://www.legis.state.pa.us/cfdocs/billInfo/billInfo.cfm?sYear=2017&sInd=0&body=H&type=B&bn=1613
Introduced by Rep. Brian Ellis (R-Butler) September 14 is House Bill 1763 to increase minimums for auto insurance in PA to $30,000 (up from current $15,000) bodily injury, $60,000 per accident (up from existing $30,000) and $10,000 for property damage (up from current $5,000). Unlike the last legislative session, this bill was referred to the House Insurance Committee instead of the House Transportation Committee.

DEPARTMENT STRIKES AT FUND TRANSFER
On September 13, Acting Insurance Commissioner Jessica Altman wrote to the chairs of the House Insurance Committee and the Senate Banking & Insurance Committee to explain how pulling money out of the Insurance Regulation & Oversight Find (IROF) would hinder the Department’s ability to fulfill its regulatory responsibilities. She said that the biggest problem with transferring from IROF to the General Fund is the Department’s cash flow. While there was a balance in IROF of $23.8 million in July, the Insurance Department operates on a significant negative cash flow basis from July through March, and needs the IROF balance to be able to meet payroll, pay vendors, and provide all services. Most money from fees and company assessments comes in the second half of the fiscal year. This means, according to Altman, the Insurance Department receives about $1.1 million monthly from July through March from the General Fund. The agency spends about $2.2 million each month to operate, however. In the April through June quarter, with the bulk of the fees and assessments being paid by companies and agents, the General Fund transfers to IROF are projected to average $7.1 million a month.

POLITICS

Elected in 1984, veteran House member John Taylor (R-Phila.) has opted not to run for re-election in 2018.
Rep. Tarah Toohil (R-Luzerne) announced that she is not running for the congressional seat being vacated by Rep. Lou Barletta (R-11) according to PoliticsPA.

REGULATORY UPDATES

Harleysville Insurance Company and three affiliates have requested permission from the PA Insurance Department to redomesticate from PA to Ohio.
PA-based United Concordia Life & Health Insurance Company is seeking to merge into Arizona-based United Concordia Insurance Company.
In Delaware, per Surplus Lines Bulletin No. 21 (8/31/17), surplus lines licensees are required to file policy transactions, premium tax reports and payments electronically starting January 1, 2018. Delaware uses OPTins, www.optins.com and surplus lines licensees must register with that system no later than 30 days before January 1st. Details: DOI-SLTax@state.de.us.

FLOOD NOTES to P/C AGENTS…Those firms affected by intense flooding in PA July 14 or July 29, 2017, have until October 23 to apply for a Small Business Administration disaster loan. Details: 800-659-2955…The PA Insurance Department has a list of 17 private sector insurers offering non-National Flood Insurance Programs (NFIP) Flood Insurance. www.insurance.pa.gov/Coverage/Pages/Licensed-Companies. NOTE: Many of these products are Surplus Lines, not standard market.