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  • January 17, 2018 4:30 PM | Vaughn Lawrence (Administrator)

    By Doug Dvorak, Enquiron

    Owning and operating a small business is incredibly rewarding – but it’s not without its challenges. Small business owners wear many different hats. Often, they play the lead role in many areas that larger companies have entire departments to manage. With so much individual responsibility, it’s easy to get lost in daily duties and issues the organization faces – failing to recognize big-picture problems is an issue small businesses are facing across the board. 

    In 2017, there have been a variety of particular challenges that have stopped some small businesses in their tracks. Learning to overcome them can help clear a pathway to success for 2018. We took a closer look at two of the most pervasive issues small businesses face today to shed some light on how to approach them in the new year effectively.

    According to Wasp Barcode Technologies annual small business survey, the biggest challenge facing small businesses today is hiring employees – with 50% of respondents reporting hiring as their top challenge. (1)  It makes sense – effective hiring can be the difference between growing a small business and going out of business. But recruiting and hiring top talent is easier said than done. With 29.6 million small businesses, it’s difficult to attract the right prospects. (2)  While this is a challenge that larger businesses also face, small businesses are without the advantage of a big brand and extensive resources.

    Implementing simple and effective HR practices can enhance the hiring process for small businesses. One easy way to improve hiring is to increase the number of qualified applicants. Without a substantial volume of candidates, small businesses forfeit their ability to choose, opening themselves up the risk of counterproductive hiring. As a small business owner, it’s helpful to be proactive and work on searching for and contacting potential applicants through resume database searches and professional networks like LinkedIn.

    Small businesses don’t have all the time in the world to spend hiring, so it’s important to use time invested in recruiting wisely – and it begins in the job posting. Small businesses need to harness the interest of people who are passionate about their company. Therefore, it’s important that job postings are honest about what the business stands for and that the content is tailored towards an optimal candidate. Small business owners should use tools like Google Trends to learn about popular job titles and phrases. It’s also helpful to peek around at similar job postings to pick up their strengths and weaknesses when creating a job description of your own. Spending time on the job posting can save small businesses precious time in the recruitment process.

    Another major challenge pertinent to small businesses is cybersecurity – and it must be taken seriously. According to a report by Keeper Security and The Ponemon Institute, 50% of small businesses have been breached in the past year. (3) Small businesses are a hacker’s best friend – holding more digital assets than the individual consumer, but less security than a large company. The most common attacks against small businesses are web-based phishing when hackers collect sensitive information (think: login credentials, credit card info) through a legitimate-looking (but fraudulent) website, usually sent to unsuspecting individuals in an email. (4)

    Preventing cybersecurity threats begins with proactive planning. Small businesses should initially create a disaster recovery plan – noting the answers to critical questions such as: What data needs to be best protected? Which firewall resources should we use? The plan should include details about what will be done in the event of a cybersecurity threat as well as best practices to avoid cyber-attacks. Creating this disaster recovery plan also gives small businesses the opportunity to map out how the company will react in the case of a fire, flood, or any other type of natural disaster.

    The next step is to improve cybersecurity awareness within the organization. It’s important to ensure employees are aware of common phishing scams and how to avoid them, as well as the processes laid out in the disaster recovery plan. Taking the initiative to instill cybersecurity awareness can help protect a small business from the efforts of destructive hackers.

    Effective hiring and cybersecurity planning are only two key difficulties small businesses face. There is an infinite list of challenges plaguing small businesses every day. To deal with them most effectively, it’s helpful to talk to an expert in business advisory services. Working with a knowledgeable partner can break down these issues and help push your business towards growth in the new year.

    This article was featured in the PAMIC Pulse


    1. Brian Abner, “3 biggest challenges facing small businesses in 2017,” The Business Journals, December 1, 2016,
    2. “Small Business Profile,” Small Business Administration Office of Advocacy, 2017,
    3. Sammi Caramela, “Cybersecurity: A Small Business Guide,” Business News Daily, June 2, 2017,
    4. Brien Posey, “10 Tips for Spotting a Phishing Email,” TechRepublic, October 15, 2015,

