VOLUME 123, NUMBER 19 / November 12, 2012
A CINN Group, Inc. Publication
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[ IN THE NEWS ]
ISO Expands Classifications
ERSEY CITY, N.J.—ISO announced new classifications to its commercial property program to account for the emergence of alternative energy sources. ISO is a member of the Verisk Insurance Solutions group at Verisk Analytics (Nasdaq:VRSK). In response to the growing demand for alternative energy, ISO is introducing classifications and associated rating information for risks in three main areas: electric vehicle charging stations, solar panel arrays, and wind turbines. "We're committed to making program changes that add value through innovation for our customers, and we continually monitor the technological, societal, and business environments for new developments in managing risk," said Beth Fitzgerald, senior vice president of ISO's Insurance Programs and Analytic Services division. "Environmental issues are becoming increasingly important to businesses of all types and sizes, leading to an increase in the use of alternative energy technologies." "Whether spurred by the availability of tax credits and subsidies, the call for North American energy independence, or a desire to reduce their carbon footprint, environmentally conscious corporations are constructing or retrofitting their campuses with alternative energy sources, including solar panels and wind turbines," said Fitzgerald. "And the growing popularity of electric and hybrid vehicles has presented companies with the opportunity to install charging stations as a benefit to their clients and employees." The property classifications complement similar classifications ISO introduced last year for the commercial general liability line of business. "As alternative energy technologies grow in importance, it's critical that we not only provide our customers with appropriate information on the current cost of risk but that we begin to accumulate data to enable future evaluation of the risk from both the first-party property perspective as well as third-party liability," added Fitzgerald. The new ISO classifications and rating manual has a planned April 2013 effective date. [IA]
[ COVER STO RY ]
[DE PA RTMENTS] In the News........................................................................................................3 Foreword............................................................................................................ 4 Insight, By Peter H. Bickford ...............................................................................6 Exposures and Coverages, By Jerome Trupin, CPCU .................................10 Guest Opinion, By Gino A. Orrino .................................................................16 On the Level, By N. Stephen Ruchman ..........................................................18 Face to Face, By Michael Loguercio ...............................................................34 Courtside, By Lawrence N. Rogak ...................................................................40 Classiﬁeds.........................................................................................................43 Looking Back...................................................................................................44 Last Word, By Richard Amerling, M.D. ...........................................................46
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www.insurance-advocate.com INSURANCE ADVOCATE / November 12, 2012 3
[ FORE WORD ]
No Tie Required
iven the destructive power and resulting disaster that followed our recent hurricane, I believe that some systems need to come together a little better than in the past. In speaking with a friend who is very close to the adjusting process, I inferred from him that, had insurers been involved in FEMA and in other homeland security and similar groups’ planning processes the resulting settlement of claims and provision of care might be enhanced for the future. The Insurance Advocate has commissioned an article that will explore this concept in some depth in an upcoming issue. The incredible number of people who failed to hear clearly and understand thoroughly what would befall them puzzles even the most casual of observers. Failure to evacuate, failure to heed clear warnings and to act sensibly, caused more damage and loss of life that anyone could predict. One observer remarked that hurricanes in the future should bear names that were more serious than a nickname for Sandra or any other pleasant name. Perhaps then people who are told to evacuate might be scared straight toward the evacuation routes that our governments have spent so much time creating… In this issue of the publication we present our annual wrap-up on the Insurance Federation of New York, Inc.’s 98th Annual Free Enterprise Award luncheon with particular pleasure. The Federation went ahead with its plans for the November 9th event despite some skepticism among prospective attendees during a period of time in which 9 out of 10 events were canceled. The Federation went ahead Andrew better than 300 to its annual luncheon that normally has more than 400. While the Association did have that number of reservations, we learned that many individuals were still without power in their offices and in their homes and, of course, we recognize that the transportation systems were bottlenecked everywhere. Nonetheless, the Association enjoyed great success as it honored Robert Benmosche and listened attentively to the remarks made by former Gov. Dirk Kempthorne, who served as U.S. secretary of the Interior and is now top gun at ACLI. We include his speech in this issue of the Advocate and commend it to your attention. One highlight of the event will be evident from the photo spread in this issue. Readers will wonder why DFS Superintendent Lawsky (pictured) appeared rather casually dressed. The Superintendent, it turns out, had just returned from one of his frequent trips following the hurricane to distressed areas in greater New York. That morning, he and members of his staff traveled to one of the worst hit areas in New York, Breezy Point. The Superintendent and his team were ever present during the aftermath lending assistance to stricken areas deep within New York's badly afflicted outer boroughs. He was generous, in his remarks, toward the industry's activity following the hurricane and was robust in his praise of the honoree Robert Benmosche, noting that the honoree had acted honorably following the AIG bailout, repaying the government and taxpayers with interest. The Superintendent has done good service to New Yorkers in a number of ways thus far in his administration, but my favorite will be his on the ground approach following the disaster. Admission to the club of excellent public service is now wide open to this industry leader. No tie required… As if Hurricane Sandy were not enough, one week later a Noreaster whipped up wind and drummed up fear of further damage fast on the heels of Sandy. Fortunately, while there was some damage, the extent was limited. A small side effect of this storm affected a new conference that was sent by Joe Coughlin at the University of Hartford. While the show went on as planned – Coughlin is an Eagle Scout – this attendee, for one, missed it. We will have a wrap-up on this event in the next issue. Happy Thanksgiving to all of our readers and their families. [IA]
4 November 12, 2012 / INSURANCE ADVOCATE
VOLUME 123, NUMBER 19 NOVEMBER 12, 2012
EDITOR & PUBLISHER Steve Acunto, 914-966-3180, x110 firstname.lastname@example.org CONTRIBUTING EDITOR Peter Molinaro 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 email@example.com SUBSCRIPTIONS P.O. Box 9001, Mt. Vernon, NY 10552 914-966-3180, x126 firstname.lastname@example.org 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
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[ INSIGHT ]
By Peter H. Bickford
Insurance Solvency Regulation: Quo Vadis?
t is hard to escape hearing about Solvency II, the EU plan to strengthen the financial requirements for insurers, and the US efforts to address the consequences of these new standards on domestic companies. For most of us our eyes glaze over with the mere mention of the subject, and certainly with the details.
RBC has no single fixed target, but one that differs by risk factor. The Solvency II target of capitalization geared to a 99.5% confidence level goes beyond the NAIC approach of identifying insurers at risk of financial difficulties and instead sets a target
The mere suggestion that US regulators were more willing to allow company failures that the European regulators piqued my interest, so I asked Conning to answer a few questions about this statement, and they were gracious enough to provide me with thoughtful, detailed responses that I believe are important enough to share. Peter H. Bickford
However, because it may change the entire approach to solvency regulation in the US, these impending changes in solvency regulation are very important developments for domestic companies, their markets and their producers, and not just to insurers doing business across international boundaries. Recently the highly respected research and consulting firm, Conning, issued a study titled “Insurance Solvency Regulation: The Race for a Workable Risk-Based Solution” (© Conning Research & Consulting, 2012), which reviews the European and US approaches to solvency regulation, both current and proposed, the conflicts in approach and issues that will be raised by future changes. Being a solvency regulation junkie for the past 25 years or so, I was very curious about Conning’s observations regarding the developing course of solvency regulation. Although the full report was beyond my budget ($1,750.00), Conning provided me with the Report’s Executive Summary, which was itself very illuminating. One conclusion of the Report in particular caught my attention: "The more fundamental contrast between the two systems is in the calibration of required risk capital. 6 November 12, 2012 / INSURANCE ADVOCATE
capital level designed to prevent any failures. The U.S. system is oriented toward protecting the policyholder rather than the institution. In the U.S. system, insurer failures are tolerated as long as obligations to policyholders can be absorbed by another insuring organization. The Solvency II capital threshold appears designed to protect not only policyholders, but also shareholders, bondholders, and employees." (Italics are mine) The mere suggestion that US regulators were more willing to allow company failures that the European regulators piqued my interest, so I asked Conning to answer a few questions about this statement, and they were gracious enough to provide me with thoughtful, detailed responses that I believe are important enough to share. Following are my questions and Conning’s responses in full: PB. What is the factual basis for the Solvency II 99.5% capitalization conﬁdence level? Conning: The 99.5% confidence level comes from DIRECTIVE 2009/138/EC OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 25 November 2009, Article 101:
"The Solvency Capital Requirement shall be calibrated so as to ensure that all quantifiable risks to which an insurance or reinsurance undertaking is exposed are taken into account. It shall cover existing business, as well as the new business expected to be written over the following 12 months. With respect to existing business, it shall cover only unexpected losses. It shall correspond to the Valueat-Risk of the basic own funds of an insurance or reinsurance undertaking subject to a confidence level of 99,5 % over a oneyear period." PB. Will such a high level of "certainty" act as a deterrent to capital infusion into insurance businesses subject to Solvency II? Conning: In the study we note that one possible consequence of the additional capital required under Solvency II could be depressed return on equity, which could impact investment in the industry. The study does not go further to speculate as to possible additional effects on capital availability to the industry. PB. There is no similar percentage "conﬁdence level" percentage stated for the NAIC approach. Is there one? Conning: For the NAIC RBC formulas and factors, there is no single, overarching confidence level, time horizon, or risk metric used, unlike with Solvency II SCR. The individual components of the RBC formula are calibrated separately. The ranges of confidence levels tends to be from about 90% to 96%. Our research did not uncover any factor/model calibration exercise that targeted anywhere near 99.5%. The difference between 95% and 99.5% for long-tailed distributions can be quite large. PB. The paragraph concludes that the US system "tolerates" failures while the Solvency II regime is designed to "protect not only policyholders, but also shareholders, bondholders, and employees." That conclusion may come as a surprise to a lot continued on page 8
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[ INSIGHT ] continued from page 6
of US regulators, and to the NAIC itself. It also raises a whole host of questions for investors, for the groups seeking convergence of insurance regulation internationally, and for the determination of equivalence with Solvency II. Does the main study give more support and basis for such a consequential conclusion, and if so would Conning be willing to share that support with me?
