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By Jim DeLuccia, manager, PICPA communications

In advance of her presentation at the Nov. 28-29 PICPA Insurance Conference, I had the opportunity to chat briefly with Jessica K. Altman, insurance commissioner for the Commonwealth of Pennsylvania. Commissioner Altman will cover the current initiatives and priorities of the department at the conference, and she provided me with a sneak peek of her discussion.

Jessica K. Altman Insurance Commissioner Commonwealth of Pennsylvania

PICPA: What is one initiative the Pennsylvania Insurance Department is working on right now that will have significant ramifications for CPAs and other financial professionals working in this industry?

Altman: One of our key priorities is the recruitment of fresh talent to contribute to the success of the department and sustain its reputation as a thoughtful and informed regulator. I believe that using my time in the role of Commissioner to make investments in staffing and resourcing is the best legacy that I can provide to the department.

Efforts to date have focused on hiring in the area of financial analysis, an area that, due to attrition and a lack of hiring, was significantly understaffed for a period of time. We have successfully backfilled many of the vacancies by taking a hiring class approach, similar to law firms. We hired several individuals who were trained together and are now able to use their colleagues as resources as they learn their roles. We are also looking to other areas that are likely to experience high rates of retirement in the coming years, and finding ways to begin preparing for that transition – making the staffing decisions now that will be needed to mitigate significant losses in institutional knowledge.

PICPA: Overall, what is the current state of the health care insurance marketplace, and how does it affect Pennsylvania residents?

Altman: The health insurance industry has undoubtedly experienced the most change in recent years of all the lines of insurance that we regulate. In addition to implementing transformative policies in health insurance, the Affordable Care Act also brought health insurance square into the crosshairs of political battles. The heightened notoriety of health insurance allowed us to achieve great improvements in the market over the last decade, but it also has meant that health insurance has served as the proverbial rope in a political tug-of-war.  

While the debates continue, I view our role as regulator in rather simplistic terms: protect the consumer. Whatever it is that I can do to best provide certainty and best cut through the noise as a resource for consumers will always be my top priority. One of the key ways to protect the consumer is to cultivate an insurance market that offers choices of comprehensive, affordable insurance coverage.  

I work closely with stakeholders sitting in various seats to handle each issue in turn as they arise. We aim to be proactive when possible, but many times these days we do not have the benefit of clear sites into the future, which puts us in the position of reacting as changes occur. When doing so, we focus on being thoughtful, deliberative, and effective.

By taking a pragmatic approach, understanding the market and the issues that put it at risk, and sitting down with the insurers to understand their concerns and perspectives, we have brought all of the stakeholders to the table and made sure what we are doing is in the best interest of our residents and our health care system overall.

For 2019, Pennsylvanians’ individual health insurance market will actually experience increased choice and an overall average decrease in premiums. Thirty of Pennsylvania’s 67 counties will have more health insurers offering coverage in the individual market next year. Further, the number of counties with just one health insurer offering coverage in the individual market will decrease from 20 to 10. The health insurers that currently sell in Pennsylvania’s individual market will all stay in the market, and we approved an average statewide decrease in premiums of 2.3 percent. We hope to continue the trend of increased choice and affordability as the individual market stabilizes.

PICPA: How do you see the marketplace changing over the next few years?

Altman: One of the most transformative issues that I see impacting the industry in the next few years is the adoption of technological advancements into the insurance industry, and how we as regulators can properly and consistently approach such proposals.

Similarly, the capacity to gather and use data is also evolving. The question then becomes how technological advancements and the use of data will change not only the business of insurance, but also the consumers’ experience when engaging with an insurer.  

When we start reviewing insurance policies that use millions of data records provided by third parties over which the Insurance Department has limited or no regulatory authority, we have concerns about the data’s accuracy. We wonder about its completeness, and we wonder who is performing the data validation. We have concerns about our ability to assist consumers when challenging the accuracy of the data used to calculate their insurance premium. And a discussion regarding data and technology would be remiss to not include a concern about data security: how should insurance companies protect themselves from cyberthreats, and then work with regulators in the unfortunate instance of a data breach? We will continue to wrestle with these challenging issues over the next few years, and will consistently aim to prioritize the consumer.

PICPA: What is one point you would like conference attendees to take away from your presentation?

Altman: Through everything we do, the role of the Insurance Department is to facilitate a robust and competitive insurance marketplace, with the ultimate goal of providing insurance consumers with the products they need and ensuring they are treated fairly in the purchase and use of those products. In executing this role, it is necessary to be both reactive to constantly evolving topics and proactive in preparing for the broader issues that the insurance industry will be facing in the years to come.

It is critical that we look forward and not forget the longer-term challenges the insurance industry is facing. I am constantly thinking about autonomous vehicles, big data and predictive analytics, blockchain technology, and other technological innovations that have the potential to fundamentally change insurance products, and how consumers will interact with those products. As the industry innovates, we must also ensure that the Department innovates alongside it. We are recruiting and retaining a talented team of regulators prepared to deal with these challenges. Innovation is good, and there is so much potential for positive change within the industry. As a regulator, my challenge is to encourage and allow for innovation, while also drawing the lines that ensure that innovation does not run awry of the principles our industry has always held in the highest regard. At the end of the day, it is all about the consumer and ensuring they are as well served by the insurance markets as they can be.

For more information on the current developments from the Pennsylvania Insurance Department, check out Jessica Altman’s presentation at the Nov. 28-29 PICPA Insurance Conference in Malvern, Pa.