    Douglas R. Dvorak is vice president of product innovation for Enquiron. He is responsible for new product ideation, development and market strategies. Dvorak has over 20 years of insurance industry specific experience, primarily as an attorney.  His professional experience includes responsibility for liability and commercial line claims for ULLICO, including its fiduciary liability insurance program. Prior to that he worked in the directors and officers and fiduciary liability insurance practice of the Washington, D.C. law firm of Shaw Pittman LLP. He represented ULLICO as its coverage counsel in association with the largest pension fund scandal in history. He is a graduate of the Haworth College of Business at Western Michigan University and the University of Detroit Mercy School of Law.
  • January 17, 2018 4:00 PM | Vaughn Lawrence (Administrator)

    By Dr. John Park, Baker Tilly

    Each year the National Football League hosts a rookie draft that is a life-changing opportunity for many young men. Only a handful of those selected in the draft will go on to have lengthy and successful NFL careers. Before the draft, teams looked at all the measurable factors of the potential draft picks, including height, weight, and speed. However, they also looked for intangibles, such as attitude, ability to respond to stressful situations, and work ethic.

    When we think about successful leaders and organizations, there are key success factors that are identifiable and can help us predict business performance. There are also intangible factors that contribute to success and aren’t easily measured or apparent at a surface level. Responding to change falls into that second category. How we deal with and manage change is a key success factor in organizational performance. Nimble organizations and leaders that can pivot and adapt to change will have a positive impact and position themselves for success.

    Both nonprofit and for-profit organizations face significant changes related to the economy, technology, customer/stakeholder expectations, and an evolving workforce. The ability to fulfill the missions of our organizations and to be financially sustainable is becoming more complicated. As organizations confront these challenges, it is important to remain nimble and responsive.

    The following set of best practices are focused on how organizations and their leaders can adapt to change and remain nimble in a changing environment:

    Practice continuous improvement

    • Teach, learn, and model key behaviors
    • Create positive individual and organizational habits

    Manage your response to change

    • Understand your paradigms and blind spots
    • Recognize that to be nimble you must have engaged leaders and staff

    Stay true to your vision and values

    • Do not sacrifice who you are to become someone or something else
    • Strive for positive growth

    The following questions can help leaders focus on continuous improvement:

    • What are your key success factors and metrics?
    • What organizational and personal habits do you need to add or eliminate?
    • With whom should you connect or build stronger relationships?

    We all recognize that change is inevitable. But you can be a game changer by focusing on positive improvements, acknowledging and addressing barriers and challenges, facilitating continuous learning and growth throughout the organization, and paying attention to coworkers, family, friends, and your community.

    Paying attention to your customers, community, and staff through the development of open and systematic communications channels will help you to adapt and grow during times of change. The ability to respond to change in a systematic and timely manner is characteristic of successful and sustainable organizations and their leaders.

    This article was previously published by the Pennsylvania Institute of Certified Public Accountants. This article was also featured in the PAMIC 360.

    Dr. John Park joined Baker Tilly in 2012 and has focused on the identification and development of Baker Tilly’s high potential leaders and as a director in the consulting practice working with clients to facilitate their strategic planning and risk management activities, developing customized leadership development programs and facilitating 360 feedback assessments. His undergraduate and master’s degrees are from Shippensburg and his doctorate in education is from Penn State.

  • January 17, 2018 4:00 PM | Vaughn Lawrence (Administrator)

    By Sue Quimby, MSO

    Marijuana is approved for use in some manner in over half of the states, including medical use in 29 states and the District of Columbia, as well as recreational use in at least 8 states.  However, it continues to be a controlled substance under Federal law, thereby posing potential insurance coverage issues.  Helping clients understand the possible implications of marijuana and other controlled substances is another sign of the true insurance professional.  

    Marijuana readily comes to mind when people talk about insurance coverage for “controlled substances”. From an insurance standpoint, the problem stems from the fact that, on a federal level, marijuana is classified as Schedule I, which means it is considered to have “no currently accepted medical use,” a “high potential for abuse” and “there is a lack of accepted safety for use of the drug or other substance under medical supervision” (

    Use of a controlled substance may negate coverage under most insurance policies, whether or not the results of the individual’s action were intentional. Workplace laws, including mandatory drug testing, can pose a problem for users, as marijuana can stay in a person’s system for a number of months. In some states, such as Wisconsin, Workers’ Compensation benefits for the injured employee and their dependents are voided if the employee violated the employer’s drug policy. However, a number of courts have ruled that a positive test for marijuana does not necessarily mean impairment, and does not preclude recovery of Workers’ Compensation benefits. In states where marijuana is legal, laws vary as to whether Workers’ Compensation should pay for the treatment. 