Conning: Our statement indicates that the confidence level built into the Solvency II directives achieves a level of attempted institutional solvency “guarantee” that may go well beyond the main intention of policyholder protection. We raised the point to make the distinction between regulation focused on policyholder protection and regulation that appears to have a much broader scope. The NAIC's stated U.S. Insurance
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Regulatory Mission (from the NAIC's International Solvency Working Group Meeting 12/3/2009): "To protect the interest of the policyholder and those who rely on the insurance coverage provided to the policyholder first and foremost, while also facilitating an effective and efficient market place for insurance products." From that same meeting, the NAIC commented on calls for increased capitalization requirements: "Regulatory regimes could establish capital requirements so high as to have a zero-failure regime. However, in balancing the costs of such a system, most insurance regulatory regimes around the world accept a non-zero failure system with expectations of some insurance company failures. According to the IAA, 'It is impossible for capital requirements, by themselves, to totally prevent failures. The establishment of extremely conservative capital requirements, well beyond economic capital levels, would have the impact of discouraging the deployment of insurer capital in the jurisdiction.'" It is important to note, also, that the U.S. system designed its RBC standards to work along with state insurance guaranty funds. The state guaranty funds are in place to protect the policyholder in the event that a financially impaired insurance company is unable to pay its insurance claims--which is a different approach from designing capital standards that will prevent company failure. Postscript: the implementation of Solvency II has been delayed several times as its cost and consequences continue to be debated, both for the EU and internationally; and with the full scope of the Dodd-Frank legislation on insurance solvency regulation in the US not fully developed, this is a topic all industry participants need to be aware of and to follow closely. [IA]
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[ EXPOSURES AND COVERAGES ]
By Jerome Trupin, CPCU
What are the Traps in Wrap-Up Exclusions? What if a Condo/Coop Doesn’t Rebuild After a Loss? What Does ‘Reside’ Mean in a Homeowners Policy?
ho said these topics aren’t related? They all begin with a W. It’s WWW; not the world wide web of the Internet but the world wide web of insurance.
What Are the Traps in Wrap-Up Exclusions? Wrap-up programs combine general liability, workers compensation and umbrella insurance coverage for all contractors working on large construction projects. They are also referred to as an OCIP—Owner Controlled Insurance Program or CCIP— Contractor Controlled Insurance Program; the alternate names tell it all. It’s an insurance program controlled by the owner or the general contractor (GC). The owner or the GC place the insurance for the project with one insurance company. The wrap-up covers all those involved in the project. If contractors want the work, they must obtain and pay for coverage through the selected wrap-up insurance program. They don’t use their own broker and insurance company. Wrap-ups were first developed to cover the construction of defense plants during World War II and have become universal for large projects. Just how large depends on the state of the insurance market and insurers’ desire to write business. The argument for wrap-ups is that they promote efficiency in claims handling, loss control and administration, which can
Wrap-ups were first developed to cover the construction of defense plants during World War II and have become universal for large projects. Just how large depends on the state of the insurance market and insurers’ desire to write business.
reduce costs for the owner or GC and provide more seamlessly effective protection for all parties. Furthermore, wrap-ups are designed to minimize cross claims and third-party over1 claims. The argument against them, from the contractor’s point of view, is that they can create gaps in the contractor’s insurance protection and damage the contractor’s relationships with its own insurers. To avoid duplicate coverage and charges the wrap-up project is eliminated from the contractor’s policy. Two ISO endorsements are available to do that: CG continued on page 12
1 “Third-party over” is an action in which an injured employee, after collecting workers compensation benefits from his or her employer, sues a third party for contributing to the employee's injury. The third party will frequently claim over against the injured employee’s employer (hence the title “third-party over”). While it might seem that such claims should be banned by the sole-remedy provisions of the workers compensation law--the employee is, in effect, suing his or her own employer--courts allow many of these claims. In a construction project context, the suit is often against the owner or general contractor, who then sues the employer. Because the wrap-up insurer provides coverage for both parties, a wrap-up eliminates the need to engage in the oft-times outrageously expensive third-party over litigation to sort out who has to pay. (I’ll discuss third-party over claims in more detail in my column next month.)
10 November 12, 2012 / INSURANCE ADVOCATE
Jerome Trupin, CPCU
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 email@example.com. 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
21 31 05 09 [Limited Exclusion Designated Operations Covered by a Consolidated (Wrap-Up) Insurance Program] and CG 21 54 01 96 [Exclusion – Designated Operations Covered by a Consolidated (Wrap-Up) Insurance Program]. There’s only one difference between the two forms, but it’s a big one. Both endorsements exclude coverage for bodily injury or property damage liability arising out of ongoing operations and products-completed operations coverage at the location covered by the scheduled wrap-up. And they both state that coverage is excluded whether or not the wrap-up coverage is identical to that provided by the contractor’s policy and even if the limits of the wrap-up policy are not adequate to cover all claims. The wrap-up policy receives the premium, so it’s the policy that the contractor will have to rely on. Its regular insurers are not receiving any premium for the wrap-up project, so they’re not going to provide any coverage. You can’t argue with that. But here’s the key difference between the endorsements: CG 21 31 provides that the exclusion does not apply when the wrap-up policy has been cancelled, nonrenewed, or is not in effect for any other reason except exhaustion of limits. CG 21 54 says that the exclusion does apply even if the wrap-up policy is no longer provides coverage, regardless of the reason. CG 21 54 poses a real problem for contractors who are covered by a wrap-up instead of their own insurance. A contractor has no control over the owner’s or GC’s decision to cancel the wrap-up insurance. Cancellation by the insurer for non-payment of premium may provide only10days notice. Even if the contractor is aware of the non-payment notice, arranging coverage in 10 days can be a major challenge. Insureds often depend on their broker to help them avoid a lapse in coverage. The
broker on a wrap-up policy represents the owner or GC; it owes little or no duty to the contractor. If you insure contractors who are covered by wrap-up policies, check which exclusion endorsement is attached to the policy you write for them. CG 21 54 could leave the contractor holding the bag and leave you with a very unhappy client.
