New England Biz Law Update
It would be hard to fault anyone for assuming that the legal department of a 110-year-old property and casualty insurance company with a national reach must be a large operation.
After all, Amica Mutual Insurance Co. is under the eye of regulators from all 50 states and the District of Columbia, collects about $2.2 billion in annual premiums, employs 1,500 people at its headquarters in Lincoln, Rhode Island, and has some 3,800 employees scattered across the country in 44 branch offices.
But as Amica’s longtime senior vice president and general counsel Robert P. Suglia puts it, “We handle all the legal issues that come up with a huge staff of me, two other attorneys, and an administrative assistant.”
Suglia, who joined Amica in 1994 as counsel and was elected to his current position in 2006, says the fact that the company is owned by its policyholders is one factor allowing for a smaller department than what might be expected.
“Since we’re a mutual insurance company, we don’t have any of the SEC-type of regulations,” he says. “Also, we’re a direct writer, so we don’t deal with independent agents. That would entail a different set of issues than our employment group. So two areas that could create a lot of work for my department are taken off the table up front.”
Suglia recently sat down with New England In-House’s Barry Bridges to talk about his job in the heavily regulated insurance industry and how changes in technology are affecting the business.
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Q. What are other practical aspects of working for a mutual insurer?
A. Being a mutual company is part of our culture and gives us a long-term view. The interests of the company and the policyholders are aligned, and we keep that in mind with all our transactions.
Because we’re not a stock company and because we’re not tied to quarterly and annual reports, we’ve always stood behind our policyholders even in very difficult markets. After the ’04-’05 hurricanes in Florida, a lot of companies were withdrawing. We stuck with the policyholders that we had there. We recognize that everything runs in cycles.
Q. How involved are you with the company’s cybersecurity efforts?
A. Obviously it’s a huge focus of our IT department. But we’ve been working, particularly in the last year, to make sure that we have a response plan on several fronts.
There are really three prongs to it: a response on the legal and regulatory side; on the IT side, where you need to bring someone in to find out exactly what happened; and on the public relations side. The IT professionals will tell you it’s not if something occurs, but when it occurs. It has to be at the top of the list, and it’s a concern all the way up to the board level.
Q. When do you bring in outside counsel?
A. It’s often for corporate litigation. Claims are handled by the claims department. We have counsel that we work with routinely on employment matters, but we have very few of those reaching the litigation stage. We have a very good HR department, very good policies, and a lot of long-term employees here.
We also have a number of trademarks, such as the Amica logo, and we take notice when a Google search returns a link showing “Get Amica insurance here” and it’s from someone we have no relationship with. We work with both an outside vendor and outside counsel to try to prevent misrepresentation and unauthorized use of our marks.
Q. So employment law is a narrow part of your work?
A. I think for a company this size, the number of contested employment cases we have is very low. That speaks well of the company’s management and philosophy. We treat everyone well here, and by treating our employees well, our employees treat our customers well.
There are other employment-related areas, such as the maintenance of policies and procedures, our ERISA plans, and the pension plan. We work with our HR department and with ERISA counsel to make sure we are in accordance with the law.
Q. Are you watching any legislation at the State House this session?
A. My job has become more and more involved with governmental affairs. I’m a registered lobbyist at the Rhode Island Legislature. When lawmakers are in session from January to June, I spend a considerable amount of time there representing Amica.
There are always a number of bills of interest. One this year relates to mandatory sick time. Even with our company’s generous employment policies, we would not meet the standards of that bill. It’s a little overreaching, and we’ve been working to express our concerns about the way it’s written.
I’m also active with our national trade associations, particularly PCI, the Property Casualty Insurers Association. One of their major efforts is a reform of Texas law relating to hail damage claims. We’re trying to support that effort, as Texas is a big state for us.
Q. How has your role as legal counsel changed in the past few years?
A. We have had to respond to changes in technology. For example, the recent development of the “sharing economy,” with companies such as Uber and Airbnb, has created a number of issues as far as how our exposures have changed. We’ve had to stay abreast of the different responses coming from legislatures and insurance regulators.
The insurance industry may not be as nimble as tech companies, so it took a while to understand the exposure and to craft appropriate policies and procedures.
Related to that, we’re looking at autonomous vehicles. The largest piece of our business is automobile insurance, and to the extent you have vehicles driving themselves, it creates a whole new raft of questions on where liability lies when there’s an accident. It’s really a matter of when most cars on the road will be autonomous and how that will change the market.
Q. Although you are regulated primarily at the state level, do you anticipate anything from the Trump administration that could impact your industry?
A. We are generally supportive of the state-based insurance system, and we feel that’s likely to be reinforced under the current administration, but there is a bit of federal oversight of insurance through the Dodd-Frank Act. That law really is geared more toward international insurance companies, and we’re only in the U.S., but it’s something we follow. There’s a possibility that there will be some rollback of Dodd-Frank under President Trump and with Republican control, and we’ll work to see how that affects us.
On the federal front, though, President Obama appointed me to the first board of the National Association of Registered Agents and Brokers, or NARAB, created by Congress in 2015. Unfortunately, after the election, Congress stopped doing confirmations, so I won’t say the Senate refused to confirm me, but they never took it up. Trump will now have the opportunity to make appointments, and he could re-nominate some of the same people.
Q. What is unique about the insurance business as compared to other industries?
A. The degree of regulation. When you get an Amica policy in Rhode Island, the price is based on a rating plan that was filed and approved in Rhode Island.
When you book an airline seat, the price changes minute to minute depending on the time you’re at the computer, the day you book, and when you want to travel. Our pricing is fixed. Our pricing is based on what happened in the past, but it’s also predictive of what our future losses are going to be. When we sell our product, we don’t know its final cost. That’s unusual. When Gillette sells a razor blade, it knows how much it spent to produce it.
