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VOLUME 124, NUMBER 10 / May 20, 2013

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May 20, 2013 | volume 124 number 10


Foreword: Ring, Rhyme and Reason Steve Acunto, Publisher


Insight: Disappearing Act Peter H. Bickford


Exposures and Coverages: $41.7 Million LIability Judgement Mediation for Disputed Sandy Claims; More on Fund Transfer Fraud Jerome Trupin, CPCU


On the Level: Major Industry Events No Insurance Pro Should Miss N. Stephen Ruchman, CPA


PAEAN: In Praise of a Public Adjuster


Survey: PIA Members Report Significant Underwriting Changes in Homeowners Insurance Market


In the Associations: RAA Elects 2013-14 Officers


In the Associations: IIABNY Elects Andrew Kaufman Chair of the Board


In the Associations: IIABNY Honors Outstanding Services at Cooperstown Event


Guest View: A Tale of Two Hurricanes: What Does Katrina Tell Us About Sandy? Dr. James W. Fossett


Crackdwon: Senate Targets Auto Fraud


Face to Face: Google It! Michael Loguercio


In the News: Amalgamated President & CEO David Walsh and Amelia Chebba Walsh Honored by CMSV


Courtside: When Farm Animals Wander into the Road, Owner May Be Liable for Auto Accident; Horse’s Owner Has No Liability for Normal or Typical Horse Behavior Lawrence N. Rogak




Looking Back: June, 1988


In the News: J.P. Morgan Securities, Inc. v. Vigilant Insurance Co. Katlin Nash


UJA Federaion of New York: 2013 Long Island Insurance Division Dinner


MSO: Pet Insurance - Protection Our Furry Friends Like us on Facebook… The Insurance Advocate Magazine INSURANCE ADVOCATE / May 20, 2013 3


Steve Acunto


Ring, Rhyme and Reason


n this issue of the Insurance Advocate we feature several different items worthy of note, not the least of which the names of those who are now elected to serve as volunteer leaders of the RAA and the IIABNY. We also feature a recent PIA survey’s results. In our last issue we presented a list of those companies which contributed to the 2013 IFNY Interns program which is administered in cooperation with YES!Solutions, Inc. All of this points again and again to the importance and relevance of volunteering. The insurance industry depends to a great extent upon its ongoing image-making, if there is ever to be the acceptance of just what is involved in this critical economy–supporting industry, it is through volunteers, not through ads featuring animals or a “spacey” woman. While these ads may be successful in purveying policies, the overall feeling about the industry is not improved by them. It is improved by volunteers, by people who associate their professional activities with their love of society... Speaking of society, our last guest editorial—I was my own guest in this one!—about the proposed UFC bill and the sport of boxing, civility, and our society, drew a great deal of response. It might be better for me to write about sports or the arts since those subjects get more response often than insurance which, to so many readers, is their daily “bread.” I will share one letter with you from among the many I received. It is from a longtime friend Ed Wright. Dear Steve, Your piece on UFC in New York was interesting and well written. I’ll begin by saying I find UFC utterly unappealing as either sport or entertainment. I can’t seem to get beyond condolence for the poor fellows who are relegated to making a living in such a vicious way. Too, I must admit I have a certain appreciation of boxing. Having said this, however, I disagree with at least some of your positions. First, I don’t see UFC as “pseudo-extension of a good sport”, no more than, say, football is an extension of rugby. I think each stand on their own. Second, the argument that boxing has rules and UFC does not, is unsupported. True, UFC rules may be more liberal, i.e., no guns, knives or blunt instruments, but there are rules. I presume if an opponent were unconscious, the ref wouldn’t allow an aggressor to keep pounding him. Finally, there is the matter of slippery slope. I assure you there are many out there quite capable of assembling a very compelling case that boxing is barbaric and vicious and as such ought to be outlawed. You seem to dismiss rather lightly the “occasional deaths” and “extensive trauma.” Again, many non-boxing fans likely feel that sports that result in “occasional deaths are too violent to condone. UFC may be ugly, unsophisticated and brutal, but there is enough libertarian in me to say if consenting adults consent, have at it. In other words, be careful of what you wish for. Thanks for listening and keep up the good work. Edward G. Wright, CPCU President & CEO, W. J. Cox Associates, Inc. 9600 Main St., Suite Three, Clarence, NY 14031-2093 **** ...Speaking of the arts, in this issue we present poet Stan Drescher in praise of public adjusters. Not sure of the rhyme and reason. You decide. [IA] 4 May 20, 2013 / INSURANCE ADVOCATE









VOLUME 124, NUMBER 10 MAY 20 2013

EDITOR & PUBLISHER Steve Acunto 914-966-3180, x110 CONTRIBUTORS Peter H. Bickford Jamie Deapo Michael Loguercio Sari Gabay-Rafiy Lawrence N. Rogak N. Stephen Ruchman Jerome Trupin, CPCU PRODUCTION & DESIGN ADVERTISING COORDINATOR Creative Director Gina Marie Balog 914-966-3180, x113 SUBSCRIPTIONS P.O. Box 9001, Mt. Vernon, NY 10552 914-966-3180, x126 PUBLISHED BY CINN Group, Inc. P.O. Box 9001, Mt. Vernon, NY 10552 (914) 966-3180 | Fax: (914) 966-3264 | President and CEO Steve Acunto


INSURANCE ADVOCATE® (ISSN 0020-4587) is published bi-monthly, 21 times a year, and once a month in July, August and December by CINN Worldwide, Inc., 131 Alta Avenue, Yonkers, NY 10705. Periodical postage paid at Yonkers, NY and additional mailing offices. POSTMASTER Send address changes to Insurance Advocate®, PO Box 9001, Mt. Vernon, NY 10552. Allow four weeks for completion of changes. SUBSCRIPTION RATES $59.00 US, Canada $65.00, International $110.00. TO ORDER Call 914-966-3180, fax 914-966-3264, write Insurance Advocate® PO Box 9001, Mt. Vernon, NY 10552 or visit INSURANCE ADVOCATE® is a registered trademark of CINN Worldwide, Inc. and is copyrighted 2013. All rights reserved. No part of this magazine may be reproduced in any form without consent. Trademark registered U.S. Patent and Trademark Office.

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By Peter H. Bickford

Disappearing Act


hat do you do when you do not like the statutory format of a required report? The options would seem to be to comply with the reporting requirement, ignore the law and be punished for failing to comply, or change the requirement. If you are a licensed insurance company, broker, agent

bureau, 7 paragraphs on the health bureau and 6 paragraphs on the life bureau (compare this to the 8 pages devoted to the technically non-existent liquidation bureau!). The remainder of the narrative was primarily about the structure of the DFS and not about the businesses it regulates (interestingly, the banking division

Like so much of the focus of the DFS these days, new section 207 of the Financial Services Law is primarily banking oriented, and is one more example of a disturbing trend of the current administration to diminish the role and presence of the insurance business in New York. Peter H. Bickford

or other regulated entity, the answer is usually to grumble and comply. If, however, you are the superintendent of financial services you simply get the requirements changed. Last year I wrote about the diminished annual report of the superintendent to the New York legislature and the governor on the insurance business in the state, and suggested that it failed to meet the intent if not the letter of the law (IA, June 18, 2012). The report on the insurance business was a mere shadow of prior reports in terms of scope and content. For instance, the last annual report of a superintendent of insurance, for the calendar year 2010, was 235 pages long filled with complete narratives and supporting tables and schedules for the business overseen by each bureau of the department, including over 55 pages on property business alone. The first annual report of the superintendent of financial services for calendar year 2011 – comprising the reports for both insurance and banking — was a total of 118 pages: 41 pages of narrative and the rest various charts and schedules. Of the 41 pages of narrative, a grand total of 3 pages were devoted to the insurance division, including just 4 paragraphs (paragraphs – not pages!) on the property 6 May 20, 2013 / INSURANCE ADVOCATE

portion of the report was almost exactly the same in terms of content and length as prior banking department reports). Naturally I was curious about how the report would look this year — to see if there would be any significant changes, additional deletions or improvements. However, when I went to check the operative statute – Section 206 of the Insurance Law — it was gone! After a bit of research I discovered that Insurance Law Section 206 had been repealed last July and replaced by a new Section 207 of the Financial Services Law combining the reports on the banking and insurance businesses into one report. With the creation of the DFS merging banking and insurance, requiring a single report makes sense, and at first blush it appears to be a simple case of moving the separate banking and insurance requirements into one provision under the relatively new Financial Services Law. Of course, that would be too easy! Like so much of the focus of the DFS these days, new section 207 of the Financial Services Law is primarily banking oriented, and is one more example of a disturbing trend of the current administration to diminish the role and presence of the insurance business in New York.

The bulk of the new section goes into great detail regarding the required reporting of banking activities for the preceding year. The new law, however, continues to deemphasize the scope of reporting required by the DFS on the business of insurance. The real kicker in new section 207, however, is that it extends the time for filing the report from May 15 to June 15. As a result there is no report to review at this time, and by the time it is available to review, it will be substantially irrelevant and stale. Why does the DFS need an extra month to do a report that is less than half the size and content of prior reports? By comparison, licensed insurance companies will not only have been required to file their detailed 2012 statutory statement, but also their first quarter 2013 statements, before the DFS has to file its summary report with the legislature. An equally important question: what was the legislature thinking in approving this change? The required report is a report to the legislature as well as to the governor. The legislative session usually ends by the end of June. Of what value is a report to the legislature on a regulated business that is not required to be filed until the end of session? One of the required elements of the report is that it should contain “legislative recommendations that the superintendent deems necessary or desirable.” Is this a hollow, meaningless requirement? If the report is supposed to have value to the legislature, shouldn’t it at least be timely? Following my review of the first annual report by the superintendent of financial services last year, I made a couple of Freedom of Information Law requests to see if it was possible to fill in some of the gaps in the report. The results were a mixed bag. I managed to get some information that had been included in the old insurance department reports but omitted from the DFS report. For example, one of the schedules that had routinely been included in prior insurance department reports but was deleted from the DFS report was a schedule of continued on page 8

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[ INSIGHT ] continued from page 6

employees of the DFS. Through a Freedom of Information Law request, I obtained a copy of the schedule for 2011, which showed that the DFS had a total of 1346 employees, 1039 in the New York office, 275 in Albany and 32 in other offices throughout the state. Of the 1346 total, 742 were examiners, 83 attorneys, 65 actuaries, 231 other professionals, 54 investigators and 171 support staff. These numbers are for the entire DFS, including banking, insurance and consumer affairs (a comparison to the 913 total employees of the insurance department at the end of 2010 is not entirely possible because of cross-over and pooling of assignments under the DFS). It is not clear why information like the schedule of employees was not included in the DFS report, or why the bulk of the other information removed from the old insurance department reports was removed. It could not be because of the

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difficulty in compiling the information or its complexity. The templates already existed, and the updated information readily available. And the DFS had no problem replicating and updating the banking department piece of the report. This is just one small example of information not included in the DFS report. The DFS denied my Freedom of Information request for other, even more significant information about the insurance business. More on these denied requests in a future column. The disappeared information would have been of value to the recipients of the report – particularly the legislature — and the general public, providing significant insight into trends, strengths, weaknesses, developments and effectiveness of the business of insurance in New York and of its regulation. We can only hope that the DFS will eventually understand the importance of all the businesses it regulates. One way it can do this is by restoring the report to its former content and value. [IA]






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By Jerome Trupin, CPCU

$41.7 Million Liability Judgement Mediation for Disputed Sandy Claims More on Fund Transfer Fraud This is current events month. While the topics aren’t closely related, they’ve all been in the news or on my desk in the past month.

