November of 2019 marked 30 years of NCIGF assisting its member state guaranty funds to ensure the promise to insurance customers is kept. Looking back over this active year it is clear that the state-based insurance guaranty fund system is regarded throughout the world as the cornerstone for policyholder protection. As we look ahead to 2020 and face new challenges, it is with the assurance that our system is strong.
To be the definitive national leader on matters related to insolvency and its consequences to policyholders and claimants protected by the state-based property and casualty guaranty fund system.
To bring the greatest possible value to the member state property & casualty guaranty funds and the state-based guaranty fund system in operational support, communications and public policy development.
NCIGF has created an Attorney Directory of experienced lawyers, familiar with guaranty fund association laws and activities, for members to access when the necessity for outside counsel arises. The completion of this resource was a team effort, with 61 responses from 25 different law firms and many attorneys in multiple jurisdictions. Each attorney profile includes the attorney’s jurisdiction, area of expertise, experience, and a resume so guaranty funds are able to make an informed decision prior to reaching out to them.
Roger’s Term as Chair of IFIGS:
NCIGF President & CEO, Roger Schmelzer chaired the International Forum of Insurance Guaranty Schemes in 2019, representing the guaranty fund community on an international platform and elevating the U.S. guaranty system’s reputation among domestic solvency regulators. During his tenure he helped establish a 3-year strategic plan powered by working groups around the world to recruit new members, establish principles for guaranty schemes and provide information on the various schemes now in existence.
NCIGF implemented a new communications strategy in 2019 with the goal of engaging more members, trades and industry representatives. A renewed relationship with Triple-I has been engaged and benefits have already been seen. NCIGF continues to communicate its role within the insurance story, firmly establishing the organization as the trusted expert when it comes to insurer insolvency. 2019 saw NCIGF’s first online annual report. The report was interactive and also featured a video message from President & CEO, Roger Schmelzer. NCIGF also produced a guaranty fund explainer video, offering viewers an engaging video to help better understand how the state guaranty funds work and how NCIGF supports those funds. The NCIGF Board of Directors began utilizing board management software called OnBoard. This application manages board resources and meeting materials in a secure, web-based platform. Reducing the dependence on paper streamlines the meeting process, cuts meeting preparation costs, and ensures that confidential materials stay confidential. OnBoard will continue to be utilized throughout 2020.
Launch of the new Members’ Site:
NCIGF’s new members’ site was launched in 2019, offering a more manageable and navigable resource. Accessing important information has never been easier as the site include a robust ‘search’ feature. Tools like GF Forums provide users access to both staff and members with the mere push of a button. The site is also taking communication with members to the next level, offering a platform where comments, likes and new questions can be posed to the whole community or just a specific committee. The site is highly modular, and staff will continue making improvements in the years to come.
Data security continues to be our overriding business imperative. Proper retention and encryption protocols are necessary to ensuring that sensitive information is protected. In 2019 we improved our IT security policies as well as upgrading our cloud network and response plans. NCIGF contracted with Ingalls Information Security for Managed Detection and Response (MDR) services. Ingalls has complete visibility of our networks, server and firewall logs, Azure logs, Office 365 logs, and endpoint security software in order to identify any intrusion or malware infestation as close to real-time as possible. They are part of a layered defense strategy that adds external monitoring to NCIGF’s internal system of alerts. The NCIGF IT staff meets with Ingalls every two weeks to review any security events or adjust our security posture if required. Constant vigilance has resulted in our cyber insurance writer lowering our premiums for the second year in a row amid industry wide increases.
In first quarter of 2019 the NCIGF IT team took on the monumental task of a complete migration to the cloud. This involved migrating NCIGF's entire collocated infrastructure into Microsoft's Azure platform. Not only were services migrated, they were refactored to better utilize the capabilities of the platform. This migration signifies NCIGF's commitment to be the leader in information technology within the Guaranty Fund System. Migrating to the cloud allows NCIGF's information systems to perform as nimbly as possible. This allows NCIGF the ability to respond to the natural fluctuations in insolvency activity, while keeping infrastructure costs as low as possible. The entire migration champions NCIGF’s core goal of providing the best value we can to the membership.
2019 saw the NCIGF community’s first IT Summit, where technology leaders within the guaranty funds came together to educate, share ideas and strengthen the overall level of data security in the shared risk pool. That is the pool that exists between NCIGF, guaranty associations and receivers. Plans are in the works for future similar events.
NCIGF’s subsidiary, Guaranty Support, Inc. (GSI), worked with several members and receivers throughout 2019 providing services such as extraction and UDS conversion of insolvent company data, implementation of IIGF’s proxy voting application to another guaranty fund, as well as providing security services like security posture analyses and IT audit remediation. Profits earned from GSI’s 2019 projects have reduced NCIGF member dues by roughly 1.5%.