What if a Condo/Coop Doesn’t Rebuild After a Loss? Here’s an item from my email box this month. An insured in Westchester County asks: Can I come up short in the event of a total loss to my Coop building? In the case of a total loss of a coop building due to a fire, (etc.),… what kind of coverage should unit owners have to make sure they receive the total appraised value of unit, to cover a mortgage let’s say, outside of the personal belongings…. or would it be the association’s responsibility? If so, what am I looking for in the (association’s) building insurance coverage that would guarantee this coverage? The quick answer is that if the property is rebuilt and the insurance proceeds are sufficient to pay for the reconstruction, the unit owners will be fine—they better have sufficient additional living expense coverage to tide them over the long period that they may be out of their units and sufficient contents and improvements coverage, but that’s true even if the loss is confined to just one unit. However, suppose the building is substantially damaged and is not rebuilt. A common provision in offering plans for condos provides that if the damage exceeded 75% and 75% of the unit owners elect not to rebuild, the property is to be sold and the net proceeds of the sale together with the net insurance proceeds distrib-
uted to the unit owners in proportion to their interests in the common property. The letter writer is correct; that’s where a problem may arise for the unit owners. And it’s the coop’s or condo’s insurance that’s involved in the problem. An offering plan that I just reviewed provided that the amount of insurance on a replacement cost basis was to be $34 million. The plan showed that the total selling price of the units was $48 million—a difference of $14 million. $4 million of the difference was accounted for by the cost of the land, but there’s still $10 million to be accounted for even if we assume that the land can be sold for $4 million. (That may not be a good assumption because of the cost to demolish and remove the damaged existing structure that may not be covered by insurance—more about that below). What’s that $10 million composed of and does it have any value if the property is destroyed and not rebuilt? It’s primarily composed of the developer’s soft costs such as expenses for advertising and selling the units, legal and accounting fees, and, of course the developer’s profit. If the building is destroyed and not rebuilt, those items go up in smoke. Therefore the unit owners might not receive an amount equal to the appraised value of their units. Mortgages on individual units are based on appraised value, which can be much more or much less than the bricks and mortar cost of the buildings, so the unit owners may not even receive enough to cover their mortgages. The good news is total losses are rare and that, even in the event of a major loss, properties are usually rebuilt. But there can be a problem. Here are some reasons a condo or coop might not be rebuilt: • The cost to rebuild may substantially exceed the amount of insurance. Estimates used to determine the amount of insurance are based on
The Consumer Brand of the Independent Agent. www.iiabny.org/TrustedChoice 12 November 12, 2012 / INSURANCE ADVOCATE
continued on page 14
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new construction. Rebuilding is much more expensive than groundup new construction. And no estimate is completely accurate; if it were it wouldn’t be called an estimate. • Debris removal is expensive. If the amount of insurance is equal to or less than the cost to rebuild, there won’t be anything left to cover debris removal other than the typical debris removal additional coverage. (ISO forms provide $10,000 additional debris removal coverage, which will be increased to the magnificent sum of $25,000 when the 2013 ISO changes are approved and implemented.) • Flood and earthquake limits are often just a fraction of the full replacement cost of building. A large loss may create difficult problems in financing the reconstruction if the cost exceeds the insurance recovery. • Changes in zoning laws may prevent rebuilding a building of the same size and plot-density or may forbid rebuilding entirely. What Can Be Done? • The coop or condo should obtain increased additional debris removal coverage 2 . As I noted above, the $10,000 or $25,000 ISO additional coverage is grossly inadequate3. I’ve seen estimates for debris removal of $10 to $12 per square foot of the building. For a 100,000 square foot building, that’s over $1 million. • Make sure the amount of insurance is 100% of a realistic estimate of the actual replacement cost. In their zeal to control insurance costs, insureds and producers frequently underestimate replacement cost. • Increase the flood and earthquake
coverage limits. One study reported that flooding to a depth of just 2 feet caused, on average, damage to a onestory building equal to 22% of the building value; for flooding that’s 5 feet deep the figures was 30% 4 . (Obviously the percentages for a highrise building will most likely be lower.) • Be sure that the coop or condo has ordinance or Law coverage and that the limits are sufficient. Building ordinances or laws may impose requirements that greatly increase the cost of repairs. • Coops and condos may need expert assistance to evaluate the amount of insurance needed. Insuring the gap between market-value before a loss and the proceeds when a coop or condo is destroyed and not replaced is similar to auto-lease gap coverage. Here’s something to add to your wish-list: An endorsement to cover the potential gap in coop and condo insurance. I think it can be done. It could be tied to the unit owner’s mortgage balance to avoid the difficulty of agreeing on an accurate appraisal value. This is a great opportunity for a company that specializes in coop and condo insurance. It would differentiate them from their competition, give their insureds peace of mind, and give their producers a valuable prospecting tool.
What does ‘Reside’ Mean in a Homeowners Policy? Take Three. Where do you reside? A little formal for ordinary conversation, but it seems like an easy question to answer—however it’s one that’s tripped up a number of homeowner insureds. I’ve written in previous issues of the Insurance Advocate about the variety of circumstances that can cause insurance companies to decline coverage when they feel that the insured doesn’t “reside” in the
dwelling5. A recent Court of Appeals decision indicates that what “reside” means is far from a settled matter. On March 24th, 2005, Jona and Douglas Dean went to Northeast Agencies in Dobbs Ferry, N.Y., to purchase homeowners insurance to be effective March 31, 2005, the date they expected to take title to a house in Irvington, N.Y. When they applied for coverage, the Deans mentioned to the agent that house had “cosmetic damage that needed repairs.” It turned out that the house actually had extensive termite damage. As a result, the Deans couldn’t move into the house until repairs were made. Douglas Dean, with the help of family and friends, worked on the repairs—going there, he stated, almost every day after work. The policy was renewed on March 31, 2006. On May 15, 2006 a fire destroyed the building. The Deans had still not moved into the house. Tower Insurance Company denied coverage stating two reasons: First, Tower said the policy covered “the dwelling on the residence premises” and, because the dwelling was unoccupied at the time of the loss, it did not qualify as a residence premises. Second, the policy was void because the insureds had intentionally concealed or misrepresented material facts. On April 27, 2010 the New York Supreme Court ruled in favor of the insurer on the issue of residency6. That didn’t settle it. Despite its exalted title, in New York the “Supreme Court” is not the highest court. There are two higher ones, the Appellate Division of the Supreme Court and the Court of Appeals. The insureds appealed the decision to the Appellate Division. On May 10, 2011 it reversed the lower court. It held that the policy was ambiguous because it didn’t define "reside.7” The Appellate Court granted Tower continued on page 16
2 The Commercial Lines Manual contains rules for rating this coverage. Some specialty companies automatically include high limits for additional debris removal coverage. 3 More than the standard ISO debris removal coverage can be needed in other situations. Even if the building loss doesn’t exhaust the limit, the standard debris removal limit may not be enough. A small building loss can sometimes trigger a very large debris removal expense, particularly if the debris that has to be removed is polluted. 4 http://www.emd.wa.gov/about/documents/MitigationLossAvoidanceStudy-Centralia.pdf 5 “Not Every House is a Home “ Insurance Advocate, March 19, 2012 and “Updates on Homeowners Residency Issues” Insurance Advocate , May 7, 2012 page 6 6 Dean v Tower Ins. Co. of N.Y. 2010 NY Slip Op 31107(U) Supreme Court, New York County 600989/07 7 Douglas Dean et al. v Tower Insurance Company of New York 2011 NY Slip Op 03899 [84 AD3d 499] May 10, 2011 Appellate Division, First Department 8 Douglas Dean et al. v Tower Insurance Company of New York 2012 NY Slip Op 07142 October 25, 2012 Court of Appeals.
14 November 12, 2012 / INSURANCE ADVOCATE
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[ EXPOSURES AND COVERAGES ] continued from page 14
the right to appeal to the Court of Appeals, which it did. And, hot off the press, on October 25 (I’m writing this on October 27, 2012) the Court of Appeals affirmed the Appellate Division’s ruling that “reside” is ambiguous8. This is troublesome; no insured moves into their newly-purchased residence simultaneously with closing title. Before my wife and I purchased our prior home, the home inspector we hired discovered
termite damage. We closed title anyway. We were expecting our fourth child and we had to have a larger house. We didn’t move in until the damage was repaired about two weeks later. If the house had burned down during that time, would the insurer have disputed coverage? We certainly wouldn’t have been living in the house at the time of the hypothetical loss and, unlike Douglas Dean, I didn’t do the work myself. How long a gap voids coverage? Is it 2 hours, 2 days, 2 weeks, 2 months, 2 years? Was it our residence
[ GUEST OPINION ]
because we intended to live there? There’s no clear answer. This problem cries out for clearer wording from insurance companies and rating organizations. Let’s hope they’re listening9. [IA] 9 I contacted ISO and AAIS to see if they have any plans to clarify the wording. AAIS responded that it is discussing wording that ”would essentially require the policyholder to warrant that he or she owns and occupies the residence,” but that no decision has been made. ISO hasn’t responded yet, Super-storm Sandy intervened. I’ll tell you what ISO replied in a future issue.