$41.7 Million Liability Judgment for Injury to One Person The headline read: “Conn. Student Disabled On School Trip Wins $41.7 Million.”1 My first reaction: “Must have been an awful injury.” Second: “There are probably some lessons here for insurance people.” Both were correct. Cara Mann, a 9th grader at The Hotchkiss School, a prestigious private school in Lakeville, CT, was bitten by a tick while a school trip in China. She developed encephalitis and is now brain-damaged and unable to speak. We can’t weigh the facts—that was the jury’s job and will ultimately be reviewed on appeal—but we can look at the risk management and insurance aspects. The first line of defense is loss control. Alerting parents and students to potential hazards and recommending protective measures is a winning strategy for everyone. If this was, in fact, an area known to be infested with disease-carrying insects as the plaintiff ’s attorney alleges, warnings and precautions were called for. The School’s attorney’s response that “…tickborne encephalitis is such a rare disease that it (the School) could not have foreseen a risk and could not be expected to warn Munn or require her to use protection against it”2 is weak. Pro-active preparation is always the best way to treat and ameliorate risk. Many organizations require that the participants and/or their parents sign waivers. These are of limited legal effectiveness; courts are often unwilling to enforce them. Their main value is alerting participants to the

The first line of defense is loss control. Alerting parents and students to potential hazards and recommending protective measures is a winning strategy for everyone.

risks and potentially discouraging them from suing when something does happen. As to insurance coverage, this case points up the need for world-wide coverage and high liability limits. ISO CGL coverage provides world-wide coverage IF the insured’s responsibility to pay damages is determined in a suit on the merits in the US or other covered territory. In a case such as this—the trial took place in Bridgeport, CT—the typical CGL policy would provide defense and indemnity, up to the policy limit. Two caveats: (1) Not every CGL policy provides this much world-wide coverage. Some are limited to accidents that occur in the US, in others designated location endorsements can restrict coverage even for policies that appear to afford world-wide coverage. (2) In almost all CGL policies, if the “suit on the merits” takes place in a foreign court a subsequent suit in the US to enforce that judgment is not covered. Awards in the US are more generous and US tort law is more favorable to plaintiffs, so most accidents involving a company that doesn’t have a permanent presence in the foreign country will be brought in US courts. Nevertheless, an insured with an obvious foreign exposure, such as a

1 2 Ibid

10 May 20, 2013 / INSURANCE ADVOCATE

continued on page 12

Jerome Trupin

Jerome Trupin, CPCU, is a partner in Trupin Insurance Services located in Briarcliff Manor, NY. He provides property/casualty insurance consulting advice to commercial, non-profit and governmental entities. He is, in effect, an outsourced risk manager. Jerry has been an expert witness in numerous cases involving insurance policy coverage disputes and has taught many CPCU and IIA courses. Jerry has spoken across the country on insurance topics and is the co-author of over ten insurance texts used in CPCU and IIA programs including Commercial Property Risk Management and Insurance and Commercial Liability Management and Insurance. He regularly contributes articles to CPCU Interest Group Newsletters, the Insurance Advocate, and other publications. He can be reached at Thanks to Jerry Trupin for this article and to the CPCU Society’s Risk Management Interest Group newsletter for letting us reprint it.

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[ EXPOSURES AND COVERAGES ] continued from page 10

sponsored trip to a foreign country, should consider foreign coverage. These policies are readily available, reasonably priced, and can cover foreign property and auto liability as well as general liability.3 Often the insured’s umbrella/excess liability policy can cover over the foreign policy. Even more important: reexamine how high to set umbrella/excess liability limits. The award against Hotchkiss School may be reduced on appeal or even reversed, but it shows what’s possible and that’s what insureds should be prepared for. Tell your clients about the problem. I encourage clients to consider at least $50 million umbrella/excess limits. Breaking News: $130 Million Judgment as I was getting ready to submit this column, I saw a report of a $130M medical malpractice award against Saint Charles Hospital in Port Jefferson, NY.4 Sadly, this was another case involving a severely disabled child. Awards for medical malpractice tend to be higher than other types of cases, but the common element in both these cases is injury to a child. A child with devastating injuries tugs at the jury’s heartstrings and the defendant’s purse strings. Every organization has an exposure to claims by injured children— insureds need high excess liability limits. Go-Figure Department: The April 6, 2013 issue of the Insurance Advocate carried a story noting that St. Charles Hospital received the 2013 Risk Management and Safety Best Practices award from Physician’s Reciprocal Insurers.5

Mediation of Disputed Sandy Claims in New York and New Jersey Mediation of disputed Sandy claims has been mandated by both New York and New Jersey.6 This can be an effective way to resolve difficult claims. Chances are you

Breaking News: $130 Million Judgment as I was getting ready to submit this column, I saw a report of a $130M medical malpractice award against Saint Charles Hospital in Port Jefferson, NY. and your clients have never been involved in mediation, so some general information may be helpful: • Mediation is non-binding. The mediator does not impose a decision. • Mediation is an informal dispute settlement process run by a trained third party mediator. It’s intended to bring the parties together to clear up misunderstandings, find out concerns, and reach a resolution. • During the mediation, each side presents its view of the issue and the mediator attempts to work out a settlement. The mediator may meet separately with each side at some point. • At the end of the process, the mediator can present his or her findings and propose a potential solution.7 “Mediation” and “arbitration” are often used interchangeably, however they are different. Most importantly, an arbitrator does make a decision, which can be either binding or non-binding. Arbitration is more like an informal court proceeding and can involve witnesses, experts, etc.)8 If the parties can’t resolve the dispute by mediation, they retain whatever rights they had prior to the mediation. In an insurance setting that includes the right to demand appraisal and the right to sue. Sandy mediation expenses in New York and New Jersey will be will be paid by the insurance company. Mediation can

be conducted face to face, by video conference, or telephone conference, depending upon what is agreed between the insurer and the insured. I think a face-to-face meeting is the best. If mediation is requested: an insurer must participate in good faith, send a representative with claims settlement authority, and be prepared with a reasonable explanation if it does not alter its original decision concerning the claim. The mediation program also does not apply to National Flood Insurance Program claims. This is a major shortcoming for Sandy disputes as many will involve NFIP claims. Unfortunately, New York State cannot control Federal NFIP adjustments. The mediation program also does not apply to disputes that have been submitted to appraisal or to claims where civil actions have been filed against the insurer. Insurers are required to notify insureds of their right to a free appraisal when they deny a claim in whole or in part, when the insured notifies the insurer that he or she disputes the settlement offer, or if the insurer has not made an offer to settle with 45 days after its receipt of a proper proof of loss and requested supporting documents. You’ll be getting calls from insureds when they receive these notices. Here are some points you’ll want to discuss with them: • Prepare, Prepare, Prepare. It’s important for the insured to be prepared with a cogent statement of its position. • Most insureds will need assistance in preparing their presentation. Brokers, public adjusters, and insurance attorneys can be helpful. • The insured can have someone accompany him or her, but there is no requirement that the insured be represented by an attorney or anyone else. Florida and Louisiana have had mediation programs for all property claims for continued on page 14

3 In addition to the “suit on the merits in the covered territory” restriction, ISO and most other insurer auto liability policies are limited to coverage for private passenger cars leased, rented, hired, or borrowed without a driver. That can be a problem. For example, if school or other organization runs a trip there will most likely be some travel using buses or other vehicle that come with a driver. Just what the school’s responsibility would be in the event of an accident is for the courts decide. I’d like to let an insurance company bear the risk of an adverse decision. 4 “New York Family Awarded $130M in Medical Malpractice Lawsuit” Insurance Journal 4/19/03 5 “PRI Names St. Charles Hospital Winner of Risk Management and Patient Safety ‘Best Practices,’” Insurance Advocate, April 6, 2013 page 28 6 These comments are based on the New York regulations. 7 http:// 8

12 May 20, 2013 / INSURANCE ADVOCATE

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[ EXPOSURES AND COVERAGES ] continued from page 12

several years. I emailed two Florida public adjusters asking about their experience with the program. One responded that he found it a successful procedure. Most of those he participated in were “fairly and professionally conducted.� The other had a more mixed experience: “we do resolve some claims but it is usually not for a number I am happy with.� Both felt that it was worth trying as in Florida, like New York and New Jersey, the insurance companies pick up the tab.9

More on Electronic Funds Transfer Coverage Insurance and Loss Control A client, the head of a real estate management firm, questioned why we recommended increasing the firm’s funds transfer fraud coverage limit. “After all,� he said, “we maintain separate accounts for each of the buildings and the maximum balance in any one account is much less than our current limit.�

