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Enacting Enhanced Fraternal Solvency Legislation

March 25, 2019

The four cornerstones of each bill are:

  • Early regulatory intervention with an authorized risk-based capital control ratio as the trigger point. This bill gives the Department of Insurance more tools to address a failing fraternal.

  • A requirement that a fraternal notify the state regulators prior to assessing members and the ability of regulators to disapprove such an assessment if it is not in the best interests of members.

  • Streamlined process for a voluntary workout prior to liquidation that facilitates the transfer of insurance certificates to another fraternal or even to a commercial insurer and circumvents antiquated governance structures that can delay or preclude mergers.

  • Streamlined liquidation process to help minimize costs to members and reduce the potential loss in the certificate benefits due to a member assessment.

In Wisconsin, it appears that state regulators will include the Alliance’s solvency language in the Department’s omnibus legislation. In Texas and Pennsylvania, state regulators have approved legislative language and the Alliance has retained lobbyists to lead the effort to enact the measures. In both cases, the Alliance is working closely with its domestic members to recruit co-sponsors for the bills.


At the request of the Texas Department of Insurance, we have made a handful of minor technical modifications to the final legislative language of our bill. We are trying to accommodate TDI’s requests without diluting the core provisions of the bill and we think we have reached a reasonable compromise with regulators on these issues. While TDI cannot support or oppose legislation, assuring their neutrality on our bill will be a critical factor in our chances for successfully enacting the measure in the 2019 session.

The “final final” legislative language for both the House and Senate versions of the bill will be substituted for the original language at the first hearing on each bill. I will send you a final version of the legislative language for each bill, as well as a summary of the amendments that were made to accommodate when available.

As you know, our lobbying team recruited excellent sponsors for both the House version of the bill [Rep. Senfronia Thompson (D-Houston)] and the Senate version of the bill [Sen. Brandon Creighton (R-The Woodlands)]. Hearings on the bills will likely take place in April. Because there will likely be no opposition to the bill, these hearings will be low key events with limited testimony. I will keep you posted on the schedule for these hearings and will encourage you to testify if needed, attend if possible, and watch on your computer with your management team. Bills must be passed by both chambers by May 23 and the session ends on May 28. We have quite a lot of work ahead of us in the coming weeks to secure enactment in this session.

What we need most from our Texas-domiciled Alliance members are:

  • Information on the relationships you or other leaders of your society have with current state lawmakers – If you have cultivated a solid relationship with one or more state legislators, please let us know. These may be the earliest and most important co-sponsors for our bill.
  • Information on state legislators that may be members of your societies – This is another critical group of potential co-sponsors for our bill.
  • Information on the number of members your society has in a particular House or Senate legislative district, a particular county, or a particular region of the state – This demographic information will help us recruit co-sponsors for the bill.

Look for additional information on this initiative next week. In the meantime, I look forward to hearing back from you on the information we’ve requested. Please don’t hesitate to contact me in the interim if you have any questions or need more information on this initiative.


I wanted to update you on the latest developments on the Alliance’s effort to enact fraternal solvency legislation in Pennsylvania in 2019. I was in Harrisburg yesterday with our lobbying team of Matt Steck and Ken Rapp of Greenlee Partners. We met with legislative staff of both the House and Senate Insurance Committees to discuss our proposal and to seek enthusiastic and well-respected co-sponsors for the bill among the leadership of these committees.

The response from legislative staff was universally positive. While some were aware of the large fraternal community in the state, others had absolutely no idea what a fraternal was. However, after explaining the fraternal business model to them – and after realizing the likelihood that a significant number of fraternal members were their constituents – our message was well received. Even more important was the fact that the Pennsylvania Department of Insurance had signed off on the language for our bill; the bill had the full support of the Alliance’s Pennsylvania-domiciled member societies and the Pennsylvania Fraternal Alliance; and there was no opposition to the bill from commercial insurers or other organizations.

Our lobbyists will continue to recruit the best possible sponsors for our bill and we hope to announce who those sponsors will be in the next few weeks. We intend to introduce both House and Senate versions of the measure, which will give us the best chance of enacting the legislation in the 2019 session. Our lobbyists will also work to secure letters of support for the measure from the Department of Insurance and the state trade groups that represent commercial life insurers. Because of the widespread support for and lack of opposition to the measure, our plan is to move the bill with as few hearings and as little fanfare as possible. I will keep you posted on developments they occur and will let you know what type of grassroots support from member societies we may need to secure enactment of the bill.

A great turnout for the PFA’s 2019 Legislative Luncheon, scheduled for April 30 in Harrisburg, is the best way for each member society to demonstrate its support for the proposal and to assist in the recruitment of co-sponsors for the measure. I will be working closely with Theresa Kluchinski on the details for this event and we will provide additional information on the lawmakers that we may want to meet with while we are in Harrisburg in the coming weeks.

I have attached three documents that I have provided to our lobbying team for your information. They are:

  • A preliminary draft of a “one-pager” on the Alliance’s fraternal solvency bill – When finalized, we will use this to promote awareness of and support for the bill among state legislators.
  • A roster of PFA member societies – Of most importance to our lobbying team are the Pennsylvania-domiciled members that would be willing to engage in grassroots activities to support the bill.
  • The Alliance’s Pennsylvania “State Sheet” – We will use this to promote awareness of the impact the fraternal community has in Pennsylvania to state lawmakers.

What we need most from our Pennsylvania-domiciled Alliance members are:

  • Information on the relationships you or other leaders of your society have with current state lawmakers – If you have cultivated a solid relationship with one or more state legislators, please let us know. These may be the earliest and most important co-sponsors for our bill.
  • Information on state legislators that may be members of your societies – This is another critical group of potential co-sponsors for our bill.
  • Information on the number of members your society has in a particular House or Senate legislative district, a particular county, or a particular region of the state – This demographic information will help us recruit co-sponsors for the bill from every corner of the state.

Bottom line: We are off to a very good start and we have the right team in Matt Steck and Ken Rapp representing us in Harrisburg. I look forward to hearing back from you on the information we’ve requested. Please don’t hesitate to contact me in the interim if you have any questions or need more information on this initiative.