The Texas Surplus Lines Association joined the ranks of associations holding state meetings virtually, a method TSLA lobbyist and general counsel Keith Strama termed “responsible” to avoid virus spread. Garrett Sprowls, conference chairman, served as emcee for the 2020 Annual TSLA Meeting speaker program that included presentations by representatives of the Texas Department of Insurance, the Surplus Lines Stamping Office of Texas, Strama, and a keynote address on artificial intelligence. Past President Matt Leicht presided over the business meeting, including annual award announcements. The virtual event held on Nov. 10 was attended by 170 members and invited guests.
During the business meeting, the membership approved the 2020-2021 slate of officers and board members nominated by the Leadership Committee. Amicia Hine, Worldwide Facilities, MHI-MGA Division was elected president; Justin Kotrla, AmWINS Group, vice president, and Tiffany Way, RT Specialty, secretary/treasurer, who completed a three year term as director. Directors elected for three year terms include Terence Babler, Southwest Risk; Jodi Berger, USG Insurance Services, and Zak Reed, AUI. They are joined by affiliate member/nonvoting director, Wade Vaché, Scion Underwriting.
Retiring board members include Lynn Bordelon, Worldwide Facilities, MHI-MGA Division; Jeff Fields, Markel, and Rose Perez, USG Insurance Services.
Leicht presented the association’s annual awards that honor highly contributing committee members and a committee chairman.
Don King Committee Member of the Year honors were shared by Stephen Gunn, Hallmark Financial Services, who served on the Regulatory Liaison Committee, and Morgan Whitt, Towerstone, who served on the Membership Recruiting Committee. The TSLA officers chose these committee members for the honor that is named in memory of past TSLA member, director and dedicated volunteer, Don King, Delta General Agency.
Robert McEwen, The Parks Group, was honored with TSLA’s Joe Howse President’s Award. McEwen chaired the Regulatory Liaison Committee which kept in close touch with TDI before and during the COVID-19 pandemic, keeping the regulators and TSLA members abreast of adaptations necessitated by emergency orders affecting the government agency and members’ businesses.
Even before the award was announced, TDI Deputy Commissioner of Financial Solvency Jamie Walker, in her remarks to TSLA members, commended McEwen and the entire Regulatory Liaison Committee for their participation in multiple meetings with the TDI over the last eight months. “These conversations helped us gather information regarding the operation of the market and were very helpful,” said Walker.
This award is named for Howse, who was president of TSLA for the 1977-78 term and noted for his exemplary service. It is presented each year to a committee chairman chosen by TSLA’s president.
Ron Galloway was the keynote speaker. In his presentation titled How Advanced AI and Machine Learning Will Transform Insurance, Galloway shared his research on how health care, finance and insurance are changing as decisions become more data based. Galloway is the founder of 818 Research LLC, a research analyst and film director whose work has been covered by prominent news outlets in the U.S. and abroad.
Artificial intelligence, once growing in a linear fashion, is speeding up exponentially now, Galloway said. Galloway observed that insurance, once based on generalization about categories, is moving toward granular, specialized source data about individuals that is obtained through artificial intelligence and its subset machine learning. “Insurance is moving from proxy data about categories to source data about individuals,” he said.
Galloway said insurance will soon extensively use machine learning for determining risk. “Machine learning will bring opportunities and challenges that never occurred to anybody before.”
In two to five years, said Galloway, “You will not recognize a lot of what is going on in the insurance market due to new entrants and the use of data gleaned from sensors.”
TDI representatives Libby Elliot, associate commissioner and government relations director, and Walker, were the first speakers on TSLA’s program.
Elliot said that TDI’s staff eagerly awaits news on who will be appointed successor to Insurance Commissioner Kent Sullivan. She cited Sullivan’s leadership in modernizing the department’s processes as helping to make the transition to remote work possible. Elliot said the transition to work from home occurred over a weekend. Now, she said, 95 percent of the staff continues to work from home. She said 80 percent of the staff already had laptops, and the remainder were equipped fairly quickly.
The pandemic, Elliot said, reduced TDI’s reliance on paper processes, something that has been in the works for years. Since March, the department has expanded online options for applying and renewing agent licenses.
Application of artificial intelligence to rate and form filings for property/casualty insurers started last March. Elliot said the groundwork for including life and health filings has begun and should be available to life and health filers in the coming months. Filings are primarily handled through the SERFF system administered through the National Association of Insurance Commissioners.
The next phase of the project will adapt the machine learning to recognize not just words and phrases used by prior filings, but also concepts. She said this will facilitate more effective review.
Walker commended the surplus lines agents for improved on-time performance with policy filings. She said the year-to-date performance had nine fewer late filings with an increase of 7,700 filings, compared with the same period last year. Considering the “highly disruptive time in our economy and our lives,” Walker complimented the brokers for their “resilient policies and processes.”
The financial regulator said she recently completed a round of disciplinary referrals against filers included in the stamping office’s late filers report for 2019. Walker said that many of the referrals were for failure to timely pay the late filing fee and not for the more egregious penalty categories, such as being habitually late or more than a year late.
Walker said she follows the open door policy of TDI and welcomes any agent to discuss “friction points” that may exist between agents and the regulatory regime.
Stamping office E.D.
SLTX Executive Director Greg Brandon provided a review of the quasi-government agency’s operations. Brandon’s first day on the job was March 9, making his first major order of business transitioning the office staff to remote work in response to pandemic guidelines.
Still, said Brandon, the SLTX staff provided high level customer service and data management that supported the integrity and confidentiality of the data.
Through the end of October, this has been a record-setting year, in terms of premium reported to the agency, said Brandon. At the end of October, premium reported was $6.6 billion, or 12.2 percent more than the first 10 months of 2019. As yet, COVID has not had a negative impact on reported premium and only a 4.3 percent reduction in item count, he said.
Brandon said the board saw that the level of income to SLTX had become too high and responded with a recommendation to cut the fee in half. Signed by the insurance commissioner in Sept., the lower fee of .075 percent of premium becomes effective Jan. 1.
Brandon told the agents that the top 10 surplus lines carriers account for 45 percent of the $6.62 billion of reported premium, with premium among the top 10 totaling nearly $2.99 billion. Leading the pack is Underwriters at Lloyd’s London, with $1.49 billion in premium, as of Oct. 31.
Premium reported by members of TSLA made up 54 percent of the total reported premium, said Brandon. He called that remarkable, considering TSLA members make up only seven percent of the 858 brokers who have made filings this year.
The entire day’s program was recorded, with the various presentations available for purchase through TSLA’s website. A replay of the business meeting is available without charge.