I responded by pointing out the counter-intuitive definition of occurrence in crime insurance. It typically reads: ...�Occurrence� means: (1) An individual act or event; (2) The combined total (emphasis added) of all separate acts or events whether or not related; or (3) A series of acts or events whether or not related (emphasis added); committed by a person acting alone or in collusion with other persons‌ Thus, depending on the exact nature of the claim, an insurance company might argue that 20 thefts of $50,000 each on the same or different dates from the same or different bank accounts by one or more persons are not 20 losses of $50,000 each, but one loss of $1,000,000. Our client instructed his broker to increase the limit. I also suggested that he talk to his bank about loss prevention. When he did, his bank recommended a program known as Positive Pay. Positive Pay is an automated fraud detection tool offered by the Cash

Management Department of most banks. The company transmits a daily list of issued checks. When checks are presented for payment, the bank compares them electronically against the submitted list. If a check is presented that does not have a match, the bank sends a fax or an image of the item to the client and the client instructs the bank to pay or return the check.10 There was an excellent article on cyber theft from the Journal of Accountancy. It’s dated October, 2010. Given the rate of change in the cyber-world, it may be somewhat out-of-date. Nevertheless, it is a good description of the problem. The authors list insurance as one of the measures needed to cope with fund transfer fraud and recommend an amount of insurance equal to the maximum exposure. Sending clients the article is a good way to open up the discussion fund transfer fraud and crime insurance in general. You can find it at: .htm [IA]

9 Based on emails from Charles R. “Dick� Tutwiler, Tutwiler & Associates and Greg Roover, Claim Concepts, Inc 10 The description of Positive Pay is from

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Major Industry Events No Insurance Pro Should Miss


n June 6, the Long Island Insurance Division of the UJAFederation of New York’s 2013 Annual Dinner will take place at Shelter Rock Jewish Center in Rosyln, N.Y. I’m very excited about this event, not just because I co-chair it with my good friend, Justin Fries, who also sits on the PIANY

insurance departments, despite their seemingly similar fields, is fraught with discrepancies that might not be obvious to the general public. His career is equally impressive; starting as chief counsel to Sen. Charles Schumer on the Senate Judiciary Committee, Lawsky went on to serve as deputy counselor and special assistant to

I am very proud to be a part of UJA, which…most recently, made some $13 million available to our network of agencies, synagogues and day schools to provide financial assistance, temporary housing, food and more to New Yorkers struggling after Hurricane Sandy. N. Stephen Ruchman

board, but because this year, we will honor two very well-known and illustrious individuals who represent our industry and state with distinction: Amy Feller, senior vice president of the Chubb Group of Insurance Cos. and Benjamin Lawsky, the first superintendent of financial services in New York state. I can’t think of two more worthy and reputable individuals to honor. Over two decades, Feller has become a respected leader for Chubb, where she started her career as a Personal Lines Underwriter and moved up through the ranks of that company to her now leadership position. She graduated from University of Albany with a degree in Business Administration and then earned her MBA from Fordham. Her substantial charitable work includes previous service as co-chair of the UJAFederation. In 2009, PIANY recognized her as Industry Professional of the Year at MetroRap, and the National Association of Insurance Women named her Outstanding Achiever in 2007. Lawsky, a graduate of Columbia College and Columbia Law School, will also be honored with the UJA Humanitarian award. Without doubt, he has one of the most visible and challenging positions in our industry. New York is one of the financial capitals of the world and the comingling of the former banking and 16 May 20, 2013 / INSURANCE ADVOCATE

then-Attorney General Cuomo. Prior to that, he spent more than five years as an assistant U.S. attorney in the Southern District of New York, where he prosecuted white collar crime, organized crime, and terrorism cases. I am very proud to be a part of UJA, which has always worked to improve our community through charitable donations, volunteerism and economic development. Most recently, we made some $13 million available to our network of agencies, synagogues and day schools to provide financial assistance, temporary housing, food and more to New Yorkers struggling after Hurricane Sandy. And, we helped mobilize thousands of volunteers in the recovery efforts. I’m looking forward to the event and hope to see more friends and colleagues from this industry than ever. This must be conference season, because less than a week after the UJA dinner, PIA of New Jersey and New York hold the 2013 Joint Annual Conference in Atlantic City, June 9-11. With more than 2,000 expected to attend, this event is the Northeast’s biggest conference in our industry. The show gets bigger and better every year—participants have fun on the shore, network, meet new markets and vendors, and they can earn up to 24 CE credits, including bridge credits, if they take advantage of the self-study course

beforehand with the on-site exam. The PIA conference concludes with one of the industry’s most heartwarming events—the Fun Run on the boardwalk, to benefit Special Olympics of New Jersey. Appropriately this year, PIA will focus the conference on Superstorm Sandy. It will be good to see old friends and hear from so many professionals who learned hard lessons about disaster preparedness. While times of crisis build bonds and bring out the best in people, I am proud to say our industry has not forgotten or left unattended those still in need or rebuilding after the storm. Both of these events will give us more opportunity to do the right thing. I know I say this often, but it’s true— ours is a relationship business. Events like the UJA Dinner and the PIANJ/PIANY Joint Annual Conference are great places to nurture important professional relationships as well as true friendships. I’m looking forward to seeing you at both! [IA]

N. Stephen Ruchman, CPIA, is a retired partner of B&B Coverage LLC. A past president of the Professional Insurance Agents of New York State Inc., he is an active supporter of PIANY, and has sat on, or chaired, nearly every committee including the Executive Committee and the Long Island Advisory Council and PIANY’s Political Action Committee. A graduate of Michigan State University, with a major in insurance, Ruchman is past president of the Peninsula Counseling Center and a member and past president of the Rockville Centre Chamber of Commerce board of directors. He is division chair for the Insurance Division of the United Jewish Appeal and has served on the business advisory board of The First National Bank of Long Island. He can be reached via e-mail at

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In Praise of the Public Adjuster A sometime poet takes poetic license and hymns the misunderstood P.A.


tan Drescher is easily the only poet ever to sing the praises of the Public Adjuster.Many great poets worked in the financial services at one point or another (T.S. Eliot, Wallace Stevens et al)but really had little of beauty to write about insurance. Eliot, in fact, dedicated a portion of the Waste Land to a broker who seduces a secretary – not a beautiful image.

But here we have Stan, the Bard of Business, who actually committed an entire Broker Licensing course to rhyme so his students would be able to recall the rules. Clever man. Enjoy this unusual strophe to the PA. SA


You don’t think of insurance Until you have a loss But without assistance It’s worse than a divorce

Appointed by the company Your agent is their choice So it’s best if you’ve a loss To have your own voice

In confusion the insured Can miss a whole collage In a dark dingy corner In their trash filled garage

All policies have clauses Not easy to discern But a trained professional Will help you as you learn

The agent that you’ve chosen By law is on their side And so if push comes to shove With them he must abide

Sometimes when there’s a problem They’ll climb up on the roof And will measure every inch ‘Till they find needed proof

Florida law protects you Should you face resistance And none can deny you When you seek assistance

Take note that the adjuster Who comes to see your loss Was sent by his employer Your company, his boss

He’ll rent a sturdy dumpster To cart away debris And find you other quarters As long as you agree

The P.A. only earns a fee On what he can collect But if that isn’t possible He’ll still earn your respect

The “Principle of Indemnity” Says “they must make you whole” And your P.A. is obliged To guarantee that goal

Even if you’ve had a loss Within 36 months It still can be reopened But should be done at once

He’s certified and bonded With fingerprints on file And with knowledge he’s attained He’ll fight your denial

P.A.s can’t void exclusions When they’re called to your loss So always have the peril Known as proximate cause

You won’t see “An Act of God” It’s not on any form They do pay for the peril And hurricane’s a storm

He strives for prompt settlement By filing forms on time And with the Exactimate Will fight for every dime

Property must be maintained Don’t let it rust or fade And loss due to wear and tear Will not ever be paid

A TV ad perhaps will show Exclusions unrevealed And ‘tho a picture never lies Much has been concealed

Even when a loss seems small It’s no less traumatic But when someone holds your hand Results can be dramatic

A policy condition Is your obligation Inventory must be made A standard regulation

Even with a loss that’s tough P.A.s evaluate They weigh all the ashes And settle by the weight

A company cannot exploit Those who are destitute Knowing they’re unable To protest or refute

But listing inventory Can be tedious And if you’ve no one to help It’s quite laborious

So don’t be a number But be realistic With your own adjuster You’re not a statistic

P.A.s crawl into attics And find much on those floors Old paintings, toys and games And once, a chest of drawers 18 May 20, 2013 / INSURANCE ADVOCATE


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PIA Members Report Significant Underwriting Changes in Homeowners Insurance Market Price Increases In Homeowners, Commercial Property and Liability Coverages


uring PIA’s Market Trends Survey, more than 400 association members from Connecticut, New Hampshire, New Jersey and New York responded to questions regarding changes in pricing, remarketing, underwriting, nonrenewals and the use of wholesalers. The results dictate a significant change in doing business, indicative of a market shift. Overall, respondents reported that they are seeing a pricing increase in the range of 6 to 10 percent on new business and renewals, that coupled with the fact that the changes in underwriting are being viewed as significant or extreme, is indicative that the market is most undoubtedly shifting. The survey was conducted in late March through early April 2013. A breakdown of the lines of business follows.

Homeowners Homeowners appears to be most affected by the apparent market change. Ninety-five percent of PIA members responding in Connecticut, New Hampshire, New Jersey and New York indicated new business price increases in the range of 6 to 10 percent. When asked “To what extent are underwriting guidelines becoming more strict?” more than 45 percent of the responses indicated a significant or extreme change in the underwriting approaches to homeowner policies. This is a direct result of the recent changes in the market, including the result of Superstorm Sandy. Approximately 45 percent of those surveyed identified a moderate to extreme increase in nonrenewals. These numbers are even more dramatic for businesses in the coastal areas.

Auto It appears personal auto has been least affected by the changing market. This line of business saw the lowest price increase range of any in the survey. PIA members 20 May 20, 2013 / INSURANCE ADVOCATE

Commercial liability, like personal auto, appears to be a line of business less affected by the market shift. The average response reflects a price increase range of 6 to 10 percent.

indicated they are witnessing an average price increase of 0 to 5 percent on new business. Eight percent of respondents have seen price decreases—this represented the largest price decrease in the survey. When asked if the underwriting guidelines are becoming stricter, survey respondents reported that auto guidelines remain relatively unchanged: Approximately 50 percent said underwriting changes are minor or have stayed the same. Similar results were found for the frequency of nonrenewals with 71 percent of members reporting the same or minor increases in occurrences.