    Auto liability coverage may come into play in the case where an employee testing positive causes an accident. State laws vary as to legal limits in a driver’s system before the driver is considered impaired.  General liability coverage may or may not respond to incidents involving an employee using marijuana. 

    Employment Practices Liability is another area that may come into play. Employers must take care to ensure that their hiring and firing practices include provisions for employees who are using medical marijuana. Some states allow employers to terminate employees for positive drug tests, and federal law does not allow for marijuana use at work (

    Marijuana is a booming industry. Sales of legal marijuana, for both medical and recreational purposes – at $6 billion in 2016 – are projected to exceed $24 billion by 2025. A number of insurance companies now offer coverage to businesses that grow, process, manufacture and sell marijuana products. 

    Crime is a serious issue in marijuana businesses.  Marijuana is a cash industry. The federal government regulates banking, so banks are hesitant to accept marijuana money, fearing legal problems that could ensue. Credit card companies generally don’t allow their cards to be used to purchase marijuana. This means that large amounts of cash are often on hand at dispensaries. This presents a significant exposure to any insurer willing to write coverage for the business. 

    Hawaii recently announced it plans to become the first non-cash marijuana state. They are setting up a payment process with a Colorado-based credit union. Patients will be asked to use a debit payment app. Customers would use their checking accounts to pay the credit union (

    For the plants themselves, the coverage questions are more difficult. For those who grow marijuana for personal use in “legal marijuana” states, the best answer is to contact the insurer and ask. State laws regarding quantities grown must be followed. If the grower is operating a business and selling the plants or products, then coverage under a standard personal lines policy will be voided. 

    Insurance coverage for marijuana use is still a developing issue.  Helping clients understand the possible implications is another value-added service of the professional insurance agent. 

    This article was previously published in the Insurance Advocate® and is provided courtesy of MSO®, Inc. (The Mutual Service Office, Inc.). MSO provides advisory services for all property and casualty lines except workers compensation. This includes customized forms and manuals for insurers, MGA’s and agents/brokers. This article was also featured in the PAMIC 360.

    Sue C. Quimby is assistant vice president, media editor, client services and training; senior product development analyst for MSO, Inc. (The Mutual Service Office, Inc.). You can reach Sue at 201.857.9128 or by email at

  • January 03, 2018 4:30 PM | Vaughn Lawrence (Administrator)

    A.M. Best has upgraded the Financial Strength Rating (FSR) to A (Excellent) from A- (Excellent) and the Long-Term Issuer Credit Rating to “a” from “a-” of Farmers Mutual Fire Insurance Company of Marble, Pennsylvania. The outlooks of these Credit Ratings have been revised to stable from positive.

    The ratings reflect Farmers Mutual’s balance sheet strength, which A.M. Best categorizes as very strong, as well as its strong operating performance, limited business profile and appropriate enterprise risk management.

    The rating actions also reflect Farmer Mutual’s increased balance sheet strength, driven by its risk-adjusted capitalization being at the strongest level, significant growth in policyholders’ surplus over the past five years primarily driven by strong operating earnings, stable loss reserving trends, comprehensive reinsurance program with strong partners and a high-quality investment portfolio comprised of

    a diverse blend of fixed-income securities and equity holdings. These positive rating attributes are offset somewhat by the company’s limited financial flexibility and scale.

    This press release was featured in the PAMIC 360.

  • January 03, 2018 4:00 PM | Vaughn Lawrence (Administrator)

    Gamma Iota Sigma announces the expansion of its programming in the digital space and will present The Pipeline, the Insurance Industry’s first Virtual Career Fair for Collegiate Talent, on February 13, 2018. On the occasion of Insurance Careers Month, The Pipeline Virtual Career Fair will bring employers together with college students pursuing a career in the insurance industry, providing access to companies seeking entry-level and internship candidates. This event is open to all students, regardless of their affiliation with GIS. It is also an opportunity for recruiters to have a single access point to tap into an aggregated pool of talent from a number of schools.

