2016 Industry Preview
IIAT STAFF
2016 Industry Preview
Homeowners
2016 Industry Preview
Market Share Report Homeowners
Year
TX Premium
(millions)
TX Loss
Ratio
US Loss
Ratio
2014
$7,860.7
46.2%
49.6%
2013
$7,252.3
44.8%
46.4%
2012
$6,407.2
54.4%
58.9%
Written Premium Growth: 8.3%
2016 Industry Preview
2015 - Homeowners

Written Premium Up 4.66% through September
 Rate
Increases Continue for Most Companies
21 Increases in 1st Qtr.
42 Through 3 Quarters
2016 Industry Preview
FAIR Plan Exposure – 9/30/2015
Policy Count
Exposure
Tier 1
13,236
$2.78 billion
Tier 2
104,745
$16.98 billion
Remainder of State
16,633
$2.72 billion
2016 Industry Preview
TWIA – 9/30/2014
2015
2002
Policy Count
273,000
86,000
Exposure
$85.7 billion
$16.0 billion
Combined Tier 1 & 2 Exposure: $106 billion
CRTF: $485.5 million
Cumulative Underwriting Loss: $340 million
2016 Industry Preview
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84
Session
SB 900 – TWIA Changes
o Funding –
eff. 9/1/15
o Requires funding to the 1 - 100 yr. level (approx $4.8 bil)
o Class 2 and 3 bonds responsibility of TWIA policyholders
o Industry Assessment up from $800 mil to $1 bil
o Change in funding order
o Board Makeup –
o 3 Industry, 3 Coastal, 3 Non Coastal
o 2 IIAT Representatives
o Depopulation PLAN
o Protects Agent of Record
o Requires contract or Limited Service agreement for agent
2016 Industry Preview
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84
Session
SB 498–Noncompliant Properties – WPI -8
eff. Immediately
o Removes 12/31/15 expiration date for noncompliant properties
o 40,000 TWIA policies at risk
o Retains certification requirements for:
o Addition
o Alteration
o Remodel
o repair
HB 2439 – TWIA Engineer Approval
eff. 9/1/15
o No TDI approval required
2016 Industry Preview
Personal Lines Endorsements
2016 Industry Preview
New Residency Endorsements
 HO
06 48 – Residence Premises Definition
Residence Premises means...
“That part of any other building where you reside...
on the inception date of the policy...
 HO
06 49 – Broadened Residence Premises Definition
Designed to select a period that you know the insured
Is not residing in the property
2016 Industry Preview
Residency Endorsements
 Always
Use the Broadened Definition HO 06 49
 Always
Use the Entire Policy Period in the Box Provided
Inception Date
Termination Date
Information required to complete this Schedule, if not shown above, will be shown in the Declarations.
Effectively Changes the Definition by Eliminating the
“Where you Reside” Language
2016 Industry Preview
Unusual Company Endorsements
 Harassment,
 Cannabis
Intimidation, or Bullying
Exclusion
 Animal
Injury
 Limited
Animal Liability Endorsement
 Limited
Swimming Pool or Spa (Hot Tub) Endorsement
2016 Industry Preview
Homeowners Issues
 Slowing/Declining
Real Estate Values
 Report
Shows Houston and Austin Most Susceptible over
the Next Three Years
 Prepare
Staff to Address Questions
HO 04 20 – Specified Additional Amount of Insurance for
Coverage A Dwelling
 Automatic
25% or 50% Increase in limit
2016 Industry Preview
Personal Auto
2016 Industry Preview
Market Share Report
Personal Auto
Year
TX Premium
2014
$16,314.5
TX Loss
Ratio
65.6%
2013
$15,205.5
64.3%
65.6%
2012
$14,218
65.6%
66.4%
(millions)
US Loss
Ratio
66.0%
Written Premium Growth: 7.3%
7.79% Increase Through September
2016 Industry Preview
Transportation Networking
Companies
HB 1733 – eff. 1/1/16
 TNC primary from “App on” to “App off”
 3 stages of operation - App On, Engaged, App Off
 Logged on App – $50/100/25 Limits
 Available, but no passenger in vehicle
 Engaged - $1 mil CSL
 Passenger in Vehicle
 Personal Lines carrier can endorse policy to include
coverage if they choose to.
2016 Industry Preview
New ISO Endorsements
PP 23 40 – Public or Livery Conveyance Exclusion
 Specifically
Excludes Liability and Physical Damage
Coverage While App is On
PP 23 45 – Limited Transportation Network Coverage
 Coverage
While Logged On, but Not Engaged
PP 23 41 – Transportation Network Coverage
 Coverage
While Logged On, Engaged Until Passenger is
Picked UP
2016 Industry Preview
2016 Industry Preview
Delivery Services Using Personal
Autos
 Dropoff
 InstaCart
 Favor
 Postmates
 Amazon
- $25 an hour
Flex – 2, 4, 8 hour shifts - $18-$25 an hour
2016 Industry Preview
The Sharing Economy
 Ford
is Testing a New Lease Option in Austin Beginning in
February, 2016
 Allows
Up to 5 Persons To Jointly Lease One Vehicle
2016 Industry Preview
Personal Auto Issues
 PricewaterhouseCoopers
predicts the sharing economy
will become a $335 billion business by 2025 — up from
$15 billion a year today.