Commercial Property Commercial property, like homeowners, appears to be suffering the greatest impact by the shifting market—no doubt recent storms (Irene and Sandy) are partly to blame. Ninety-six percent of respondents reported pricing increases on new business, while 97 percent reported increases on renewal business. The most frequent price increase reported (more than 50 percent) was in the range of 6 to 10 percent, and another 21 percent report-

ed increases in the range of 11 to 15 percent. Underwriting guidelines seem to be shifting for this line of business, with 30 percent of respondents significant or extreme underwriting guidelines. There does not seem to be a shift in the nonrenewal activity—respondents report minor to moderate changes. It appears the carriers are willing to keep the current business on the books—but at a price.

Commercial Liability Commercial liability, like personal auto, appears to be a line of business less affected by the market shift. The average response reflects a price increase range of 6 to 10 percent. However, those responses also reflected the second-lowest survey numbers—right behind personal auto. In addition, more than 60 percent of respondents reported no change or a minor increase in nonrenewals. When asked about underwriting becoming more strict, commercial liability scored second lowest (again behind personal auto) with a response indicating a minor to moderate increase.

Commercial Property/Liability Remarketing When asked, “What percentage of your business are you having to remarket, and if this was an increase over last year?”— the results are clear: Ninety-three percent of the responses indicate an increase of remarketing. PIA members tell us they are remarketing more than 26 percent of their business, which represents the unexpected largest response category. However, overall members responded that, on average, they are remarketing 11 to 15 percent of their business.

Wholesalers Even though underwriting is stricter and prices appear to be rising, the use of

[ SURVEY ] wholesalers has not dramatically increased. Thirty-seven percent of respondents indicated that they are placing less than 5 percent of their business through wholesalers. With those numbers, 20 percent of respondents also stated that this is a decrease from the previous year.

Underwriting The survey asked, “To what extent are underwriting guidelines becoming more strict?” Approximately 30 percent of the survey responses for auto, homeowners, commercial property and liability indicated, “a significant or extreme” increase in underwriting strictness. Homeowners has felt the greatest increase in underwriting strictness—only 6 percent of respondents indicated the same or no change. By contrast, 22 percent of respondents indicated the same or no change in underwriting strictness for personal auto.

Nonrenewals Closely mirroring the results of the underwriting category, 35 percent of respondents saw no change with nonrenewals/cancellations for personal auto and homeowners captured the greatest increase with 45 percent seeing moderate to extreme changes in the occurrence of nonrenewals/cancellations. The PIA Market Trends Survey was open to all association members in Connecticut, New Hampshire, New Jersey and New York. The survey was open for three weeks and received more than 400 responses. PIA plans to run this survey again at the end of the year to gauge the movement of the market and to see where and how much of a shift is occurring. The survey’s full results can be found online. For more information, log on to the PIA website (, click the “Government, Industry Affairs” tab then “2013 Market Trends Survey.” [IA]

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Reinsurance Association of America Elects 2013-2014 Officers


ASHINGTON, D.C.—Tad Walker, President and Chief Executive Officer, PartnerRe North America, was elected chair of the Board of Directors of the Reinsurance Association of America (RAA) at the 45th Annual Meeting of Members on April 26, 2013 in Sea Island, Georgia. Elected to serve with Mr. Walker are vice chair Tad Montross, Chairman and Chief Executive Officer, General Re Corporation, and Pina Albo, President, Reinsurance Division, Munich Reinsurance America, who will serve as secretary-treasurer. Mr. Walker is also chair of the Council of Reinsurers and Brokers, and Robert Hatcher, Executive Vice President and National Managing Director, U.S. Branch Network, Willis Re, was elected co-chair of the Council of Reinsurers and Brokers. Tad Walker is President and Chief Executive Officer of PartnerRe North America. Mr. Walker has been with PartnerRe since 2002. Prior to his appointment to President and CEO of PartnerRe North America, he held the position of Executive Vice President and Chief Underwriting Officer of PartnerRe U.S., with overall management responsibility for all underwriting activities in the U.S. business units. Before joining PartnerRe, Mr. Walker was Senior Vice President at American Re, responsible for the company’s Latin American operations and international financial products. He worked for Bacardi International for ten years, first as Risk Manager for the Company and then managing insurance investments. He earned a B.S. from Georgetown University’s School of Foreign Service. Tad Montross is Chairman and Chief Executive Officer of General Re Corporation. Prior to assuming that role in April 2008, he was President and Chief Underwriting Officer of General Re since 2001. Tad joined General Re in 1978 as a Casualty Facultative Underwriter. He was promoted to Senior Vice President in 1992. Tad is a graduate of Harvard College. He currently serves on the Executive

Committee of theBoard of St. John’s University’s School of Risk Management and the Executive Committee of the Board of Trustees of the American Institute for CPCU. He has served on the Board of Directors of the National Disaster Coalition and the Insurance Information Institute, and on the Advisory Committee of the Chicago Board of Trade. Pina Albo is President of the Reinsurance Division, Munich Reinsurance America, overseeing the Company’s reinsurance operations, and is responsible for developing and achieving the strategic and business plans of the Division and enhancing Munich Re’s relationships and presence in the market. Prior to joining Munich Re’s U.S. operations in January 2008, Pina held various positions with the Munich Re Group for over 15 years. Ms. Albo earned a Bachelor of Arts from the University of Winnipeg, a Bachelor of Law from Osgoode Hall Law School of York University in Toronto, and a Masters of Law from L’Université d’AixMarseille III in Provence, France. Ms. Ablo was named Insurance Woman of the Year by the Association of Professional Insurance Women (APIW) in 2011. Robert (Trey) Hatcher is Executive Vice President and National Managing Director, U.S. Branch Network, Willis Re, responsible for Willis Re’s 13 branch offices in the United States. He was appointed to that position in 2007. Trey is also Senior Account Executive responsible for the production of new business and account management. He is based in Philadelphia. Before joining Willis in 1994, he was Vice President and Principal with Towers Perrin. Trey began his career with Chubb & Son. Trey is a graduate of Hampden-Sydney College. [IA] The Reinsurance Association of America is the leading trade association of property and casualty reinsurers doing business in the United States. RAA membership is diverse, including reinsurance underwriters and intermediaries licensed in the U.S. and those that conduct business on a cross-border basis. The RAA represents its members before state, federal and international bodies. INSURANCE ADVOCATE / May 20, 2013 21


IIABNY Elects Andrew Kaufman Chair of the Board Albany insurance agent is trade group’s top elected officer


ooperstown, N.Y. — the New York City metro and “Many of you may know The Independent Insuburban areas; that three out of four surance Agents & Bro• Mark Gar velli, vicekers of New York (IIABNY) president of Walsh automobile insurance today elected Andrew J. Duffield Companies in clients start their search Kaufman as its chair of the Buffalo, New York, to for insurance on the Web. board for the 2013-14 term. represent the central and Kaufman took the oath of ofwestern areas of the state; It’s critical that independent fice during a ceremony fol• Charles P. Shank, CIC, agents, through their lowing IIABNY’s Annual president of Shank & recognized and valuable Business Meeting, held at The Falvey Insurance, Inc. in Otesaga Resort Hotel in East Greenbush, New Trusted Choice® brand, Cooperstown. Members also York, to represent the ANDREW KAUFMAN find a prominent place in elected and installed new ofstate’s Capitol District those web searches.” ficers and regional members and areas north; and of the board of directors. • Lane S. Rubin of The Kaufman is president of insurance ance marketplace in coastal areas in the Excelsior Group in Valley Stream, New agency Aurora, Inc. in Albany. A member wake of Superstorm Sandy. York, won a two-year term as an at-large of the IIABNY board of directors since He also stressed the importance of member representative on the Nominating 2008, he has chaired a task force on New Project CAP, a suite of programs and serv- Committee. This committee evaluates canYork’s troubled group self-insurance sys- ices designed to help independent agents didates for leadership positions and makes tem for Workers’ Compensation. He also and brokers reach online insurance shop- recommendations to the membership. served as a member of the board’s finance pers. “Many of you may know that three Earlier in the day, the IIABNY board committee. Previously, he held the top out of four automobile insurance clients of directors re-elected David G. Evans, positions in several insurance organiza- start their search for insurance on the CFP, of the Independent Insurance Agents tions, including the Capitol District Web,” he said. “It’s critical that independent & Brokers of America, Inc. in Alexandria, Insurance Community, the Independent agents, through their recognized and valu- Virginia, to a one-year term as a directorsInsurance Agents of the Capitol Region, able Trusted Choice® brand, find a promi- at-large. [IA] and Albany Insurance Day. nent place in those web searches.” Kaufman is active in charities such as The Independent Insurance Agents & Other officers elected and re-elected the Regional Food Bank of Northeastern to IIABNY’s executive committee for one- Brokers of New York, Inc. has represented New York. A product of the State year terms are: the common business interests of independUniversity of New York (SUNY), he cap• James D. Sutton, CIC, AAI, presi- ent insurance professionals since 1882. More tained the men’s varsity swimming team dent of James F. Sutton Agency Ltd. than 1,750 agencies and their 13,000 plus at the College at Oswego. He set school in East Islip, New York, elected chair- employees currently rely on the DeWitt, New York-based not-for-profit trade association records in three freestyle events and was elect. among the top finishers at the SUNY • R. Todd Rockefeller, partner of for legislative advocacy, continuing educaAthletic Conference championships three DeRosa, Rockefeller, Sohigian & tion and other means of industry support. consecutive years. He holds a bachelor’s Werdal, Inc. in Harrison, New York, In addition, most IIABNY members proudly identify themselves as Trusted Choice® degree from Oswego and a master’s degree elected secretary-treasurer. agents and brokers, a national consumer from the University at Albany. Kaufman stated several priorities in his IIABNY members also elected and re- brand uniting more than 21,000 independacceptance speech. Chief among them elected the following regional directors to ent agencies across the United States. For more information, go to www.trustedwere legislation to reform the use of cer- two-year terms: tificates of insurance; a prominent role for • Louis Atti, CPCU, vice-president of or agents and brokers in New York’s health The Evans Agency in Angola, New insurance exchange; increasing diversity York, to represent the central and within the insurance industry; improving western areas of the state; the relationship between insurance pro• Michael Coughlin, chief executive ducers and the New York State Insurance officer of Coughlin Group in Fund; and protecting the property insurLarchmont, New York, to represent 22 May 20, 2013 / INSURANCE ADVOCATE