    Companies wishing to participate can register for Regular Registration for $350.

    In presenting The Pipeline, GIS is collaborating with organizations including Insurance Careers Month, Insuring Ohio Futures, IABA (International Association of Black Actuaries), and MyPath. With an estimated 400,000 jobs needed to be filled by 2020, the insurance industry is looking to hire and engage with students of all interests: risk management, finance, economics, information technology, data analytics, human resources, marketing, and more.

    GIS places significant emphasis on collaboration, working closely with partner organizations both for maximum reach and to best benefit the industry. The Pipeline will complement GIS’s existing hallmark event, the Annual International Conference and Career Fair, continuing efforts to bolster the talent pipeline into the industry and meaningfully connect students to opportunities in insurance. The next Annual Conference will be held October 4-6, 2018 in Chicago, Illinois. There are many ways for companies to engage directly with GIS and its active chapters at 68 colleges and universities throughout North America, from the Sustaining Partners Program to the GIS Career Center and opportunities directly with chapters.

    About Gamma Iota Sigma

    Incorporated in 1965 and boasting an annual membership of over 4,000 students at 75 colleges and universities throughout North America, Gamma Iota Sigma (GIS) is the industry’s premier collegiate talent pipeline and has over 50 years of history of engaging students and preparing them for careers in insurance. GIS is the only organization of its kind and is the solution to the industry’s talent gap issue, pursuing a mission to promote, encourage, and sustain student interest in insurance, risk management, and actuarial science as professions. GIS is committed to growing the number of highly qualified students entering the industry; to that end, the number of GIS students and active chapters has more than doubled in recent years and continues to grow. In partnership with Sustaining Partners, corporate supporters, professional organizations, and trade associations, the full spectrum of GIS programming provides its members with meaningful interaction with the industry, as well as the tools to pursue and succeed in an insurance career. For more information, visit:

    This press release was featured in the PAMIC 360.

  • December 20, 2017 4:30 PM | Vaughn Lawrence (Administrator)

    By Phil Reynolds, President, BriteCore

    InsureTechs are progressively disrupting the insurance industry to meet changing insured preferences. Carriers must adopt new strategies to remain key market players.

    Market Demands Evolution

    The economy is shifting towards concierge and convenience services as seen in increasing preference for convenience and concierge services like Uber over taxis. Modern companies are successfully meeting consumer demands by integrating technology into their services to enhance ease of use and customer accessibility. 

    The trend of changing consumer preference is reflected in the insurance industry. Only 24% of millennials purchase homeowners insurance through local agents[1]. Similarly, consumer satisfaction is decreasing with traditional access channels as customers now expect highly automated processes that emphasize transparency. Celent research finds 37% of current policyholders prefer smart technology to human contact, which is expected to grow to 90% by 2022[2].

     The evolution of customer preferences has created a demand for new products and services, yet many carriers are retaining traditional offerings, leaving customer needs unmet. InsureTechs—challengers disrupting the current insurance model through technology-powered strategies—are quickly emerging to fill the gaps. In order to contend with shifting consumer preferences and respond to InsureTech disruptions, Traditional insurers must modify their core, data, and digital solutions.

    Types of InsureTech Disruptors

    InsureTech companies are transforming the insurance landscape with three types of disruptors: Distribution Disruptors, Core System Transformers, and Supplemental Data and Device Users.

    1. Distribution Disruptors capitalize on the digital economy to deliver innovative ways of providing products. Carriers are using direct-to-consumer web portals, data pre-fills and policies packaged with other services to anticipate and meet consumer expectations, all with the ultimate goal of improving customer experience and convenience.

    Example: Jetty Inc. is a prime example of an InsureTech that has created technology-driven, user-centric distribution solutions to make insurance processes more convenient for renters. Jetty is a rapidly growing InsureTech with a direct-to-insured distribution model. Through their customer-focused website, renters and landlords can purchase insurance without ever talking to an agent. The process is simple, is beautifully designed, and conveniently provides users with an insurance policy in minutes.

    1. Core System Transformers strive towards comprehension, automation, scalability, and ease of use in their administration and insurance processes. Transformers employ the latest in technology (e.g., AI, machine learning, straight-through processing) to create the most efficient, easy-to-use processes for both employees and customers. InsureTechs use a multitude of core system transformers to enhance efficiency and customization including: fraud detection algorithms, self-service chatbots and digital assistants integrated with technologies such as Alexa or Siri.