By Gino A . Orrino
Hurricane Sandy – Thoughts and Lessons Learned (A Young Agents Perspective) Like so many of us affected by this catastrophic event I was so relieved when power was finally restored and I could clean up and get a well deserved shower and night’s rest. Feeling refreshed I was able to reflect on my agency’s preparations leading up to the “Frankenstorm” and response in during it and the week following. As insurance agents we are right in the fray along with federal and local agencies, first responders, emergency response teams, public adjusters and restoration companies. While our responsibilities are quite different during a catastrophic event there is a common goal or duty at hand. Making sure those lives affected are protected, safe and delivering them the means to rebuild and move on. But how does one in our industry ensure that? Like many other young professional s new to our business this may have been the first true catastrophic event of this degree. Given my tendency to overanalyze I asked myself a number of questions prior to the storm: Contingency Plan – • Did my office have backup generators if power went out? • Did I have an offsite location in place and could my staff get there? • In the absence or the two prior questions could my staff then be prepared to work from home on cell phones? If so do they have access to internet and can they access our server and agency management system? 16 November 12, 2012 / INSURANCE ADVOCATE
• Does my phone and internet carrier run its service lines above ground to avert the situation of downed lines? What is the maximum battery backup for the phone service provided by the carrier if power goes out? Claim Reporting – • Did we effectively communicate to our clients how they can report a claim? (via dedicated e-mail address? 24/7 Dedicated phone line/extension? Provide listing of carrier direct reporting hotlines on our website? Links to FEMA website? FEMA hotline?) • How do we deliver this claim reporting information in a way that is broad in its scope? (Blast e-mails – Social Media, Facebook, Linked In – Claims section on agency website?) • Do our partner carriers provide effective means to report claims? 24/7 hotlines? Dedicated e-mail address and fax? Do they plan to have emergency response contingencies in place such as mobile units, additional staff? Did they effectively communicate with our agency staff prior to and after the storm? • Are we proactive? Do we address the questions with our clients concerning certain coverage, limits and deductibles before they are asked? (What is…. a Hurricane deductible?... Trigger?... Business interruption service/loss of use?… Water sewer backup? …
Flood!!!! (Most professional membership organizations have some form of one page informational flyers in pdf form to help address these questions!!!) Adjusting and Remediation – • Is our staff prepared mentally to absorb the flood of calls/claims? Did I do the right job in conveying how to treat the client who just lost everything? Will they provide assurance and a calming voice during such a dire time? • Have we partnered and forged relationships with public adjusters and restoration service companies that we are confident to put in front of our insured? Moreover do they have their own contingency plans in place? Have they made the proper business arrangements with respect to labor and equipment to handle the expected influx of work? So what did l learn in the week following Sandy when so many families and businesses are dealing with devastating losses??? It pays to be prepared and if your answer is a resounding yes to the questions listed above then you’ve made a compelling argument for the importance of a professional insurance agent rather than some commoditized product advertised online. And on a more personal note the resolve and compassion of human beings is unparalleled during times like this as well as our propensity to rise and meet any challenge. Best wishes! [IA]
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INSURANCE ADVOCATE / November 12, 2012 17
[ ON THE LEVEL ]
By N. Stephen Ruchman
Weathering the storm
ong Island agents’ priorities have shifted. The storm that has devastated my friends and neighbors is a top priority. While much of the Insurance Advocate’s readership is in affected areas, I still want to share my observations and invite you to share yours with me. After the storm, we have had a minor earthquake, and even a Nor’easter. I’m waiting for locusts, but they may not appear, since there’s nothing left for a locust to feed on.
rules of the road (sometimes the hard way). I, like my neighbors, have learned that the thick cables carry power and can’t be touched, but the thin lines are for phone and internet service—we are learning personal safety lessons about security, mold, food and other necessities we never thought we’d need to know. As of Nov. 15, my clients in Oceanside still are without electricity/power. Others have power, but have lost their oil burners, which are not
I, like my neighbors, have learned that the thick cables carry power and can’t be touched, but the thin lines are for phone and internet service—we are learning personal safety lessons about security, mold, food and other necessities we never thought we’d need to know. N. Stephen Ruchman
available anymore. National Grid can’t help them put gas into houses because they are working on more urgent matters, and its getting very cold. But, we are safe and have roofs over our heads. My heart goes out to so many people, fellow agents included, who have lost everything and have unexpected needs this holiday season. While we’ve seen many heroic and selfless acts of kindness everywhere, we are learning some important lessons I wish we didn’t have to learn. The most heartbreaking incident to me was when one of my clients—a friend I’ve known since before I was married—called me two weeks after the storm. Furious and frustrated, he threatened to sue my agency because his home was not covered for flood. I explained that our agency had urged him repeatedly to purchase the coverage; I explained it to him face-to-face; we reminded him in our newsletters sent to clients; and through special letters about the need for flood insurance—but his continued on page 20
On a personal note, I had just a little damage to my own home, which wasn’t earth-shattering—a tree fell on my garage (pictured on the right). I called my carrier’s 800-number and received two calls from adjusters within three hours of making the call. The adjuster would come, I was told, in nine days (which I am fine with). The delay, I was told, was because the adjuster was coming from out of state and there were no hotels that could accommodate him. My family has been living with me while they wait for power, like so many others on Long Island, New York City and New Jersey. These past few weeks, we’ve experienced post-apocalyptic scenarios including lines for gasoline with people using 5-gallon jugs and picnic coolers to hold the gas (who knew alternate plate rationing would work so well?); cars with license plates removed and labeled with insurance companies so salvage crews can pick them up; debris piled up on sidewalks, front lawns and curbs; stores and businesses with inventory disposed outside; intersections without signals and drivers relearning the 18 November 12, 2012 / INSURANCE ADVOCATE
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[ ON THE LEVEL ] continued from page 18
home was not on the water and it had never flooded so he opted not to buy it. His $2 million home is now gone. I fear, so is this longtime relationship that I valued so much. We also learned (or at least had reinforced) that perception is important. I saw and heard some very smart advertising by insurance companies, pre- and post-storm. Unfortunately, most of it came from direct writers. The weekend prior to the storm, I found myself listening to my radioâ€”it seemed every couple of minutes GEICO or Allstate ran an ad with safety messages to the public. The only thing that came to my mind was where are our big national independent carriers, who are making record profits this year and couldnâ€™t spend a couple of bucks on radio advertising in the metro area and attain a beautiful PR coup? I, and those who had power, did hear one carrier ad on the radio about five days after the storm. These companies lost the opportunity to look good to clients and prospects alike. And they wonder why the direct writers get more business. I would like to tip my hat to agents who were able to contact their clients through their email addresses and those agents who used the PIA disaster kit, so they were prepared (as much as possible) to deal with frustrated clients. PIA also did a great job, issuing consumer press releases before and after the storm about claims and coverages, and most importantly, compiling Storm Info Central, a website full of information including carrier claim contacts, storm-related coverage details and public policy changes, news and consumer materials for agents to use. The association made this all publicly available to agents and even created a mobile version for those of us using our cell phones and tablets while our landline phones and Internet were down. Many of my fellow agents have already told me this site made dealing with the aftermath of the storm easier for them. We also learned that communication is paramount in these times of crisis. Agencies all up and down the coast are now dealing with client calls at volumes we have never seen before. Social media, continued from page 18
20 November 12, 2012 / INSURANCE ADVOCATE
Our thoughts continue to be with all those for all is for
The Trusted ChoiceÂŽ Disaster Relief Fund is available to help those who have suffered losses due to natural or man-made disasters. The fund makes cash grants to those in the insurance industry, including Big â€œIâ€? members, their agency staff and others, to pay for immediate or ongoing financial needs when other funding sources such as insurance and other grants are not available.
To apply for Trusted ChoiceÂŽ Disaster Relief funds or to make a donation, please visit www.iiabny.org/trustedchoice.
Many thanks to everyone who supported our Hope in a Bag campaign and gave countless storm victims hope this Thanksgiving!