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IIABNY Honors Outstanding Service at Cooperstown Event Awards Given at Insurance Producer Trade Group’s Leadership Dinner


ooperstown, N.Y.—The Independent Insurance Agents & Brokers of New York bestowed awards on a dedicated manager who keeps local associations running smoothly; a leader taking insurance education into the 21st century; a successful businesswoman who doubles as the supportive spouse of the group’s chair of the board; an energetic committee chairman; an insurance company executive who has been a true partner with agents; an agent who has become a tireless advocate for the effective use of technology; and two local trade groups who joined together to help their communities survive the worst storm in recent memory. New York’s oldest insurance producer trade organization presented the awards during the leadership dinner following its Annual Business Meeting at the Otesaga Resort Hotel in Cooperstown. Acting for the final time in his capacity as IIABNY chair of the board, Thomas J. Crowley presented the Chair’s Distinguished Service Awards to: • Patricia Calvert, executive director of the Independent Insurance Agents & Brokers of Suffolk County and the TriCounty Independent Insurance Agents Association. Crowley described Calvert’s contributions to the success of the two associations over many years of service. “She is one of the most dedicated and professional people I have ever had the privilege to work with,” he said, “and she is a friend to all who know her.” • Julie Crowley. Tom Crowley gave the award to his wife in recognition of her support for him during his term as IIABNY chair. Pointing out that she has a busy and successful career in real estate, he spoke of how she has picked up the slack at home during his frequent absences over the past year. • Kathleen Lawler, AAI, CIC, assistant vice-president of education for IIABNY. Crowley recognized Lawler’s successful guidance of the association’s 26 May 20, 2013 / INSURANCE ADVOCATE

education program. He noted that it has received several national awards during her nine years with IIABNY and has become a model for many other states. He also spoke of her efforts to spread IIABNY’s education programs across multiple delivery platforms. These include traditional classroom courses, webinars, streaming video and other forms of online learning. The association also bestowed the following awards: • David H. Borg of Borg & Borg, Inc. in Huntington, New York received the award for Outstanding Committee Chair. Crowley cited Borg’s work as chair of IIABNY’s Next Generation Insurance Professionals (“Next Gen”) committee. He specifically mentioned Borg’s successful events held in his region of the state, his travels around New York to meet young agents, and his trips to Albany and Washington, D.C. to meet with legislators. • Nick Steffey, founder and executive chairman of Narragansett Bay Insurance Company, Pawtucket, Rhode Island, received the Thom McDaniel Exemplar Award. The award recognizes an insurance company executive, manager or employee who support and advance the independent agency system. Crowley praised Steffey as “a company executive who exemplifies the way in which companies should work with agents.” He also cited the company’s performance during and after Superstorm Sandy last fall and Steffey’s efforts to increase insurance capacity for properties on the coast. • Edgar J. Higgins, Jr., CPCU, president of the Thousand Islands Agency in Clayton, New York, received the 1882 Fellow Award, IIABNY’s highest honor. This award recognizes significant contributions to IIABNY, the

insurance industry and the community. A former IIABNY president and state director for the Independent Insurance Agents & Brokers of America (IIABA), Higgins was the first chair of the Agents’ Council on Technology (ACT). In addition to his work as an insurance agent, he is a nationally-known instructor and consultant for agencies on technology matters. Most recently, he has spoken out about flaws in online insurance quoting processes for consumers. The Independent Insurance Agents & Brokers of Suffolk County and the TriCounty Independent Insurance Agents Association shared the award for Local Association of the Year. Crowley lauded the two groups’ work in the aftermath of Superstorm Sandy last fall. The groups worked together and separately to distribute vital information to their members and the communities at large; collaborated with public officials to find alternative housing for residents displaced by the storm; and sponsored forums where members could question representatives of insurance carriers and the Federal Emergency Management Agency about the storm. Both associations sent large numbers of members to meet with legislators in Albany and Washington, D.C., and have regular meetings with lawmakers in their district offices. [IA]

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A Tale of Two Hurricanes: What Does Katrina Tell Us About Sandy?


overnor Andrew Cuomo famously attracted controversy with claims that Hurricane Sandy was “more impactful” than Hurricane Katrina. Less impactful or not, the recovery from Hurricane Katrina, does, in fact, offer important lessons for the recovery from Sandy, which is just beginning. A first Katrina lesson is that the recovery process is likely to be lengthy, cumbersome, and frustrating. The Federal government does not have a consolidated, expedited procedure for allocating and spending disaster relief funds. Rather, funds are made available for emergency purposes from an alphabet soup of federal agencies, and state and local officials must contend with each separately. The Sandy relief bill includes appropriations to 18 different Federal agencies, including the Federal Emergency Management Agency (FEMA), the Department of Housing and Urban Development (HUD), the Department of Transportation (DOT) and the Army Corps of Engineers. Procedures for allocating and spending these funds can be lengthy and difficult to navigate, which makes it hard to spend money in a timely and coordinated fashion. Three years after Katrina, Louisiana and Mississippi had only spent slightly more than half of their FEMA funds for repairing or replacing public buildings and facilities. The recovery process in New York and New Jersey is thus likely to be lengthy, although hopefully shorter than that for Katrina. While the first installment of Katrina relief funds was approved by Congress less than a week after the storm hit, the Sandy relief bill got embroiled in Congressional deficit politics and took over three months, stretched over two Congresses, to enact. FEMA has made changes to its procedures, and President Obama has also appointed HUD Secretary Shaun Donovan to oversee the federal response to Sandy. HUD made initial allocations of the Community Development Block Grant (CDBG) funds approved in the Sandy relief bill within a week of their authorization, and has approved state plans for spending these funds in a similar time frame. It remains to be seen, 28 May 20, 2013 / INSURANCE ADVOCATE

Until policies and institutions better suited to dealing with large scale catastrophes can be put into place, future recoveries are going to be a bumpy ride. however, if these changes will produce improvements in the pace of recovery or will make programs fit together on the ground in an effective way. Second, the Katrina experience suggests that the politics around allocating and spending of relief funds can be, put mildly, contentious. One informed observer of post-Katrina politics has described the difficulty various levels of government had in working together as a “second disaster” that may have worse long term effects than the hurricane itself. The potential for political conflict and delay in the response to Sandy also seems high. Federal agencies made initial decisions about the allocation of funds between New York, New York City, New Jersey, and other states quickly, but substantial funds remain unallocated. These allocation decisions can be controversial: After Katrina, Louisiana’s Democratic Governor complained that the Republican Governor of Mississippi had received preferential treatment from the Bush Administration. The initial allocations of Sandy funds were earmarked for the worst hit areas in the worst hit states, but subsequent allocations are not, so future conflicts may arise. There is also potential for conflict over who controls recovery funds. After Katrina, Governors and legislatures in Louisiana and Mississippi feuded over authority. Closer to home, the re-building of the World Trade Center area after 9/11 has been marked by extended, rancorous debates. This conflict slowed recovery — nearly ten years after 9/11, more than 20 percent of the funds earmarked for recovery were still unspent. The Sandy recovery may lack the emotional intensity of the 9/11 debates, but it will be

spread over a wider geographic area than 9/11 and involve more elected officials, who can be expected to press claims for their particular version of recovery. These differences in policy preferences and political interests have already started to emerge. Governor Cuomo of New York State, Mayor Bloomberg of New York City, and Governor Christie of New Jersey appear to have different views on climate change and the appropriate mix of recovery strategies between rebuilding in place, retreating from areas prone to flooding, and large scale flood control. Cuomo and Christie are up for re-election within the next two years and are both mentioned as potential presidential aspirants in 2016, so they have competing political interests as well. The initial allocation of CDBG funds suppresses this potential conflict by giving both governors and the mayor independent control over a sizeable pot of money with no requirements for consultation or co-ordination. This arrangement may work well in the short run and allow recovery spending to proceed apace. It does not bode well, however, for decisions on longer term, larger scale issues such as climate change or large scale flood control, where a coherent regional response is required. Most of the lessons from Katrina for Sandy are sobering ones. The policies and institutions in place to deal with disaster relief are oriented towards short term response and recovery. It has proven difficult to manage longer term recovery in an efficient manner. Until policies and institutions better suited to dealing with large scale catastrophes can be put into place, future recoveries are going to be a bumpy ride. [IA] About the Rockefeller Institute of Government The Nelson A. Rockefeller Institute of Government is the research arm of the State University of New York. The Institute conducts fiscal and programmatic research on American state and local governments. Journalists can find further information on the Institute on the Newsroom page of our Website,

INSURANCE ADVOCATE / May 20, 2013 29

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Senate Targets Auto Fraud


LBANY, N.Y.—The New York State Senate passed legislation to crack down on auto insurance fraud which has led to injuries, even death, for innocent victims and costs hundreds of millions of dollars a year in higher premiums when New Yorkers already pay some of the highest auto insurance rates in the country. The Senate passed three bills that would significantly cut down on auto insurance scams by increasing penalties for those who commit or assist in the fraud and by giving more flexibility to insurance companies to prevent criminals from getting policies and continuing to commit auto fraud. “Auto fraud is a very serious problem that costs lives and costs New Yorkers millions of dollars,” said Senate Republican Conference Leader Dean Skelos (R, C, INassau). “The Senate has been passing bills to combat auto insurance fraud for more than a decade, yet, the Assembly has not acted on them while the problem has only grown worse. It’s time the Assembly pass these bills so they can be signed into law and consumers can save money by not having to pay the exorbitant rates that are caused by fraud.” The first piece of legislation would make it a crime to stage a motor vehicle accident with intent to commit insurance fraud. If a staged motor vehicle accident results in serious injury or death, the person who staged the accident could face a maximum of up to 25 years in prison. The bill is sponsored by Senator James Seward (R, C, IOneonta) (S. 3547), Chairman of the Senate Insurance Committee. “On March 22, 2003, Alice Ross, a 71 year old grandmother, was killed as the result of a staged auto accident. These ‘accidents’ are arranged and intentionally committed by criminals who then file fraudulent insurance claims for fake crash injuries and rob insurance companies and their policyholders,” said Senator Seward. “While the economic cost of such activity is staggering with no-fault insurance fraud estimated to cost insurance companies and their policyholders $1 billion per year, staged accidents also pose a serious public safety risk, as is demonstrated by the 30 May 20, 2013 / INSURANCE ADVOCATE