    Example: Amazon Web Services (AWS) is a leading infrastructure provider, offering a workspace with hundreds of tools to build a product or software system with top-of-the-line automation and security. Technical carriers can build from scratch and effortlessly deploy their core systems through AWS.

    1. Supplemental Data and Device Users implement modern data collection and processing tools into their insurance processes. From telematics to wearables and drones, these companies collect and process data in innovative ways to accurately predict policy risk and provide benefits to insureds. Pairing supplemental data with automatic FNOL responses, detailed customer profiles, and straight-through processing improves the quality of risk data and speeds quoting and claims processes for insureds.

    Example: Many insuretechs are disrupting insurance by implementing supplemental data and devices into everyday insurance processes. Major insurers—State Farm, Allstate, and Progressive—reward policyholders for safe driving through data collected from telematics systems. The data provided allows for accurate, user-specific risk information for more precise risk calculation.

    Engaging the InsureTech Revolution

    Established insurance carriers have a unique opportunity to engage trends in InsureTech. The following three strategies augment traditional approaches:

    Compete Directly - Transform internal systems to compete directly for consumer business using modern technology.

    Underwrite the Insurance - Partner with InsureTechs to underwrite the products their technology platform is distributing.

    Invest as a Capital Partner - Utilize capital reserves to purchase equity in InsureTechs, benefitting from their success.

     InsureTechs are a growing force for change in insurance and technology. Carriers are responding to insure-tech disruptions by competing with, underwriting for, or investing in insuretech-powered solutions. Take time this month to consider how your company can participate in the InsureTech revolution to deliver better products and services to customers.

    This article was featured in the PAMIC 360.


    1. Narcisco, Eric (2016). 5 reasons millennials aren’t buying insurance from local agents. Retrieved from:
    2. Santana, Danni (2017) Insurers adopt AI to keep up with customer demands. Retrieved from:

    Phillip Reynolds is the CEO and co-founder of Intuitive Web Solutions, creators of the BriteCore insurance processing system. He holds a certificate in "Leading Change in Complex Organizations" from the Massachusetts Institute of Technology and speaks frequently on organizational design and technological innovation for property casualty carriers. Mr. Reynolds received the "Governor's Missouri Entrepreneur of the Year" award from Governor Jay Nixon and led IWS to the #288 spot on the Inc. 500 list. He is a frequent presenter at State conventions and is currently serving on PAMIC's Information Technology Committee. For more information on InsureTechs and what you can do to remain competitive, contact Phil at

  • December 20, 2017 4:30 PM | Vaughn Lawrence (Administrator)

    By Carrie Small, Partner, Baker Tilly Virchow Krause, LLP

    Overview of Insurance Provisions in Final Tax Reform Bill

    On December 15, 2017, a House and Senate conference committee reached an agreement on a final version of tax reform legislation, the Tax Cuts and Jobs Act (TCJA), which contains several key provisions that would significantly impact the property and casualty (P&C) insurance industry. House members voted on the bill on December 19th, passing it with a 227-203 vote. The Senate quickly followed early on December 20th with a 51-48 vote. Prior to the Senate vote, Democrats raised objections to certain items in the legislation that violated the Byrd Rule, a requirement that all measures relate to federal revenue and spending. The legislation will now go back to the House for a re-vote before advancing to the President. It is expected that President Trump will sign the bill into law by the end of the year, but the signing could be delayed until 2018 due to a congressional provision that could trigger spending cuts if signed in 2017.

    Generally, the conference agreement ultimately landed at a 21 percent corporate tax rate effective for taxable years beginning after December 31, 2017. This is a slight modification from the 20 percent corporate tax rate that was included in both the House bill and Senate amendment (although the Senate amendment delayed the effective date to taxable years beginning after December 31, 2018). The corporate alternative minimum tax (AMT) would also be repealed with special provisions to refund applicable AMT credit carryforwards. Additionally, dividends received deduction amounts would be changed from 70 percent to 50 percent, and from 80 percent to 65 percent for dividends received from a 20-percent owned corporation.