Independent Insurance Agents & Brokers of New York, Inc. â€˘ 800-962-7950 â€˘ www.iiabny.org
[ ON THE LEVEL ] continued from page 20
email and the Internet are tools we all are using on a daily, if not hourly, basis. If we weren’t convinced of the necessity to keep current with these technologies, we should be now. Our experience with clients working with adjusters has provided us several lessons, starting with tolerance and patience. It seems a little unfair to complain, given
the wave of service men and professionals who came from around the country (and Canada) to provide assistance with utilities and adjusters, but there were challenges. One of my insureds has no electricity and has been staying at her daughter’s house. When she was contacted by her carrier’s adjuster to set an appointment she went to the property that used to be her home to wait for the adjuster. He never showed up. She later found out the carrier had
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22 November 12, 2012 / INSURANCE ADVOCATE
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switched adjusters and changed her appointment. She was uninformed, waiting in a freezing uninhabitable house, not knowing what was going on. This and so many similar stories demonstrate the need for better communication from carriers and adjusters with insureds. While everyone was overwhelmed, increased communication could go far to ease frustrations and even reduce what will no doubt become a litigious climate around here very soon. Looking back at my friend who lost everything, the lesson we need to learn is that no matter how much we try to convince them, clients who don’t have property in obviously wet areas don’t buy flood insurance unless they are forced to. We will need to revisit the National Flood Insurance Program. Last spring, less than six months after Irene hit, PIA told lawmakers that streamlining the NFIP claims process, giving affected policyholders a single point of contact, and improving public education about flood insurance were necessary before another storm hit. How many times will this have to happen before changes take place? The damage of Sandy reaches far beyond infrastructure. I hope we’ve learned some lessons. [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 SRuchman@aol.com .
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[ COVER ] PICTURED (L-R): IFNY CHAIR, LANCE ALBRIGHT; GUEST SPEAKERS GOV. DIRK KEMPTHORNE, CEO OF THE AMERICAN COUNCIL OF LIFE INSURERS, AND BENJAMIN LAWSKY, SUPT., NYDFS; HONOREE ROBERT BENMOSCHE, PRESIDENT & CEO, AIG; IFNY IMMEDIATE PAST CHAIRWOMAN, CECILIA NORAT; AND IFNY PRESIDENT, NICK PEARSON
IFNY Free Enterprise Award to AIG’s Robert Benmosche
24 November 12, 2012 / INSURANCE ADVOCATE
[ COVER ]
he Insurance Federation of New York, Inc. (IFNY) bravely held its 98th Annual Free Enterprise Award Luncheon on November 9th, drawing a crowd of 350 insurance leaders to New York’s Cipriani Wall Street. It was the first affair held after Hurricane Sandy at the venue and, according to the Guest of Honor, Mr. Robert Benmosche, IFNY sent a signal of recovery to the insurance community. The Free Enterprise Award was given to Mr. Robert Benmosche, President and CEO of AIG, who accepted it enthusiastically and complimented the insurance business for its resilience and its responsiveness during the hurricane Sandy disaster. Mr. Benmosche noted that, on the very day on which he was receiving the award, his own building had yet to regain power. One of the featured speakers of the day was Governor Dirk
Kempthorne, former Governor of Idaho and U.S. Secretary of the Interior and presently, President and CEO of the American Council for Life Insurers (ACLI). Governor Kempthorne praised life insurance as an instrument for financial growth and gave a rousing talk to industry professionals about the honor and integrity of what they do, especially as demonstrated recently by the industry reaction to hurricane Sandy (his speech can be read, in it's entirety, on page 30 of this issue). Mr. Nick Pearson, IFNY President, Ms. Cecilia Norat, IFNY Immediate Past Chairwoman, and Mr. Lance Albright, IFNY Chairman, each delivered remarks that focused upon Mr. Benmosche, the industry and upon IFNY itself, which this past year undertook a major support effort for an entity known as Boys Hope Girls Hope. Ms. Mary Lanning, Vice Chair of the group, thanked the Association profoundly for sponsoring so many students and exposing them to the various working components of the insurance in-
dustry. These students who are from the inner boroughs of New York are encouraged to look at the insurance industry for their future careers. Of the 350 in attendance, many were Presidents of companies and contributors to the effort. The Superintendent of the Department of Financial Services, Benjamin Lawsky, was scheduled as a guest speaker and arrived late in the program in working clothes fresh from his tour of Breezy Point in Brooklyn, which was devastated by hurricane Sandy. He found time in his busy schedule to make an appearance and address the audience. The Superintendent, who led an all-out-effort by the Department to assist those affected by the storm, praised the industry for its response and praised Mr. Benmosche for AIG’s responsible approach to repaying its bailout debt. In all, Mr. Lawsky was warmly received by the industry leaders who recognized his yeomen effort in deploying department “troops” to the areas devastated by the hurricane. [IA] INSURANCE ADVOCATE / November 12, 2012 25
[ COVER ]
L-R: Thomas Workman, President, LICONY; Howard Mills, IFNY Director, Deloitte; and Kash Saraiya, ACE Group
Joy Feigenbaum, Executive Deputy Superintendent, NYDFS
L-R: Salvatore Curiale, IFNY Director with Robert Benmosche and Martin Carus of AIG
Kermitt Brooks, IFNY Director, AXA Equitable
L-R: James Corcoran, IFNY Director; Lance Albright, IFNY Chairman, QBE the Americas; Richard Hershman, IFNY Director, FTI Consulting; and past honoree Warren Heck of GNY Insurance Companies 26 November 12, 2012 / INSURANCE ADVOCATE
L-R: Honoree Robert Benmosche, President and CEO, AIG with Former Superintendent, NYSID, Jim Wrynn.
L-R: Douglas Hayden, IFNY Vice President, Wrigth Insurance Group with Tom Olsen and Anthony Iandoli, both from AIG
IFNY Chairman Lance Albright, QBE the Americas starts the program
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[ COVER ]
IFNY Immediate Past Chairwoman, Cecilia Norat of AIG introduces the honoree
Honoree Robert Benmosche is presented with the Free Enterprise Award by IFNY President Nick Pearson of Edwards Wildman Palmer
Mary Lanning, ML&G Associates, Vice Chair of Boys Hope Girls Hope
Steve Boon, IFNY Financial Vice President with Louisa Foss of Chubb Insurance Companies
L-R: John Halleron, Chairman of Boys Hope Girls Hope with Don Privet, Excess Lines Association of New York
L-R: Michael Brown, Ohrenstein & Brown LLP; Elise Greenspan, AECOM; Michael Hager, AECOM; and IFNY Vice President Manfred Ohrenstein of Ohrenstein & Brown LLP
28 November 12, 2012 / INSURANCE ADVOCATE
IFNY President Nick Pearson of Edwards Wildman Palmer
Guest speakers Gov. Dirk Kempthorne and Supt. Benjamin Lawsky, NYDFS
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[ COVER ]
Governor Dirk Kempthorne on the Insurance Industry…and more! Insurance Federation of New York - November 9, 2012
hank you Nick Pearson (Edwards Wildman) for that introduction and to the Insurance Federation of New York for inviting me. Let me start with a few words about Bob Benmosche, the recipient of the Federation’s Free Enterprise Award. I called a few of the executives that I now have the pleasure of working with. I asked them to please give me the sense of the man and what he has accomplished. They said he is incredibly consumer oriented. His philosophy ultimately, is that what we have in our industry are the promises that we make. Therefore, they are the promises we must keep. That is a tremendous philosophy. Bob is probably the proto-typical retiree, in that his attitude is to be active, fully engaged and productive. He is not one to take a different course -- to sit and decline. In regard to what all took place at AIG … I believe that the best measure that can be taken of an individual is whether he or she answers the call of duty – or a cause that is presented. It’s easy to accept if it’s a highly coveted position. It’s extremely difficult when nobody wants it. It takes courage and it takes self-confidence. Facing a tough situation, Bob Benmosche truly proved to be the champion that everyone knew him to be. He became the advocate of AIG’s beleaguered employees, immediately becoming their champion. In this magnificent setting the Federation reflects its rich tradition of honoring courageous champions. And the Federation does so again today. I commend Bob. His story is inspiring. At the same time, this industry needs to continue to tell its story. Whenever you can, please take the opportunity to tell others our inspiring story so that they will realize what we are made of, what we have accomplished. It’s an incredible story. People have asked me, now that you have been at the American Council of Life Insurers for two years, how do you like it, and did you have a background in the industry? My background is that in my entire adult life I have been a consumer. And do I like the industry? I love it. I believe that it is an extension of my 23 years in public service. My motivation for being in public service was to help people. What other industry than the insurance industry exists solely to help people? You need only to walk outside to see the need for help, which we are addressing. In some of the posts I’ve held in the past I have been there in the midst of devastation. So, it was heartbreaking to see the aftermath of Hurricane Sandy. Ben Lawsky referenced what he is seeing out there on the ground. It will take a lot of cooperation, a lot of work to get things back to normal. I know this great and resilient city and the entire region is up to the challenge. And I’m gratified to note that the insurance industry is answering the call and helping the city and the entire region 30 November 12, 2012 / INSURANCE ADVOCATE