“Auto insurance fraud is costing New Yorkers millions of dollars, and it’s time that fair and honest members of our community stop paying for the crimes of others”

untimely death of Alice Ross,” continued Senator Seward. “Women and elderly drivers are in particular danger because they are often targeted for these accidents because they are less likely to be confrontational after an accident, thereby making it easier for criminals to engage in this activity.” “This bill would impose tough penalties on those who stage accidents, thereby deterring individuals from engaging in this dangerous crime. Not only would this help to contain no-fault fraud and reduce insurance premiums, but it will make us all safer,” explained Senator Seward. “New York State drivers should not have to drive down the road wondering whether someone might purposely drive into them for the purpose of engaging in insurance fraud,” said Senator Seward. According to the National Insurance Crime Bureau (NICB), insurers across the country reported a 102% increase in suspected cases of staged auto accidents between 2008 and 2011. The second piece of legislation passed by the Senate would make it illegal to act as a “runner” who steers accident victims toward crooked doctors who bill Medicaid for unnecessary medical treatments. Runners are key members of auto fraud rings. Under this bill, runners and their associates could face up to seven years in prison. The bill is sponsored by Senator Dean Skelos (R, C, I-Nassau) (S. 3033) and Assemblyman Gary Pretlow (D, WFWestchester) (A .4597). “A ‘runner’ is a person who is paid for each patient they send to a fraudulent provider. This can be a very rich incentive for them. The providers commit insurance

fraud by recruiting patients who do not need treatment or were not in a car accident, exaggerating illnesses, or, as is all too common, staging accidents,” said Senator Skelos. “Without the runners, the patient supply for fraudulent clinics would dry up, and New York residents could save tens if not hundreds of millions of dollars.” “Other states have for many years criminalized acting as a runner or soliciting or employing a runner to procure patients or clients. It is long overdue in New York, a state with one of the highest average car insurance rates in the nation,” said Assemblyman Pretlow. “This legislation is patterned on the New Jersey runner law and on the federal Medicare-Medicaid Anti-Kickback Act, both of which make it a crime intentionally to pay for patient referrals,” said Assemblyman Pretlow. “Such a measure is crucial in New York as a way to prevent fraudulent activity by drying up the supply of patients for clinics and other providers whose entire purpose is to bill no-fault insurance carriers without regard to the legitimacy of any particular claim. The use of runners is unfortunately common in the New York metropolitan area.” The third piece of legislation passed by the Senate to combat auto insurance fraud allows insurance companies to retroactively cancel policies taken out by people who commit auto fraud on newly issued private passenger and automobile insurance policies. The bill is sponsored by Senator Martin Golden (R, C, I-Kings) (S. 1959) and Assemblyman Carl Heastie (D, WFBronx) (A. 3774). “These criminals often take out policies and pay for them with bad checks or stolen credit cards just before they stage accidents. Under current law, insurance companies cannot cancel the policy and policyholders wind up paying for it through higher premiums. This bill would take that burden off honest consumers,” said Senator Golden. “Auto insurance fraud is costing New Yorkers millions of dollars, and it’s time that fair and honest members of our comcontinued on page 32

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munity stop paying for the crimes of others,” said Senator Golden. “This legislation will give insurance companies the right to revoke insurance policies for those who try to game the system.” “Automobile no-fault states have higher average premiums than tort states. One of the reasons for this is that fraud tends to be more prevalent in no-fault systems, as the rules under which they are implement-

32 May 20, 2013 / INSURANCE ADVOCATE

ed make it relatively easy for bad actors to submit fraudulent claims,” said Senator Golden. “Additionally, an accident can create a multiplicity of lawsuits, since providers and collection attorneys may initiate a lawsuit for each and every bill. New York’s generous no-fault benefits, with minimal oversight, provide huge incentives for unbundling of services and supplies.” “Staged accidents are one type of fraudulent claim that is becoming more and more prevalent in New York,” said

Senator Golden. “In many cases, actors procure a policy by submitting a bad payment (either using a nonexistent bank account or stolen credit card information). Most states allow the retroactive cancellation of a policy in the case of a reversed payment to prevent this type of activity. New York, however, does not permit retroactive cancellations; rather cancellations are currently only prospective in nature. That turns into a gold mine where no-fault is involved. The time between when the policy is ‘purchased’ and when it is cancelled provides ample opportunity for no-fault fraud.” “This bill allows for retroactive cancellation in New York of newly issued automobile insurance policies to prevent this type of fraud. This would bring New York in line with the other large no-fault states,” said Assemblyman Heastie. “In fact, only seven other states (AZ, CO, ME, MD, NC, and SD) do not allow for retroactive cancellation. Innocent victims of uninsured drivers (i.e. mandatory uninsured motorist coverage), would be covered under their own policy or the Motor Vehicle Accident Indemnification Corporation,” said Assemblyman Heastie. “The proposal would allow retroactive cancellation of the automobile policy, in the first thirty days, where the payment is made with insufficient funds or the identity used to procure the policy turns out to be fraudulent,” said Heastie. “The automobile insurers would be allowed to cancel a policy retroactively in these cases.” “By permitting retroactive cancellations, New York would join the great majority of other states, and would remove many of the incentives for staged accidents,” said Assemblyman Heastie. Last year, the longest-running auto insurance rip-off scam in history was busted by federal and New York City authorities. Three dozen people, including doctors, lawyers, and patients coached to fake injuries, are accused of stealing more than $279 million in accident benefits over five years. The ring allegedly exploited the State’s “no-fault” auto insurance law as their own giant state-sponsored ATM machine. In New York, vehicles registered in the State are required to carry insurance that lets drivers and passengers obtain up to $50,000 for accident injuries, regardless of fault. [IA]

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By Michael Loguercio

Google It!


s you know from reading my column for so long, every so often I am fortunate enough to happen upon some very interesting information that I enjoy sharing with those of you who enjoy my work. Today is no different! With gratitude to the “Agents Council for Technology” and “ACORD Users Group Information Exchange” (ACT/AUGIE) committee that I am a member of, I am happy to present to you this piece written by Matthew Marko of Progressive Insurance. This article is about Michael Loguercio how participation in Google+ can help an agency considerably, in maximizing its local search optimization. Google+ local business pages have replaced Google Places, and if a consumer’s search suggests local intent, Google includes Google+ local business pages in the search results. Matthew provides some great tips as to how an agency can get started with Google+ and use the tool to its full advantage. The article also contains a number of links to very helpful additional information that will help agencies increase their visibility online.

Why Google+ should be part of your agency’s online strategy If you’ve been following Google’s social experiment from afar, you may have lost Google+ in the shadow of social media’s 800 pound gorilla, Facebook. But before you dismiss the search giant as an also-ran in social, take note of Facebook’s own pet project, Graph Search. Facebook’s foray into search despite Google’s clear dominance (two out of every three searches online are conducted using Google1) reveals the cracks forming in the wall separating search and social. Both companies are preparing for when the wall comes tumbling down, and now’s the time to position your agency to capitalize. If Progressive’s marketing data hold true, many more agents are opting for a place on Facebook over Google+. Here’s 34 May 20, 2013 / INSURANCE ADVOCATE

your agency already has a Google+ local business page. why you should diversify by building a strong presence on both. Google+ is much more than social Google+ does have social strengths, such as the ability to easily segment and target communications to customers using Circles and host Hangouts with customers on insurance topics. However, for now the primary insurance agency benefit of Google+ is local search optimization. Americans conduct 3.6 billion local searches on Google each month, and Google+, acting as an online business directory, is the most effective way to capture those prospects.2 It’s also the best way to do so without having to compete with big brands’ multi-million dollar online advertising budgets. A key reason to engage with Google+ is to acquire new customers in a way that no other social media site or online directory can currently offer. From Places to Plusses Google reports that one in three searches have local intent, and 83 percent of consumers search online for local businesses.2 If a search query suggests local intent, Google includes the Google+ local pages in the search results, typically near the top. Formerly called “Google Places,” Google+ local business pages now include social elements as well, making an agency’s participation in Google+ (and customer interaction on the platform) a growing factor in showing up in local searches. Here are five steps to start taking advantage of Google+ for local search: 1) Claim and verify it If you haven’t done so already, claim and verify your Google+ listing. This is something you can easily do on your own. Be sure not to create a duplicate Google+ listing for your agency if one already exists. It’s against Google’s rules. To check if your business already has a Google+ listing, simply go to and enter your business address and phone number into the search bar. If a listing shows up reflecting your business name, then

Ensure it is under your control through the owner-verification process. If someone in your agency does not have the log-in information to manage your Google+ listing, click on “Manage this Page” on your business’ Google+ page to begin the verification process. Owner verification is a critical step in building trust with Google and guaranteeing that you control your business information on Google+. Progressive research indicates that as of November 2012, more than half of independent insurance agencies had failed to complete this critical first step, significantly diminishing their ability to rank highly in local search results. If you’re not the do-it-yourself type, programs like Progressive’s ListAgent or local search packages from Project CAP can help you with claiming your business listings online and optimizing your local presence. While you’re at it, it’s an excellent idea to also claim local search listings at sites like Yahoo, Bing, and Yelp. 2) Build trust in it Review your Google+ listing for accuracy and be sure that you’re using the identical name for your agency and its contact information across all directories, on the internet and on your agency website. Search engines like Google look for consistency in your agency’s name, address, and phone number (NAP) online, and your visibility in search results improves if you have consistent listings. Exact NAP match is important. For example, you don’t want your agency website to say “ABC Insurance Agency” while your Google+ listing says “ABC Ins Agency.” and offer free, simple tools to assess the consistency of your agency’s name, address, and phone online. You also can improve your local search ranking over time by creating references continued on page 36


