I recently attended the Pennsylvania Institute of Certified Public Accountants (PICPA) Insurance Conference and wanted to share what I thought were the most relevant topics for my Fraternal Benefit Society clients:
- One of the main themes was cybersecurity. The Pennsylvania Department of Insurance will eventually be bringing in specialists for exams. Compromised passwords have been an issue in 81% of the breaches. You should use more complex passwords and change them every so often. The speaker also suggested security awareness training for employees. Also, vendor access and oversight is very important to review.
- Enterprise risk management was also very important. You should be thinking strategically in this area. Your plan should include the following: governance and structure, strategy and objective setting, performance, review and revision of the strategy, and results review, including communication and reporting.
- The Pennsylvania Insurance Department presented and the most notable item here was that they plan to increase their scrutiny of annuities from both the market conduct and types of product angles.
- From an accounting perspective:
- Investments in surplus notes that are rated NAIC 1 or 2 are recorded at amortized cost
- If rated a 3 or lower they need to be recorded at the lower of amortized cost or market
- Restricted cash is now recorded in cash and cash equivalents
- The designation change of bonds (from 6 to 20 categories) has been delayed until 2019
Contact H2R CPA at 412-391-2920 or email@example.com to learn more about our specialized assurance and advisory services for Fraternal Benefit Societies. Our team would be pleased to provide a complimentary consultation.