2016 Industry Preview
JD Towing v. American Alternative
Insurance Corp
 New
Rule for Texas Involving Total Loss to Property
 Allows
for Loss of Use in Total Losses
 Damages
Must Not Be Speculative
 Applies
to Time Reasonably Needed to Replace the
Personal Property
2016 Industry Preview
On-Line Shopping
 Latest
Transunion Shopping Index Shows No Increase in
the Percentage of On-line Shoppers
 Flat
to Declining Since 2011
 The
Texas Percentage is 13% Higher Than the National
Average
 Update
Your TrustedChoice.com Information
 Studies
Show Millennial Shoppers Want Agents
2016 Industry Preview
Commercial
Insurance
2016 Industry Preview
Market Share Report
Commercial Multi Peril
Year
TX Premium
2014
$2,601.8
TX Loss
Ratio
50.0%
2013
$2,490.4
49.4%
45.4%
2012
$2,333.8
61.3%
56.7%
(millions)
US Loss
Ratio
49.2%
Written Premium Growth: 4.47%
Negative Growth in 3rd Quarter (1.29%)
2016 Industry Preview
Market Share Report
Business Auto
Year
TX Premium
2014
$2,785.6
TX Loss
Ratio
66.0%
2013
$2,446.4
65.7%
62.9%
2012
$2,170.5
68.9%
63.8%
(millions)
US Loss
Ratio
64.1%
Written Premium Growth: 13.9%
2016 Industry Preview
Market Share Report
Workers Compensation
Year
TX Premium
2014
$2,843.8
TX Loss
Ratio
46.2%
2013
$2,673.6
47.6%
59.8%
2012
$2,445.0
47.7%
67.9%
(millions)
US Loss
Ratio
60.5%
Written Premium Growth: 6.37%
Negative Growth in 3rd Quarter (6.28%)
2016 Industry Preview
Drones
180,000
Registered in First Two Weeks
Increasing
ISO
Commercial Usage
Has New Endorsements
Expect
to See Exclusions Attached At
Renewal
Number
of Options
2016 Industry Preview
CG 21 09 – Exclusion Unmanned Aircraft
“Unmanned Aircraft means an aircraft that is not
1.
Designed
2.
Manufactured; or
3.
Modified after Manufacture
To be controlled directly by a person from within or on the
aircraft
2016 Industry Preview
CG 21 09 – Exclusion Unmanned Aircraft
 Excludes
BI & PD & Personal Injury (Coverage B)
 Excludes
ownership, maintenance, use or
entrustment to others
 Includes
language excluding negligence in the
supervision, hiring, employment, training or
monitoring of others by that insured…
2016 Industry Preview
Coverage Options
CG 21 10 – Excludes BI & PD Only
CG 21 11 – Excludes Personal Injury Only
CG 24 50 – Limited Coverage for Designated
Unmanned Aircraft
2016 Industry Preview
CG 24 50
 Schedule
Requires Description of Unmanned Aircraft
 Description
of Operations or Projects is Also Required
 Adds Additional
Aggregate Limit
The exclusion for Unmanned Aircraft does not apply:
“…to unmanned aircraft described in the schedule but only
with respect to the operations or projects described in the
schedule.
2016 Industry Preview
Commercial Lines Premium
September 30, 2015
Third Quarter
9/30/2014 -2015
Products
10.83%
9.59%
General Liability
1.70%
1.97%
Commercial Fire
(4.36)%
(2.33)%
Multi-Peril
(1.29%)
1.28%
Workers Comp
(6.28%)
3.59%
2016 Industry Preview
Surplus Lines – 2015 Totals
Fire & Allied Lines
(4.27%)
Commercial Multi-Peril
(15.51%)
General Liability
5.81%
Commercial Auto Liability
.71%
Commercial Auto Physical Damage
Total Premium $5.02 billion
(12.97%)
(.45%)
2016 Industry Preview
Headwinds
 Decline
in Oil Prices
 Further
Reductions in CapEx by Major Players
 Dallas
Fed Data Shows Slowdown in General
Business Activity and Projected Future Activity
 Less
Optimism from Retailers
Texas Economic Outlook
Dr. Ray Perryman
Monday – 10:30
2016 Industry Preview
CIAB Survey
Small
Medium
Large
Avg
Sept, 2015
-1.4%
-3.8%
-4.1%
-3.1%
June, 2015
-1.3%
-3.5%
-5.2%
-3.3%
March, 2015
-0.5%
-2.7%
-3.7%
-2.3%
Dec, 2014
1.1%
-0.9%
-2.2%
-0.7%
Sept, 2014
1.1%
0.3%
-1.1%
0.1%
2016 Industry Preview
Commercial Lines Summary
 Slowdown
In Economic Activity
 Pricing
Pressure
 Growth
Will Come From New Accounts
2016 Industry Preview
Legislative & Regulatory
2016 Industry Preview
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84
Session – Legislative Makeup
28 Freshmen Members of Texas House
New Chair of House Insurance Committee
Chairman John Frullo (R) Lubbock
9 Freshmen Member of Texas Senate
New Chair of Senate Business and Commerce
Senator Kevin Eltife (R) Tyler **
2016 Industry Preview
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84
Session
Legislative Statistics
6276 Bills Filed
4207 - House Bills
2069 - Senate Bills
1323 Bills Passed
819 – House Bills
504 – Senate Bills
(approx. 21% pass rate)
2016 Industry Preview
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84
Session
Agent Issues
SB 876 – Omnibus Licensing bill
eff. 9/1/15
TDI initiated this legislation due to overwhelming number of license
requests and delays in issuing.
