Dear Fellow PRCUA Members,
It is that time of year again. The time to report to our membership the financial status of the Polish Roman Catholic Union of America. We can look back at the year 2020 as a time of change. Changes occur in the way we interact with the people around us. No longer meeting face to face, in large groups or even shaking hands, but now we are masked, have virtual meetings, and greet by elbow bumping. These changes affect all form of business, including the PRCUA, especially since insurance sales are a personal meeting business. Because of the pandemic, prospective members are not always open to letting a sales agent into their houses to speak to them about their life insurance coverage. As we look to the future, we hope and pray that the new normal soon morphs back to an improved version of its old self.
As I have reassured our members throughout the year, your investment in life insurance and annuities is safe with the PRCUA. Over 90 percent of our assets are invested in long term bonds, assuring a steady income in the years to come.
Below this article you will see our financial statement. For the year 2020, the PRCUA had a negative net income of $398,765, with a total surplus of $10,056,719. We endured a loss of $986,427 in surplus funds. For reference, surplus is the cumulative amount of money that remains in a company over time; calculated as the company’s assets minus its liabilities and capital. The surplus is a fund that fluctuates with the changes in the needs of the business. This past year was the regularly cycled audit year for the PRCUA, completed by the Department of Insurance from the State of Illinois. The state auditors found that PRCUA had not been reserving the correct percentages for our life insurance products, resulting in a shortage of approximately $390,000. Additionally, impacting our figures are annuity-related facts. As annuity certificates age, their surrender fees recede and more funds need to be added to reserve funds. In 2018, the White Eagle Annuity was introduced as an annuity with two years of surrender fees. Most of these annuities’ surrender periods ended in 2020 and approximately $300,000 was needed to add to reserves to cover the full value of the certificate. Lastly, as PRCUA enters the final phases of our OIPA installation, the new insurance platform, funds were designated from the surplus to cover this software installation which totaled approximately $378,000. These funds were moved from the surplus to the reserve funds. Except for the outflow for OIPA, the other amounts were a reallocation of funds within the organization.
Finally impacting finances were adjustments in commissions paid on our products. Over the past year, we examined the commission schedules for our sales force and made the decision to adjust and simplify them. In the coming years, you will see the effects of the adjustments on the net income. In simple terms, the PRCUA was paying more to our sale force than funds coming into the organization in the first year a life certificate was issued. Looking at what was best for our organization, the appropriate changes were made.
Even though there is a loss in the surplus, we have achieved many things in the past year and the amount of surplus funds continues to place the PRCUA in a strong financial position. Despite the pandemic environment and due to strong numbers earlier in the year, 2020 sales doubled the sales from 2019. We have continued to examine different ways to cut back on expenses. The COVID-19 virus and associated restrictions forced the organization to think outside of the box. Some of these solutions have been beneficial to us in a few ways. On March 9, 2020, our headquarters building was closed to the general public. Among other things, this situation forced us to meet virtually with our Board of Directors for the first time. It has been a hard transition, but overall has been both efficient and effective. As a safety precaution and following CDC guidelines, all fraternal events were postponed last year, including sports tournaments, recitals, and banquets.
We are continuing our conversion to the Oracle Insurance Plan Administration (OIPA) platform. It has been a long and tedious two and a half years. When completed, this platform will combine several different programs into one, improving efficiency and workflow – for staff and our sales force. In addition to internal benefits, the goal is to provide better service to members, ultimately allowing for direct access to certificate information in real-time at the time most convenient for the member and greater automation to satisfy requests.
Because of the pandemic, we also had to make changes to the way business was done. Our day-to-day business is not easy to do in a work-at-home environment. To be safe, our initial reaction was to change our workday to a four-day week and split our staff to slow down any possible cross contamination with the virus. After 3 months, we brought the entire staff back together. In that time, we worked with our vendors to provide hand sanitizing stations, plexiglass shields at cubicles and extra cleaning and sanitization efforts by our cleaning staff to assure that we were providing the most clean and secure workspace for our employees.
Even though we have been meeting virtually for over a year, our Board of Directors (BOD) has been busy working independently in committees. The Board has four separate committees: Strategic Planning, Governance, Enterprise Risk Management, and Investment.
- Strategic Planning Committee has been meeting to set a plan for the future of the PRCUA. Topics that the committee has discussed are (1) a restructuring of the BOD, streamlining it to be more effective, the possibility of having an all at-large directorate in place of regionally aligned directors, (2) rearrangement of the budgeting process of the PRCUA, in place of a four year budget being presented to the Convention, an annual budget would be built and presented to the BOD for approval, (3) change the legislative process for the PRCUA, which would include having a direct vote from every adult member of the Union in place of delegates selected to represent each society and (4) a change to the format of the Convention to emphasize education and fraternal aspects over governance of the organization.
- Governance Committee meets to verify that the PRCUA is in compliance with the regulations set forth by the National Association of Insurance Councilors (NAIC). This organization is comprised of insurance regulators from across the United States who set guidelines for insurance providers.
- Enterprise Risk Management Committee tasks include not only the physical risks, but the intellectual risks as well. They examine the safety and security of our physical property, member information and IT security.
- Investment Committee meets with our investment advisor to assure that they are making sound investments for the Union. They are also the gatekeeper for new investment proposals our advisors present as opportunities for the PRCUA.
As the world changes, so does the need for professional and educated personnel in our boardroom, executive offices and headquarters building. In the last six years, the PRCUA has proactively provided formal on-line training for our executive officers and directors to give them a basic understanding and expand to a greater knowledge of the insurance business. We have opened that up to our employees as well, requiring certain basic courses to complete the FLMI-1 Certificate. Our employees are encouraged to continue their studies to assist them in providing the best customer service possible. Our staff is required to complete monthly cybersecurity training to assure that they understand the different ways that hackers are trying to acquire information from computer systems. These courses are provided through LOMA and KnowBe4.
As the world begins to open up again, I look forward to meeting face to face with our members to remind them that we have been in this together as a family. All of you are members of this vast family that needs to continue to look to the future as our predecessors had in the past, overcoming various adversities in times of depression and war. The PRCUA will continue to grow and spread the news that we are healthy and vibrant in the 21st century. Remember to tell your friends about our great fraternal and “Get Involved, Stay Involved, and Get Others Involved.”
James J Robaczewski ALMI, FIC, ACS
PRCUA National President