Pet Insurance – Protecting our Furry Friends PET OWNERSHIP in the United States is a growing business. It is estimated that 56% of households own at least one pet. The Humane Society of the United States (www.humanesoci estimated that in 2011 there were over 78.2 million dogs and 86.4 million cats owned in the United States. Over 151 million fresh water fish are kept as pets! For many people, pets are a highly valued member of the household. Helping clients understand and obtain coverage for their beloved pets is another value-added service of the professional insurance agent. According to American Pet Products Association’s 2011-2012 survey, (www., pet ownership in America is at its highest level in two In addition to accidecades. While 60% of dents and illnesses, covDog and cat dog owners own only erage may be obtained one dog, 52% of cat for hereditary/genetic owners spend owners own two cats. conditions, surgery, an average 40% of pet owners own testing, hospitalizations multiple pets. The surand medications. In the of over $200 vey also reveals that pet case of congenital conper year owners are willing to ditions in particular, adspend money to extend vancements in science per animal on and improve their pets’ mean that conditions routine lives. It is estimated that that were once fatal are Americans will spend treatable. As with veterinary care. now $55.3 BILLION dollars human health, regular on their pets in 2013. preventative care can Caring for pets can be help to avoid or reduce very expensive. Dog and cat owners expensive medical bills down the road. spend an average of over $200 per year For this reason, coverage for routine per animal on routine veterinary care. care may be a preferred option. A reHospitalizations can run over $1000 per cent study found that the day. As pets age, the costs increase. cost of pet insurance runs between $20Americans spend over $12 billion per 40 per month per pet. year on veterinary care. The total cost of Coverage varies among programs. It having a pet over its lifetime has been esis important to review the provisions of timated to exceed $11,000. each plan carefully. While some are Pets come in all shapes and sizes, and more expensive, it may be worth it if so does pet insurance. Pet insurance is the animal is injured or becomes ill. not just for dogs and cats. There is also While not all plans cover routine care, coverage available for more exotic pets, there are plans that offer a flexible health such as birds, iguanas, opossums, potsavings account for such things as anbellied pigs and sugar gliders. Given the nual check ups, heartworm medication, high cost of purchasing and maintaining teeth cleaning and vaccinations. Most some of these pets, the purchase of inpolicies cover accidents and illnesses, surance for them is certainly something with more and more programs offering to consider. coverage for genetic conditions. Some

programs even offer coverage for the cost of cancelling holiday or vacation plans due to a pet’s illness or injury, as well as cremation costs. The expense of alternative therapies and rehabilitation may also be included in the program. Eligibility requirements vary. For example, some programs have age limits, and some require that the pet be spayed/neutered. There may be a waiting period for coverage to become effective. At least one plan has a 12 month waiting period for hip dysplasia. Deductibles and percentage of costs covered vary, with some plans paying up to 90% of veterinary bills. Maximum amounts payable also vary. Pet accident and injury insurance and wellness care can help to ensure that pets and their owners share a long and happy life together. Helping your clients understand and obtain coverage for their treasured household members and improving their peace of mind is a sign of the true insurance professional.

139 Harristown Road Glen Rock, NJ 07452, Suite 100 (800) 935-6900 INSURANCE ADVOCATE / May 20, 2013 35

[ FAC E TO FAC E ] continued from page 34

to your agency NAP on additional local directories. There are hundreds of local directory sites where you can submit your NAP information for free, with the only cost being the time it takes you to manually claim them. Alternatively, Progressive’s ListAgent program can do this for your agency for under $100 a year. 3) Connect it Google changed its local ranking algorithm in 2012 to favor Google+ business listings that link to well-optimized websites, making your agency website’s search optimization an important factor in both organic and local search results. While website optimization can be time-consuming and expensive, here are a few simple changes to help your website’s local search optimization: • Include your agency’s name, address and phone number in text (not as an image) in the header or footer of every page on the site. • Include your city or town name in your title tags, meta descriptions, and header (H) tags. • If you have multiple agency locations, create a separate “location” page on your website for each location, and a separate Google+ local business page for each location. Submit each location’s page to its respective Google+ local business page. • Start using Authorship Markup on your agency web site and blog posts. If you don’t have a website, consider using a carrier directory page in place of a website in your Google+ listing. For example, the ProgressiveAgent .com agent directory offers Progressive agents free locally-optimized agency pages that work well for this purpose. 4) Populate it Populate your Google+ profile with content. Thoughtfully consider your business description, including key search terms that describe what your agency does. Make use of all business 36 May 20, 2013 / INSURANCE ADVOCATE

listing categories available and include photos and videos. Providing this content not only helps your agency rank higher in local searches, but it also makes your listing stand out to consumers and increases the likelihood that they’ll do business with you. Click here for more tips on optimizing your local listings. 5) Legitimize it On your agency website and within your established agency referral processes, ask for reviews on Google+ as well as other sites like Yelp and Citysearch. Not only are reviews important to your prospects – 70 percent of consumers say that they trust online reviews as much as personal recommendations, according to BrightLocal. Reviews are also known to be an important local search ranking factor. Progressive research indicates that the average independent insurance agency has less than one online review, so creating a slow-but-steady review generation process can really make your agency stand out. The battle between Facebook and Google remains fierce, and both are making big moves to enhance their value to consumers and businesses. Questions may remain over social ROI, but there’s no question local search is critical as more and more people start their insurance shopping online. Adding Google to your online strategy brings a few social benefits, but the local search impact makes it a clear plus. References: 1 centage-points/ 2 ed-parsons-1-in-3-searches-at-google-are-local/

Around town, PIA of NY held its annual Long Island RAP Conference, and once again it was a hit in the NY insurance industry. During the gala luncheon, I had the honor and privilege of presenting my dear friend and PIANY Secretary Amy Bryan, CIC, owner of Bryan Insurance Agency LLC, with the 2013 LIRAP Community

Service award for her recovery work in the aftermath of Superstorm Sandy. As I explained to the lunch attendees, “The Long Island RAP Committee decided we were only going to present one award— and this award is for community service, which we have never presented before.” “Within days of the storm, Amy Bryan began finding ways to help us, Long Islanders, from her home and office in the Hudson Valley,” I said. “She coordinated through social media and the help of a marketing professional who developed a logo for ‘Sandy Relief,’ and started filling trucks with supplies. She identified Long Island residents and locations where help was needed most and, with the help of her partner and others who wanted to participate, drove to a variety of places on the Island; demolishing, cleaning, providing truckload after truckload of supplies and coordinating relief efforts with volunteers.” “After all she has done for our industry and for those most affected by Sandy, we can truly say that Amy is one of our own,” I added (while I held back swelling emotions) “In fact, she has since relocated and moved to Glen Cove, making Long Island her home.” Amy thanked the Long Island RAP committee for honoring her, selflessly noting, “That’s not why we do what we do in this industry. That’s not why we volunteer outside of this industry. It started from an idea that we needed to get out there and help everyone, more than just what we were doing with claims. It didn’t start just from me. It was a whole group of people, and I wouldn’t have been able to have done it without everybody.” She continued, “I think that out of all the devastation and everything that Sandy created, the one that I learned from all this was that it really brought out the best in everybody. I’m honored to be a part of all that.” Thank you, Amy; you are truly one of the heroes of this industry and I am so proud to have you as a friend! In addition, the local insurance professionals enjoyed an expansive trade show, networking opportunities and CE sessions throughout the day. Keynote speaker Prasad Gunturi, Senior Vice President of Catastrophe Management Services, Willis continued on page 38

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Re, delivered Long Island RAP’s 2013 keynote address on the lasting impact of Sandy. “One important thing I want you to observe here is Hurricane Sandy’s track is totally different from what we saw in the last 120 years or so. ... If you look at the historical tracks, we never had a storm similar to Hurricane Sandy.” Mr. Gunturi noted that hurricanes along the East Coast feature stronger wind speeds along the right-hand side of their path. “Having intense wind speeds on the right-hand side of the track, water was able to push through ... that’s why we had a significant storm surge in Manhattan and also in the Long Island area from Hurricane Sandy.” One startling statistic that Mr. Gunturi offered was that when Willis Re entered the area to survey damage three days after the storm, it discovered up to 2 feet of sand deposits more than a mile from the coastline. “Which is really intense, in my opinion,” said Prasad. Other lessons learned from Sandy that Mr. Gunturi highlighted (for future consideration) were to focus on a building’s age and roof condition when assessing risk and vulnerability. “This is how much impact the building details can have on loss results in a catastrophe risk model. The same can be seen on the ground. If you look at older properties versus newer properties—properties that are sitting next to each other ... they can see completely different damage.” Mr. Gunturi then offered what he thought the insurance industry should take from Sandy. “Oftentimes, companies think that collecting more data means more expense, but some of the characteristics of the building, mostly related to the roof, are easy to collect,” said Prasad. “We can collect some of that information just by visual inspections ... you can ask a question to the homeowner.” He closed his address by saying, “The point I want to make here today is in serving our community, it is our part to improve that data quality for effective catastrophe risk management.” As chair of the Long Island PIA RAP continued on page 40

38 May 20, 2013 / INSURANCE ADVOCATE






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[ FAC E TO FAC E ] continued from page 38

committee, I am extremely grateful to the following people who sat alongside me on the committee, and made this the premier event that it was: Maria Albarano; Keith Arnold; Robert Boyle; Dina Bruno; Jennifer DeChristofaro; Michael Demetriou; Donna Doyle; Chad Eskanazy; Linda Fazio; David Lande; Jeff Liebowitz; Frank Malpigli; Gino Orrino; Michael Plafker; Vince Polese; Robert Shapiro; and Steve Sternberg. Thank you for all you did to make this a tremendous success! Well, that’s what’s happening around town, as next time we will be talking about some other exciting insurance events that are taking place here in the Northeast. Until then, ciao for now! [IA] Michael Loguercio is the Regional Sales Manager for EZLynx; and has been active in the insurance industry since 1978 as an insurance technology professional and a licensed insurance broker. He is an active Past President of the Young Insurance Professionals of New York State, current ACT/AUGIE, Professional Insurance Agents of New York State, Independent Insurance Agents and Brokers of New York State, and Council of Insurance Brokers of Greater New York committee member. NY-YIP/PIA has honored Michael with a “Distinguished Service” award in 2001; “Insurance Professional of The Year” award in 2009; “Lifetime Achievement” award in 2012; and a “Special Service” award in 2013. In his community, Michael is President of the Longwood Central School District Board of Education on Long Island, NY; is a Director on the board of REFIT NY (Reform Educational Financing Inequities) and is a member of The Middle Island, NY, Rotary Club and Central Brookhaven Lion’s Club. In 2013 he was awarded the SCOPE “Community Service” award for his dedication to the public. Michael is a regular Contributor to the Insurance Advocate since 2008, and may be contacted at 631-345-9359 or may also follow him on Twitter @MLoguercioJr; and on Facebook @ Michael Anthony Loguercio Jr. 40 May 20, 2013 / INSURANCE ADVOCATE





