Risk Management and the Political Landscape
At the 2018 RIMS Annual Conference, a panel discussed political issues that could impact risk management.
The panel included:
- Lance Ewing – EVP Global Risk Management, Cotton Holdings Inc
- Joel Wood – SVP Government Affairs, CIAB
- James McIntyre – RIMS Washington Counsel
RIMS has an External Affairs Committee that reviews issues and coordinates lobbying efforts on behalf of RIMS members. The Committee has been focusing on the following issues at the federal level:
The recent tax reform packages have had a variety of impact on the insurance industry, with some companies benefiting more than others depending on their size and structure. Taxes on reinsurance ceded to foreign companies could increase costs, while the lower corporate tax levels on U.S. companies will lower costs. It remains to be seen if the tax reforms will have any impact on insurance rates when all the variables are considered.
National Flood Insurance Program
In Houston during the 2017 hurricane, it was found that the flood plane maps were 75% wrong. These maps are outdated and need revised. NFIP rules are also outdated. For example, they only allow for replacement of two feet of drywall. What happens when the floods are higher than two feet? This program needs a complete overhaul and there are calls to privatize this instead of having a federally-backed program. The program also has not been actuarially sound for years as it keeps losing money because their premiums are not sufficient for the losses it pays. From the insurance industry standpoint, this is likely the biggest issue still to be acted upon this year since it expires in June 2018.
All 50 states now have data security laws. This means that, much like workers’ compensation, there are now different rules and requirements in every state. This is creating compliance challenges for everyone involved. The industry is lobbying for some national standards in terms of notification requirements and other issues. NAIC has a model law and many are looking at the New York laws as the model for other states. The panel believes that the next significant breach that creates national headlines will likely push Congress to take action.
Americans with Disabilities Act Reform
ADA has created challenges since its implementation since there is a cottage industry in the legal community that go around looking for companies to sue for non-compliance. These companies usually do not even know they are not in compliance until the suit is filed. There is a legislative push that would change the law to require notice to the company targeted and allow them the opportunity to correct the issue before a suit is filed.
Medicare as a Secondary Payer
Dealing with Medicare in a liability situation has been a big challenge. For workers’ compensation, this is fairly well established by rules and case law, but liability is murky. Companies do not know when their liability to Medicare ends in the secondary payer information.
Employer-based healthcare coverage is challenged to survive under the current model. There are still millions that are uninsured in the nation, deductibles and co-payments keep rising, and healthcare costs are also continuing to rise. Unless something is done to address these costs, the current model cannot be sustainable. The Democratic Party is becoming increasingly-focused on universal healthcare with many proponents for this announcing they are running for President in the next election.