recover, pledging millions of dollars in support of relief efforts. This is nothing new for our industry. After the terrorist attacks on September 11, 2001, insurers also stepped up and did their part. For the thousands of people who lost loved ones, the life insurance industry eased the burden of filing claims. Companies processed claims quickly and with great compassion, even in cases when a death certificate was not available. On both the life and the property-casualty sides of the business, real questions arose over whether the attacks were an act of war, and whether claims would be excluded under the act of war clauses in policies. A Los Angeles Times headline captured the story: “Act of War” Exclusion Doesn’t Apply to Attacks, Insurers Say. That was a decision of the industry. I believe it fulfilled what we said earlier … promises made are promises kept. That is what the insurance industry is all about. We helped show our nation’s enemies that we are the UNITED States. We have political and philosophical differences, but when tragedy strikes, we stand together as a nation. We could use more people standing together these days. We certainly could use it in Washington D.C. as Congress and the White House begin to tackle the nation’s fiscal challenges. A little less partisanship will go a long way toward greater cooperation. I talk to my colleagues in the United States Senate and they say, “Dirk you wouldn’t like it here anymore.” We need greater bipartisanship. For example, when I introduced legislation to stop unfunded federal mandates on cities, counties and states - an effort that had failed for 20 years - I partnered with Sen. John Glenn, Democrat of Ohio, and got it done. Bill Clinton signed it into law. That is how we ought to get things done. And I think that Washington could learn a little more from American business. In your corporations with Boards of Directors … most of them work quite well. What would happen if down the middle of the Board of Directors’ table we placed an imaginary line. Everybody on one side… we will now call the blue team. Everybody on the other side... is the red team. Instead of dining together, the board members head to different rooms. The red room. The blue room. When a director’s term is up for renewal, the other team says, “No,” even if he or she is doing a good job. They figure out what to say so that director will not be reappointed. In fact, they may even raise money to use against this director, to try to embarrass him or her so that no one would appoint them to any board. I've just described the atmosphere of the United States Congress. It is not good. Somehow we have to come together, especially because the nation’s finances are greatly challenged. Many are looking at the work of the debt reduction commissions for a blueprint.
[ COVER ] Every commission including Simpson-Bowles -- two very fine men -- said everything was on the table. Should all good ideas be on the table? Absolutely. Without question. But, bad ideas should not be on the table. And any suggestion that puts life insurance industry products on the table is a bad idea. The principle that life insurance should not be taxed is not new. It was established during the Civil War. The government in Washington considered several taxes to pay for the war, and in 1862 enacted the first income tax. And when a tax on life insurance premiums was considered, Massachusetts Senator Charles Sumner said on the Senate floor: “Here you are proposing to tax those who have taxed themselves... that the Nation might not have to support them.” Then, in 1866, the Treasury Department reaffirmed the importance of life insurance by ruling that death benefits are not subject to the income tax. This tax treatment of life insurance became part of the current tax code in 1913. For more than a century, not taxing life insurance has been a fundamental principle of tax policy. It should remain so for at least another 100 years. Society benefits when people are encouraged to take personal responsibility. Congress must address the looming ‘fiscal cliff.’ But it also must recognize our nation has another big challenge ahead, and our products will be a key to addressing it. Our nation is aging. Every day, 10,000 Baby Boomers reach age 65, and this will continue for 17 years. Americans will continue to live longer in the future. Economist and Nobel Laureate Robert Fogel predicts that half of Americans in their 30s today will live past age 100. One gerontologist said that the first hundred and fifty year old person has already been born. Americans are living longer. But are they saving to pay for a longer retirement? No. Half of America’s pre-retirees have saved enough to last them only 16 months in retirement. Do they simply become totally dependent on Social Security? If you think Social Security is stretched now, what does that do? Do you see the important role that this industry must play? Why was 65 chosen as the retirement age? The answer dates to the 1880s, when German Chancellor Otto Von Bismarck established the first state pensions. During Bismarck’s time, few Germans reached age 65, so he knew he was not burdening the government financially. In 1935, our Social Security System adopted age 65. If we used Bismarck’s model today and created a new retirement system, the age when you would start receiving benefits… would be 78. We are living longer. In 1997, the mortality charts only went to age 85. In 1998, they went to age 100. Today, they extend to age 120. Let me conclude with this. I’m energized, I believe in this industry. Who else stands next to the individual and the family in the toughest of times - when somebody dies to soon, or they live beyond their income. My goodness – what happens to a lifetime of dignity if you surpass your income and you only have what the government provides? We represent a noble industry, because we help people maintain their dignity. One of the greatest leaders of the 20th century, Winston
One of the greatest leaders of the 20th century, Winston Churchill, said this about the insurance industry: “If I could I would write the word insure over the doorway of every cottage because for an investment so small, you can protect a family from being smashed up forever.” That is our calling. That is our cause. And again, just outside, you see why we are needed, now more than ever.
Churchill, said this about the insurance industry: “If I could I would write the word insure over the doorway of every cottage because for an investment so small, you can protect a family from being smashed up forever.” That is our calling. That is our cause. And again, just outside, you see why we are needed, now more than ever. So bless you in your work, it’s a calling, and God bless all of you. [IA] INSURANCE ADVOCATE / November 12, 2012 31
[ COVER ]
Supt. Benjamin Lawsky and Honoree Robert Benmosche
Kermitt Brooks with Susan Wilcher of AXA Liabilities
IFNY Interns from Boys Hope, Girls Hope with Gov. Dirk Kempthorne
L-R: Mark Piccione, US Re; Salvatore Curiale, IFNY Director; and Kieth Minella of Via Novus
32 November 12, 2012 / INSURANCE ADVOCATE
L-R: Howard Mills, IFNY Director; Guest speaker Gov. Dirk Kempthorne; Thomas Workman, LICONY; and James Corcoran
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[ FACE TO FAC E ]
By Michael Loguercio
Getting Fannies In Facebook Seats
o ten days have passed since I composed my most recent article on what is now being called by the mainstream media as “SuperStorm Sandy”, and I’m back on a US Airways flight only this time headed home to Long Island from our EZLynx sales meetings. Every early morning while I was away, I have watched the local Long Island News12 feed from my laptop, and listened to the WALK Breakfast Club and Pat Pagano’s weather report to stay informed and in tune on how everyone on the Island, Jersey Shore, and Connecticut coastline are doing since this disaster struck a couple of weeks ago.
I could write a book, never mind a single column, on all of the wonderful stories that I have heard about strangers helping strangers in the wake of this disaster… Michael Loguercio
My fellow employees in our Dallas office sat there with tears in their eyes and mouths wide open, as I shared some of the horror stories that were coming from the Northeast, and could not believe the pictures in Newsday that I brought with me of the first 5 days of hell that we endured. Since I left for Dallas on November 3rd, our houseguests have since left us, however there are still tens of thousands of families who are still without power, and many still without a home. Gas lines have formed for blocks, and some supermarkets are still without power…or food. We all know the tragedy of what occurred, along with the outpouring of assistance and love that 99% of the population shared with those who needed it most. I could write a book, never mind a single column, on all of the wonderful stories that I have heard about strangers helping strangers in the wake of this disaster, so since I’m not allocated that much page space in this publication, I’ll just share one more heartwarming story with you. This one originates from a few wonderful folks in this thing of ours, who during the week grabbed pens, iPads, and claim forms (just as all of you did) to help those in need, but on a beautiful Sunday morning last week traded in their neatly pressed suits and iPad for jeans, work boots, and tee shirts, and grabbed shovels, axes, hammers, masks, and large heavy duty black trash bags and marched over to a fellow friend and insurance agent’s home, or at least what was left of it, and helped this family clear out the remains of a seven foot flood that they experienced. Many thanks to Amy Bryan of Bryan Insurance Agency; Nelson Rivera of Rivera Agency; Dennis D’Amico of Member Brokerage; and Gino Orrino & Karen from Orrino Capital Services who came to the 34 November 12, 2012 / INSURANCE ADVOCATE
rescue of a dear friend to us all, and who is also an insurance agent. They say you should always surround yourself with great people…well I sure have, and I am proud to have them all as my friends. By the way, there was an injury on that job site that deserves an honorable mention: apparently Dennis stepped on a nail 2x’s, had to get a tetanus shot… and sat out some of the day. However, I heard that he did a wonderful job directing the others as they continued working while he was comfortably perched in a chair overseeing the crew! Hope you’re feeling better, Den, as I hear they left a few things for you to finish next week! J Thanks for taking such good care of “one of our own!” For four and a half years now I have been preaching to many of you about the benefit of utilizing social media within your agency to attract, and retain, new and existing business. Well, once again thanks to Jeff Yates, Executive Director of ACT (The Agents Council for Technology) who graciously has allowed me to share this with you, I am pleased to present an article written by Kevin Ament, Agency Marketing Manager at Progressive Insurance. Kevin prepared this article for ACT, and may be reached at John_K_Ament@progressive.com. As Kevin explains below, Facebook uses an algorithm called EdgeRank to choose which status updates to display in your fans’ news feeds. As a result, 84 percent of business page fans do not see the page’s posts in their Facebook news feeds! Kevin Ament provides the reader with three easy-to-implement tips that will increase the number of the agency’s fans that see its posts. These tips are essential for agencies to employ to build their reach and engagement on Facebook. The article also provides some great tools for agencies to use to monitor the reach of their posts and to keep up with changes in Facebook’s algorithm.