On October 10, 2019, the U.S. Court of Appeals for the 9th Circuit issued a landmark decision holding that the California Insurance Guaranty Association (CIGA) was not a primary plan under the Medicare Secondary Payer Act (MSP) (CIGA v. Azar, 2019 WL 5076945 (9th Cir., Oct. 10, 2019) Learn More ). NCIGF filed an amicus brief in support of CIGA. The court’s ruling alleviates CIGA’s responsibility to reimburse the Center for Medicare and Medicaid Services (CMS) for conditional payments made on behalf of workers’ compensation claimants and may also obviate its need to adhere to Medicare set-asides for claim settlements. CMS did not file an en banc appeal to the 9th Circuit or a writ of certiorari to the U.S. Supreme Court prior to the deadlines. They also have not amended the MSP to expressly apply to guaranty funds. Therefore, the ruling is good law in the 9th Circuit and persuasive elsewhere. The application of the ruling to other guaranty funds requires a state-by-state analysis, though there is benefit from coordination. The NCIGF Coordination of Litigation Subcommittee will be coordinating the guaranty fund effort to implement the 9th Circuit holding nationwide.
Increased member participation in providing GF Financial Insolvency Information:
Continued efforts in 2019 to increase member participation in providing financial insolvency information via the Reverse Data Mapper program were successful. By year-end 2019 NCIGF collected most of the insolvency information thru the most recent reporting year.
The Reverse Data Mapper collects comprehensive, uniform financial insolvency information on the guaranty fund system. Launched in 2014, the Reverse Data Mapper collects existing guaranty fund financial insolvency Uniform Data Standards (UDS) records. The data compiled from the Reverse Data Mapper and assessment data produce the aggregate facts and figures that tell the property and casualty guaranty fund story and explain the system’s success.
Tabs show Financial Position, Statements of Activities and Statements of Cash Flows for the years ended December 31, 2019 and 2018 have been prepared on an accrual and consolidated basis.
Cash and Cash Equivalents and Investments as of December 31, 2019 were $3,458,313 an increase of $487,810 from December 31, 2018.
The Contingency Fund balance as of December 31, 2019 was $2,604,203, an increase of $149,573 from the prior year. The Contingency Fund balance as of December 31, 2019 and 2018 was 63% and 60%, respectively, of the 3-year average annual operating budget. The Contingency Fund is a board designated unrestricted fund accessible with board approval. The Contingency Fund, which is held in a separate account from the operating funds, is invested in CDs with staggered maturities of no greater than two years.
Net Assets as of December 31, 2019 were $2,351,050, an increase of $290,751 from prior year.
Results (Excess Operating Income over Expenses) for the year ending December 31, 2019 were under budget by $114,494 (2.7%).
In 2019, Guaranty Support Inc. (“GSI”), a wholly-owned subsidiary of NCIGF, completed its fourth full year of operation. GSI provides core data management and support services for members and receivers to support their claims handling functions. GSI also provides services that are determined to be beyond the core services it provides to members, receivers and other entities, to the extent that their activity is consistent with GSI’s board-approved mission. GSI had net income for the year ending December 31, 2019 and 2018 of $12,057 and 7,613, respectively.
Consolidated Statements of Financial Position December 31, 2019 and 2018
Consolidated Statements of Activities For the Years Ended December 31, 2019 and 2018
Consolidated Statements of Cash Flows For the Years Ended December 31, 2019 and 2018
2018-2019 NCIGF Board of Directors
D. Keith Bell
Senior Vice President, Corporate Finance
The Travelers Compainies, Inc.
Chad G. Anderson
Western Guaranty Fund Services
*Lee Ann Alexander
Assistant Vice President and Senior Corporate Counsel
Jeffery C. Alton
Vice President, Finance
CNA Insurance Companies
Amanda L. Barbera
Indiana Insurance Guaranty Association
Michael D. Boge
State Counsel Section, Corporate Law
State Farm Insurance Companies
Charles P. Breitstadt
Senior Director of Government Affairs
Nationwide Insurance Company
*Maria S. Doughty
Regulatory & Government Affairs
Nationwide Insurance Company
J. Smith "Smitty" Harrison
South Carolina Property & Casualty Insurance Guaranty Association
Larry E. Hinton
Brandon E. LaSalle
Government Affairs Counsel
American Family Mutual Insurance Company
*William M. Lynch
Vice President & Chief State & Local Affairs Officer, Public Affairs
Liberty Mutual Insurance Company
Joyce Hall Mellinger
Senior Vice President and Associate General Counsel
Zurich North America
*Charles F. Renn
Missouri Insurance Guaranty Association
Christoper P. Roe
Senior Vice President, Corporate and Government Affairs
CUNA Mutual Group
Bradley A. Roeber
California Insurance Guaranty Association
Arthur M. Russell
Mississippi Insurance Guaranty Association
Timothy M. Schotke
Illinois Insurance Guaranty Fund
Joseph Torti III
Vice President - Regulatory Affairs
Cina D. Welch
Senior Vice President, Chief Risk and Compliance Officer
FCCI Insurance Group
John C. Wells
Louisiana Insurance Guaranty Association
Roger H. Schmelzer
President & CEO
John A. Blatt
Chief Legal Counsel & Corporate Secretary
Amy J. Clark
Vice President - Chief Financial Officer & Treasurer