    The major P&C insurance provisions that would generally be effective for tax years beginning after 2017 are as follows:

    Modification of Net Operating Loss Deduction

    Generally, the net operating loss (NOL) deduction would be limited to 80 percent of taxable income determined without regard to the deduction. Net operating losses could be carried forward indefinitely, but carryback potential would be limited to a two-year carryback in the case of certain losses incurred in the trade or business of farming.

    NOLs of a P&C insurance company would remain at a two-year carryback and a 20-year carryforward. The 80 percent limitation as described above would not be applicable to P&C insurance companies. This would have the effect of putting P&C insurance companies and all other corporations (including life insurance companies) on different loss carryback and carryforward schedules. This could create additional complexities for consolidated tax returns that include both P&C insurance companies and other types of corporations, as well as a need for increased tracking and scheduling of NOLs.

    Modification of Proration Rules for Property and Casualty Insurance Companies

    The 15 percent reduction in the reserve deduction for P&C insurance companies would be increased to 25 percent. This would keep the reduction in the reserve deduction consistent with current law by adjusting the rate proportionately to the decrease in the corporate tax rate. Should there be any future changes in the top corporate rate, the proration percentage would be automatically adjusted so that the product of the proration percentage and the top corporate tax rate always equals five and a quarter percent.

    Modification of Discounting Rules for Property and Casualty Insurance Companies

    Under this provision, P&C insurance companies would use the corporate bond yield curve (as specified by the U.S. Department of the Treasury) to discount the amount of unpaid losses rather than mid-term applicable federal rates. In addition, the special rule that extends the loss payment pattern period for long-tail lines of business remains (but with the five-year limitation on the extended period increased to 14 years). The provision would also repeal the election to use company-specific, rather than industry-wide, historical loss payment patterns.

    A transitional rule would apply for the first taxable year beginning in 2018, which would spread adjustments relating to pre-effective date losses and expenses over such taxable year and the seven succeeding taxable years.

    Repeal of Special Estimated Tax Payments

    This provision would repeal the elective deduction and related special estimated tax payment rules under section 847. Under current law, insurance companies may elect to claim a deduction equal to the difference between the amount of reserves computed on a discounted basis and the amount computed on an undiscounted basis. Companies that make this election are required to make a special estimated tax payment equal to the tax benefit attributable to the deduction.

    Impact on Accounting for Income Taxes

    Tax reform would also have to be considered for accounting for income taxes under Accounting Standards Codification 740 (ASC 740) and Statement of Statutory Accounting Principles No. 101 (SSAP 101). If enacted by the end of 2017, all P&C insurance companies would be required to revalue their existing inventory of deferred tax assets (liabilities) at the 21 percent rate. The change in rate would run through the statutory change in capital and surplus as income (net deferred tax liability position) or expense (net deferred tax asset position). The change in rate would also have to be considered as part of the admissibility calculations under paragraph 11 of SSAP 101. For example, when looking at calculations of future taxable income and future reversals, the newly enacted tax rate would have to be utilized.

    If signed into law before the end of the year, the Tax Cuts and Jobs Act would require additional consideration by all P&C insurance companies as they work through the year-end financial reporting process. It would be expected that the change in tax rate would be applied to each company’s deferred tax assets (liabilities) and future provisions of the tax bill would be appropriately analyzed for the specific impacts to the company.

    To learn more or to connect with our insurance tax specialists, visit This article was featured in the PAMIC 360.

    Carrie Small, partner, joined the firm in 2010 and leads our insurance tax practice. Carrie has 15 years of experience providing tax compliance and tax consulting services, including research and tax planning, to both privately held and public companies.

  • December 20, 2017 4:00 PM | Vaughn Lawrence (Administrator)

    The Corporate Governance Annual Disclosure Law will have effects on all insurance companies throughout Pennsylvania. In order to prepare our members, we are hosting a series on Corporate Governance so that companies can better understand this topic and implement best practices. The first session Corporate Governance - The Basics is available below. 

  • December 18, 2017 9:00 AM | Vaughn Lawrence (Administrator)

    The PAMIC educational calendar in 2017 was a great success! We provided high-quality education on emerging topics from every aspect of the industry. Through our events we were able to offer continuing education credits and networking opportunities for our Mutual and Associate members. We hope to see everyone again in 2018! 

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