Building Engagement and Reach on Facebook At Facebook’s first-ever Marketing Conference in February 2012, the company released a startling number that quickly found its way into social media consultants’ Twitter streams and new business pitch decks: 84 percent of business page fans do not see the page’s posts in their Facebook news feeds. For agencies that are exploring social media’s potential (and asking tough questions about ROI), this number is alarming. Why should resource-strapped agents put energy into creating Facebook content when so few of their hard-earned fans are seeing the final product? It’s a fair question, but before you shutter your Facebook page, you should understand what’s behind this number, and what you can do about it. With a few simple changes to your posts, you’ll be reaching more fans and building more engagement with minimal effort. Why it happens Just as Google uses an algorithm to pull the most relevant web content to the top of your search results list, Facebook uses an algorithm called EdgeRank to choose which status updates to
[ FAC E TO FACE ] display in your fans’ news feeds. The more friends they have and business pages they “like,” the more posts are competing for limited space. EdgeRank filters out all but the most relevant, and business page posts often don’t make the cut. So which posts does EdgeRank usher through, and how do you get your posts on the shortlist? How it works To outsmart the algorithm, it helps to understand it. That’s easier than it sounds.
Together, these three factors determine which posts show up in an individual fan’s news feed. So how can you use this information to create more impactful posts? What you can do about it Here are three simple tactics to help you reach more fans with your Facebook posts. 1. Use more photos The most common problem I see on active agency Facebook pages is an over-reliance on text-only status updates. Posting more photos is an easy* way to increase engagement and post weight. Photos grab audience attention and, given their size in the news feed, block out competing posts on the screen. Consider these two posts that use the same text. Which would you be more likely to read, “like” and share with your friends?
Don’t let the sigma scare you. Put simply, EdgeRank ranks your post based on three criteria: 1. The relationship between your page and the individual fan (Affinity) 2. The value of the individual post (Weight), 3. The timeliness of the individual post (Decay). 1. Affinity The first criterion is an individual fan’s relationship with your page. Fans who regularly engage with your posts by clicking, liking, sharing, or commenting have a stronger “affinity” than fans who have stopped engaging (or who never engaged) with your posts. Unfortunately, this penalizes Facebook fans who want to read your agency posts but don’t actively engage with them. I’ll share some tips for moving more of these passive readers into active fans later in this article. 2. Weight The second criterion, weight, creates a unique value for each post based on how much and what type of engagement your fans have with it. As more of your fans click, like, comment and share your post, its weight and reach increase. Higher-value engagement includes sharing and commenting, but even likes and clicks boost post weight. The type of post can significantly influence fan engagement. Third party website EdgeRank Checker evaluates posts from more than 1,000 pages monthly and has found that photos drive more engagement than any other post type, followed by video, links and text-only status updates. 3. Decay The third factor, decay, is the most straightforward. Fans who are on Facebook during or shortly after you post are more likely to see your content. Fans who log in hours later have more (and more timely) content competing for their news feed, so there’s a lower chance your posts will break through.
*One important caveat: pulling pictures from Google Images to use with your status updates is easy, but many of the images are copyrighted. To avoid potential legal exposure, consider creating an account with an inexpensive stock photography website like Shutterstock (you can purchase a quality pic for as little as 24 cents), or take your own pics and use a free app like Instagram to create a polished and consistent look for your pictures. 2. Ask for likes and shares A 2011 study from Momentus Media analyzing nearly 50,000 status updates found that directly asking fans for a “like” increased post engagement by 216 percent! Yet only 1.3 percent of posts include this specific call to action. We’ve seen this best practice dramatically increase engagement on our consumer Facebook pages.
continued on page 36
INSURANCE ADVOCATE / November 12, 2012 35
[ FAC E TO FAC E ] continued from page 35
3. Be provocative Posting on topics that people disagree on can drive up engagement, and every like, comment and share increases affinity and post weight. Religion and polarizing political topics remain danger areas, but asking for fan opinions on texting legislation, driving age minimums or limits, car seat age and weight guidelines, or product preferences (Harley or Honda: which has the superior engineering?) can generate strong opinions on either side. Even sillier questions that tap into strongly held opinions can have the desired effect. For example:
Use these three tips together to see the greatest gains in engagement and post reach, and be sure to track how fans are responding. Your Facebook page administrators can see real-time reach data at the bottom of every post:
Facebook Insights has helpful dashboards so you can track your progress and refine your strategy. If you’re not seeing traction (particularly if you’ve had an idle page for months, have a new strategy and want to give your page a jump start) you can ensure all of your fans have an opportunity to see your post in their feed by using the “promote” tool. For a small fee, Facebook will add the post to a larger percentage of your fans’ news feeds, up to 100 percent.
Keeping up with EdgeRank Sites like EdgeRank Checker report regularly on any changes in the algorithm and provide additional tips on how and when to post for greatest engagement (Wednesday and weekends are the current leaders. You can even use the post scheduler feature on the bottom left of the status update window to schedule updates to post when you’re out of the office.) 36 November 12, 2012 / INSURANCE ADVOCATE
[ FAC E TO FACE ] Awareness Program on Long Island. 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.
With a little planning and a few best practices, you should see your Facebook engagement and reach rise over time. That’s the first step to achieving your goals, whether they’re acquisition, retention, public relations or a mix. Once you understand how to engage more of the fans you’ve already earned, take another step forward by learning to use the additional Facebook tools, like tagging and question, to extend your reach further, to the hundreds and thousands of prospects in your fans’ social networks. Thank you, Kevin Ament of Progressive, and Jeff Yates of ACT, for sharing this information with us. If anyone would like to speak with me about how social marketing may be implemented within your organization, please call or email me and I will be happy to help. Well, I trust that that those in the Northeast are beginning to experience some normalcy back in your lives and the lives of your family, friends, and clients, and from my family to yours, I wish you the safest and healthiest of Thanksgiving holidays! Ciao for now! [IA]
Michael Loguercio is the Regional Sales Manager for EZ Lynx; and active Past President of the Young Insurance Professionals of New York State. He is a 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. In 2010 Michael was honored with the NY-YIP/PIA Insurance Professional of the Year award; and in 2012 with a NYYIP/PIA Lifetime Achievement award. Michael is also Chair of the 2013 Professional Insurance Agents Regional INSURANCE ADVOCATE / November 12, 2012 37
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[ COURTSI DE ]
By Lawrence N. Rogak
Court Orders In-Camera Review of Insurer's Claims File to Determine What Parts Must Be Disclosed McLaurin Fields v First Liberty Ins. Corp.
ildred Collins was the owner of the property located at 21 Tilney Avenue in Medford, New York and had a homeowners policy of insurance with the defendant until her death on July 28, 2008. The homeowners policy was renewed and issued to the Estate of Mildred Collins effective February 5, 2009 through February 5, 2010. On February 6, 2009, the insured premises sustained water and mold damage as a result of pipes freezing and rupturing. After a claim was filed, the defendant retained counsel in May 2009 regarding its rights under the homeowners insurance policy and to provide legal advice with respect to the issue of whether heat had been maintained in the premises.