Amalgamated President & CEO David J. Walsh and Alice Chebba Walsh Honored by CMSV


avid J. Walsh, President & CEO of the Amalgamated Family of Companies, which includes Amalgamated Life (, a leading provider of life and health insurance, and his wife, artist and theater producer, Alice Chebba Walsh, residents of Carmel, NY, were recently honored by The College of Mount Saint Vincent (Riverdale, NY) at the school’s Annual Scholarship Tribute Dinner. The event took place on April 29, 2013 at the New York Public Library. They were recognized for their commitment to education and continued support of the College’s mission. Also honored at the event was His Eminence Edward Cardinal Egan, Archbishop Emeritus of New York, who received the College’s Saint Vincent De Paul Award. The event raised over $470,000 which will be applied towards scholarship funds for worthy students. Walsh is an active member of the local community and often takes a leadership role in supporting civic and nonprofit organizations. In 2010, he served as the Chair of the Westchester Putnam Committee to the National Scout Jamboree in preparation for the Boy Scouts of America’s 100th anniversary celebration that year.





By Lawrence N. Rogak

When Farm Animals Wander into the Road, Owner May Be Liable for Auto Accident Hastings v Sauve


e hold that the rule of Bard v Jahnke (6 NY3d 592 [2006]) does not bar a suit for negligence when a farm animal has been allowed to stray from the property where it is kept. Karen Hastings was injured when the van she was driving hit a cow on a public road. The cow had been kept on property owned by Laurier Sauve, and the cow itself was owned by either Albert Williams or William Delarm. There was evidence that the fence separating Sauve's property from the road was overgrown and in bad repair. Hastings and her husband brought this personal injury action against Sauve, Williams and Delarm. Supreme Court granted summary judgment motions by Sauve and Delarm. The Appellate Division affirmed as to those defendants, and grant-

It is that a farm animal was permitted to wander off the property where it was kept through the negligence of the owner of the property and the owner of the animal.

ed summary judgment as to Williams also, citing Bard and other cases for the proposition that "injuries inflicted by domestic animals may only proceed under strict liability based on the owner's knowledge of the animal's vicious propensities, not on theories of common-law negligence"

(Hastings v Sauve, 94 AD3d 1171, 1172 [3d Dept 2012]. The Appellate Division expressed its "discomfort with this rule of law as it applies to these facts — and with this result", and later granted plaintiffs leave to appeal to this Court. We now hold that the rule of Bard is inapplicable to a case of this kind, and reverse the Appellate Division's order. In Bard, we denied recovery to a plaintiff who was attacked by a bull while working in the barn where the bull was kept. Noting that the bull "had never attacked any farm animal or human being before," we declined to "dilute our traditional rule" that a plaintiff in such a case must show that defendant had knowledge of the animal's "vicious propensities". We made clear that by "vicious propensities" we meant any


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[ COURTS I D E ] behavior that "reflects a proclivity to act in a way that puts others at risk of harm" (quoting Collier v Zambito, 1 NY3d 444, 447 [2004]). We have followed Bard in two more recent cases involving plaintiffs who were attacked or threatened by dogs (Petrone v Fernandez, 12 NY3d 546 [2009]; Bernstein v Penny Whistle Toys, Inc., 10 NY3d 787 [2008]). This case, unlike Collier, Bard, Bernstein and Petrone, does not involve aggressive or threatening behavior by any animal. The claim here is fundamentally distinct from the claim made in Bard and similar cases: It is that a farm animal was permitted to wander off the property where it was kept through the negligence of the owner of the property and the owner of the animal. To apply the rule of Bard — that "when harm is caused by a domestic animal, its owner's liability is determined solely" by the vicious propensity rule (6 NY3d at 599) — in a case like this would be to immunize defendants who take little or no care to keep their livestock out of the roadway or off of other people's property. We therefore hold that a landowner or the owner of an animal may be liable under

ordinary tort-law principles when a farm animal — i.e., a domestic animal as that term is defined in Agriculture and Markets Law § 108 (7) — is negligently allowed to stray from the property on which the animal is kept. We do not consider whether the same rule applies to dogs, cats or other household pets; that question must await a different case. In this case, while a number of important facts are disputed, the record read most favorably to plaintiffs would support a finding that any or all of the three defendants were negligent in allowing the cow to enter the roadway. Summary judgment in defendants' favor should therefore not have been granted. Accordingly, the order of the Appellate Division should be reversed with costs and defendants' motions for summary judgment denied. The certified question is not necessary and should not be answered. [IA] 2013 NY Slip Op 03120 Decided on May 2, 2013 Court of Appeals Smith, J.

Horse's Owner Has No Liability for Normal or Typical Horse Behavior Bloomer v Shauger


he order of the Appellate Division should be affirmed with costs and the certified question not answered on the ground that it is unnecessary. Plaintiff 's hand was injured because, while plaintiff was holding the halter of defendant's horse, the horse jerked her head back. According to plaintiff, the horse was reacting to an attempt by defendant to put a lead line on the horse. Under the rule of Bard v Jahnke, (6 NY3d 592, 596-597 [2006]), plaintiff cannot recover in the absence of a showing that defendant had knowledge of the animal's "vicious propensity" or "propensity to do any act that might endanger the safety of the persons and property of others" (Bard, 6 NY3d at 596-597, quoting Collier v Zambito, 1 NY3d 444, 446 [2004]). No such showing was made here. A tendency to shy away when a person reaches for a horse's

The Appellate Division correctly held that a vicious propensity cannot consist of "behavior that is normal or typical for the particular type of animal in question." throat or face is, as the record shows, a trait typical of horses. The Appellate Division correctly held that a vicious propensity cannot consist of "behavior that is normal or typical for the particular type of animal in question" (Bloomer v Shauger, 94 AD3d 1273, 1275 [2012]). 2013 NY Slip Op 03121 Decided on May 2, 2013 Court of Appeals

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By Katlin Nash

J.P. Morgan Securities, Inc. v. Vigilant Insurance Co.


LBANY, N.Y.—The New York State Court of Appeals heard oral arguments in the case of J.P. Morgan Securities Inc. v. Vigilant Insurance Co. In 2006, the Securities and Exchange Commission (SEC) began a civil enforcement action against affiliates of The Bear Stearns Companies, alleging they facilitated illegal late trading and deceptive market timing for certain customers, predominantly large hedge funds, enabling them to earn hundreds of millions of dollars at the expense of mutual fund shareholders from 1999 to 2003. Bear Stearns refuted the charges, saying it played a passive role in processing its customers’ trades and did not receive any special benefit from the trades, which generated only $16.9 million in fees and commissions. Bear Stearns negotiated a settlement and consented to a March 2006 SEC order, “solely for the purpose of ” SEC proceedings “and without admitting or denying the findings,” in which it agreed to pay “disgorgement” of $160 million and civil penalties of $90 million. The SEC order censured Bear Stearns for “willfully” violating securities laws and ordered it to cease and desist. The New York Stock Exchange (NYSE) issued an order with nearly identical findings, and its sanction was satisfied by Bear Stearns’ payment to the SEC. Bear Stearns sought coverage of the $160 million disgorgement payment from its primary insurer, Vigilant Insurance Co., and six excess insurance carriers. It asserted that $140 million of the negotiated disgorgement represented the profits its customers made on the illegal trades and the remaining $20 million was an estimate “on the high side” of the fees and commissions it received. The professional liability policies covered any “Loss” Bear Stearns incurred as a result of “any Wrongful Act.” The term “Loss” includes compensatory damages and settlements, but not “fines or penalties imposed by law” or costs that are legally uninsurable. The policies also exclude claims based on Bear Stearns “gaining in fact any personal profit or advantage to which (it) was not legally entitled.” When

the insurers disclaimed coverage on the ground that the disgorgement was not an insurable loss or was excluded from coverage, Bear Stearns and two of its J.P. Morgan affiliates filed this breach of contract action. The insurers moved to dismiss. The Supreme Court denied the motion, saying the SEC order “does not contain an explicit finding that Bear Stearns directly obtained ill-gotten gains or profited by facilitating these trading practices,” and thus does not establish that the disgorgement was excluded from coverage. The Appellate Division, First Department reversed and dismissed the suit, saying “disgorgement of ill-gotten gains… does not constitute an insurable loss. The public policy rationale for this rule is that the deterrent effect of a disgorgement action would be greatly undermined if wrongdoers were permitted to shift the cost… to an insurer.” It said Bear Stearns’ settlement offer and the SEC and NYSE orders “are not reasonably susceptible to any interpretation other than that Bear Stearns knowingly and intentionally facilitated illegal late trading for preferred customers, and that the relief provisions of the SEC order required disgorgement of funds gained through that illegal activity.” Bear Stearns argues the disgorgement is a covered loss because it “neither received ill-gotten gains nor was unjustly enriched… The SEC claimed the power to force Bear Stearns to pay amounts allegedly received by its customers…It was the assertion of that power…that accounted for the payment agreed to here.” Bear Stearns says, “The Appellate Division contravened New York public policy when it held that coverage for Bear Stearns’ loss should be nullified, whether or not the loss constituted the return of Bear Stearns’ own ill-gotten gain, to preserve the deterrent effect of” disgorgement. The court also erred, it says, “when it found Bear Stearns ‘guilty’ of willful misconduct notwithstanding that there had been no trial, no adjudication of any kind, and no admission by Bear Stearns.” The Court of Appeals heard oral arguments on May 1, 2013.[IA]

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