 Future license to correspond with birthdate
 Common Expiration date of multiple licenses
 CE changes from 30 – 24 hours over 2 year cycle
In line with other states (Eff. 1-1-16)
 Must complete CE and pay fine
Major change over current requirements
(Eff. 11-1-15)
2016 Industry Preview
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84
Session
SB 7 /SJR 1– Tax Changes
eff. 1/1/16
Margins Tax reduced 25%
Many other alternative discussed
Some believe this is the beginning of the end of the
margins tax
Property Tax exemption raised From $15K to $25K
Also discussed reduction of state Sales Tax
2016 Industry Preview
th
84
Session
Personal Lines
SB 188 & 189 -Policyholder Inquiry
eff. 9/1/15
 Inquiry may not be used for underwriting or pricing
Not sure this was a big problem???
HB 2779 – Claims Free Discount
eff. 9/1/15
 Company may give discount first year
Not allowed before, but CLUE reports will now
suffice
2016 Industry Preview
th
84
Session
SB 956 - Delivery of Personal policies eff. 9/1/15
New policies delivered within 30 days
Delivery to insured or insurers agent
Renewal or amended policy within 15 days of request
Request may be made to insurer or insurers agent
in writing
2016 Industry Preview
th
84
Session
Commercial Lines
SB 1081 - OCIP Disclosure
eff. 9/1/15
 Must
provide subs with certain information within 10 days of
contract
 Contact information
 Policy Forms, Limits, Endorsements
 How to exclude or include cost into bid
 Audit procedures at completion of job

Failure to furnish allows Opt out
2016 Industry Preview
HB 1295
New Texas Ethics Commission Requirement
 Applies
to Public Entities
 Applies
to Contracts that require a vote or are in
excess of $1 million
 Form
1295 must be filed with Texas Ethics
Commission
 Discuss
with Entity the necessity to file
2016 Industry Preview
Questions to Ask
 Is
a Vote Required Before the Bid is Accepted and the
Coverage is Bound?
 Do
Your Consider This Transaction a Contract That
Requires Notification to the Ethics Commission?
 Can
An Insurer Bind Coverage When the Bid is Awarded?
 Who
is Required to File?
 Who
is the “Interested Party”? Agent, Agency, or Insurer?
2016 Industry Preview
Future Legislative and Regulatory Issues
 Hail
Litigation
 Catastrophe Claims Process vs Tort Reform issue
 Surplus
Lines Placement – “Diligent Effort”
 Proportionate
Responsibility for Auto Property Damage
Claims
 Uncooperative
 Zenefits
Insureds – Notice of Cancellation
– Level Playing Field
 TWIA Depopulation
2016 Industry Preview
Life & Health Preview
2016 Industry Preview
Are you?
2016 Industry Preview
You aren't alone.
2016 Industry Preview
Trends with Employer Based Coverage
2016 Industry Preview
What about Taxes and Fees?
2016 Industry Preview
2016 Industry Preview
2016 Industry Preview
Employer Reporting
When are the forms due, now?
2016 Industry Preview
 1094-C
& 1095-C
 Who files?
 When are they due?
 Third
party solutions?
 Do your homework!
2016 Industry Preview
What’s Next for Brokers?
Commissions going down on
individual and small group
But volume is
going UP!
2016 Industry Preview
2016 Industry Preview
2-3 hour classes for
you and your clients!
Look for the
Employee Benefits Academy in May.
2016 Industry Preview
Jim Gavin
jgavin@iiat.org
Questions?
Lee Loftis
lloft @iiat.org
Misty Baker
mbake@iiat.org
2016 Industry Preview
Next
Welcome Reception
5:30 – 7:00
2016 Industry Preview