LEG REG REVIEW
2017, 36th Issue *** November 20, 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

Dear Reader:
Of all the holidays, I am especially drawn to Thanksgiving. It is unheralded but sincere. It is also a statement of giving rather than receiving. It is a time to appreciate the blessings bestowed upon us and also a time to think about the most important things – our family, our friends, and our faith. I am writing to simply tell you that I appreciate you as subscribers who share an interest in knowing what’s going on and also as friends. Thank you sincerely and Happy Thanksgiving.
Vince Phillips
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INSURANCE INCENTIVE LEGISLATION MOVES THROUGH SENATE
On November 13, the PA Senate passed two bills which change Pennsylvania insurance law to allow insurance companies and insurance producers to offer inducements and rebates to consumers. Sponsored by Senate Banking & Insurance Committee Chair Don White (R-Indiana), Senate Bills 877 and 878 reflect a change from long-standing PA laws such as the Unfair Insurance Practices Act (Act 205) which expressly prohibited the practice although the Insurance Department allows for minor gifts (“de minimus”).

A concern expressed over time has been the lack of clarity as to what “de minimus” means. The limit to rebates and inducements in SB 877 and 878 is $100. There are House counterparts, House Bills 1841 and 1842 sponsored by Rep. Mike Tobash (R-Schuylkill), which also allow rebates and inducements up to $100.

BUDGET FOLLOW UP
Although most observers breathed a sigh of relief to see the State Budget, there are still some loose ends.

The medical malpractice insurer of last resort, the PA Professional Liability Joint Underwriting Association (JUA) has sued the Commonwealth for what it says is illegally taking $200 million out of the insurer’s reserves to help balance the State Budget. (Act 44 of 2017)
Up in the air is Governor Wolf’s plan to take out what amounts to an equity loan on the state-owned Harrisburg Farm Show Complex. His goal was to have the state receive a $200 million loan which would have to be repaid to the lender over 30 years. There is speculation over the legality of such a move. The bidding period closed November 13.
Unknown as of November 19 is from which dedicated funds Governor Wolf will take $300 million. Thanks to authority given to him by the General Assembly in order to push revenue bills for the State Budget, Governor Wolf can choose from as few or as many he wants. Of concern to the insurance industry is whether the Insurance Regulation and Oversight Fund will be picked. That is a special fund dedicated to funding the PA Insurance Department’s general government operations. (Act 44 of 2017)
Governor Wolf has dropped his plan to borrow against future profits from the PA Liquor Control Board after the PA Commonwealth Financing Authority approved plans to borrow $1.5 billion from future Tobacco Settlement monies coming into the state. (Act 43 of 2017)

A BILL TO WATCH: DENTAL DIRECT PAYMENT BILL
Senate Bill 373 (Eichelberger-R-Blair) received first consideration by the PA Senate after being reported out by the Senate Banking & Insurance Committee October 24. It would direct insurance companies to pay a dentist directly for services rendered to a patient if authorized to do so by the policyholder.

FEDERAL NEWS: TAX REFORM
The U.S. House of Representatives passed a landmark tax reform bill on November 16 by a 227-205 vote. The Senate will be looking at their version beginning this coming week and ultimately, differences will be ironed out by a conference committee. This far-reaching legislation is a top priority of the Trump Administration, important for the 2018 mid-term elections to show voters that Republicans were able to achieve a major goal promised in the presidential campaign. U.S. Rep. Lloyd Smucker (R-16) provided a section by section summary of House Resolution 1. Policy highlights Section-by-section summary Bill text The House vote was along party lines with Republicans voting yes and Democrats saying no. There are two PA sponsors, Rep. Mike Kelly (R-3) and Rep. Patrick Meehan (R-7). On November 16, the Senate Finance Committee voted 14-12 to move its version. PA Senator Pat Toomey voted yes. Summary: https://www.finance.senate.gov/imo/media/doc/11.14.17%20Chairman's%20Modified%20Mark.pdf

FEDERAL NEWS: FLOOD INSURANCE
Re-authorization of the National Flood Insurance Program (NFIP) is one step closer thanks to a November 14 U.S. House 237-189 vote. A summary of H.R. 2874 follows: https://www.congress.gov/bill/115th-congress/house-bill/2874?q=%7B%22search%22%3A%5B%22hr+2874%22%5D%7D&r=1 Some provisions of interest are:

FEMA must approve claims within 120 days after receiving proof of loss.
NFIP coverage is eliminated for properties that exceed specified lifetime claim payments.
Write-Your-Own (WYO) may also write private sector flood policies; Mutual aid societies may also sell flood insurance subject to state law; Allowance to WYO companies is limited to 27.9% of the premium rate.
A seller must disclose flood history on a property.
FEMA must deny coverage to a property that does not implement flood mitigation measures if the property is an extreme repetitive loss property with cumulative claims exceeding 150% of the maximum coverage amount.

The House vote went along party lines with PA Republicans voting for and PA Democrats against.

POLITICS

PA Rep. Rick Saccone (R-Washington/Allegheny) was chosen as the GOP candidate in the special election to succeed resigned U.S. Representative Tim Murphy. He defeated two PA Senators, Kim Ward and Guy Reschenthaler to win the Republican nomination. The special election will take place March 13. The winner would serve out the remainder of Murphy’s term, meaning that the winner faces a re-election contest in November 2018.
House Speaker Mike Turzai (R-Allegheny) announced his candidacy for the Republican nominee for Governor on November 14. His announcement brings to four Republicans vying for the nomination, one of whom, Senator Scott Wagner (R-York) is also a legislator. The other two are also from Allegheny County, health consultant Paul Mango and Pittsburgh attorney Laura Ellsworth. Turzai also plans to file for re-election as a state representative.
January 25 is the date of the special election to replace Rep. Marc Gergelely (D-Allegheny) set by Speaker of the House Mike Turzai (R-Allegheny). This district is traditionally Democratic. Gergeley was forced to step down after pleading guilty to violating gambling laws.
State Representative Justin Simmons (R-Northampton/Lehigh/Montgomery) has withdrawn from the contest for the Republican nomination to succeed retiring U.S. Representative Charles Dent.