Subsequent to an investigation, it was determined that the heat had not been maintained as required by the homeowner's insurance policy, and coverage was denied by letter dated June 2, 2010 (the "Denial Letter"). Thereafter, the Executrix of the Estate, plaintiff, Yvonne McLaurin Fields, commenced the instant action for breach of contract. Issue has been joined and discovery is in progress. Plaintiff served the defendant with omnibus discovery demands dated October 8, 2010, which called for the production of, among other items, a complete copy of the claims file with the claim notes, and a privilege log. On February 17, 2011, defendant served its response to the demands, however, plaintiff 's counsel
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asserts that a privilege log was not included and portions of the claim notes were redacted, without explanation. On June 21, 2011, the defendant produced for deposition Lance Latten, the examiner assigned to the claim and who authored the Denial Letter. Upon questioning, Latten testified that in preparation for the deposition he reviewed the claims file and the unredacted version of the claim notes, and he revealed that entries had been made after June 2, 2010. Latten's testimony prompted plaintiff to serve a Second Notice for Discovery and Inspection dated October 12, 2011 (the "Second Notice"), demanding production of, among other items, memoranda, business and personal files, diaries and computerized notes, "in full, without abbreviation or expurgation." The Second Notice also demanded estimates, invoices, bills, proposals and inventories prepared by certain identified companies hired in connection with the damages sustained to the insured premises and its contents (hereinafter referred to collectively as "Demands #1 through #6"), and a privilege log. By letter dated October 18, 2011, defendant's counsel objected to Demands #1 through #6 as material prepared in anticipation of litigation or on the grounds of relevance. The letter did not address the demand for the unredacted claim notes, and did not include a privilege log. Plaintiff 's counsel, by letter dated November 10, 2011, advised defendant's counsel that the objections were improper and unresponsive, and demanded the production of the documents in five days; the documents were not produced and no response was received. The instant motion ensued. Plaintiff 's counsel contends that the claim notes sought are discoverable as a matter of law as any privilege shielding them from disclosure was waived when employees of the defendant reviewed the unredacted version in preparation for dep-
[ COURTS I DE ] osition. Counsel also contends that Demands #1 through #6 are discoverable and necessary in order to adequately prepare for trial. In opposition, defendant's counsel contends that the redacted claim note entries contain confidential communications between employees of the defendant and attorneys at the law firm and therefore are absolutely immune from discovery under the attorney-client privilege. The responsive documents to Demands #1 through #6, defendant's counsel contends, were prepared in anticipation of litigation or are irrelevant to the facts of this case. The drastic remedy of striking the defendant's answer pursuant to CPLR 3126 is not warranted here, as plaintiff has not shown that the defendant's failure to produce documents responsive to the Second Notice was willful, contumacious or in bad faith (see Rini v Blanck, 74 AD3d 941, 902 NYS2d 185 [2d Dept 2010]; Kesar v Green Ridge Enters., 30 AD3d 471, 817 NYS2d 343 [2d Dept 2006]). The branch of the motion to compel the production of the unredacted claims notes and the various other documents is decided as follows. "CPLR 4503(a) states that a privilege exists for confidential communications made between attorney and client in the course of professional employment, and CPLR 3101(b) vests privileged matter with absolute immunity" (Spectrum Sys. Intl. Corp. v Chemical Bank, 78 NY2d 371, 377, 575 NYS2d 809 ). Nevertheless, as there is a strong public policy in favor of full disclosure, a party seeking to withhold discovery on the ground of privilege has the burden of proving each element of the privilege asserted (see id.; Matter of Priest v Hennessy, 51 NY2d 62, 431 NYS2d 511 ; Koump v Smith, 25 NY2d 287, 303 NYS2d 858 ). Thus, where a party alleges that documents sought for production and inspection are shielded from disclosure by the attorney-client privilege, the party seeking to withhold such documents has the burden of demonstrating that the information contained therein constitutes confidential communications between the attorney and the client for the purpose of securing legal services or advice (see Rossi v Blue Cross & Blue Shield of Greater New
However, the court cannot determine from the papers submitted whether the redacted information in the claim notes concerns communication primarily of a legal character or "for the purpose of facilitating the rendition of legal advice or services"
York, 73 NY2d 588, 542 NYS2d 508 ; All Waste Sys. v Gulf Ins. Co., 295 AD2d 379, 743 NYS2d 535 [2d Dept 2002]; Bertalo's Rest. v Exchange Ins. Co., 240 AD2d 452, 658 NYS2d 656 [2d Dept 1997]). The attorney-client privilege is not lost because the documents also contain or refer to some nonlegal concerns (see Rossi v Blue Cross & Blue Shield of Greater New York, supra; All Waste Sys., Inc. v Gulf Ins. Co., supra). Materials prepared in anticipation of litigation are subject to a conditional privilege (CPLR 3101[d]). To demonstrate that this privilege is applicable, it must be shown that the material was prepared exclusively in anticipation of litigation (Bombard v Amica Mut. Ins. Co., 11 AD3d 647, 783 NYS2d 85 [2d Dept 2004]; Agovino v Taco Bell 5083, 225 AD2d 569, 639 NYS2d 111 [2d Dept 1996]). When such a showing is made, materials prepared in anticipation of litigation are immune from disclosure unless a party shows "substantial need" and the "inability to obtain the substantial equivalent elsewhere without undue hardship'" (CPLR 3101[d]; Valencia v Obayashi Corp., 84 AD3d 786, 787, 922 NYS2d 794 [2d Dept 2011]). Whether a particular document is shielded from disclosure necessarily is a fact-specific determination that most often requires an in camera inspection (see
Spectrum Sys. Intl. Corp. v Chemical Bank, supra). The argument by plaintiff 's counsel in support of production of the claim notes centers on the fact that two of the defendant's employees, Latten and his supervisor Kim Russo, admittedly reviewed the unredacted version of the claim notes in preparation for their respective deposition testimony, and thereby waived the attorney-client privilege. This argument is unavailing. A document protected by an unqualified privilege is not waived by a party merely by allowing its own employee to review the document in preparation for a deposition (see Fernekes v Catskill Regional Med. Ctr., 75 AD3d 959, 906 NYS2d 167 [3d Dept 2010]; Geffers v Canisteo Cent. School Dist. No. 463201, 105 AD2d 1062, 482 NYS2d 635 [4th Dept 1984]; see also US v Kovel, 296 F2d 918 [2d Cir 1981]; People v Osorio, 75 NY2d 80, 550 NYS2d 612 ; Hudson Ins. Co. v Oppenheim, 72 AD3d 489, 899 NYS2d 29 [1st Dept 2010]). There is no dispute that Latten and Russo are employed by the defendant. Thus, if the redacted information contains confidential communication protected by the attorney-client privilege, the privilege was not waived. However, the court cannot determine from the papers submitted whether the redacted information in the claim notes concerns communication primarily of a legal character or "for the purpose of facilitating the rendition of legal advice or services" (Rossi v Blue Cross & Blue Shield of Greater New York, supra at 593). Therefore, an in camera review of the unredacted claims notes is necessary. In reply, plaintiff 's counsel asserts for the first time that the redacted information is discoverable because it was prepared prior to the defendant's decision to deny coverage. An argument cannot be raised for the first time in a reply (see Bailey v Brookdale Univ. Hosp. 27 AD3d 677 [2d Dept 2006]). In any event, unlike material conditionally immune from discovery, the attorney-client privilege which has absolute immunity, is not tied to such a continued on page 42
INSURANCE ADVOCATE / November 12, 2012 41
[ COURTSIDE ] continued from page 41
However, "[i]t is incumbent on the party seeking disclosure to demonstrate that the method of discovery sought will result in the disclosure of relevant evidence or is reasonably calculated to lead to the discovery of information bearing on the claims"
decision or to the contemplation of litigation (see Spectrum Sys. Intl. Corp. v Chemical Bank, supra; Bombard v Amica Mut. Ins. Co., supra). Turning to the items in the Second Notice, to which the defendant's counsel objected on relevance grounds, the Court finds that at this juncture, plaintiff has not established its entitlement to such documents. Plaintiff is clearly entitled to "full disclosure of all matter material and necessary in the prosecution...of [this] action" (CPLR 3101[a]). However, "[i]t is incumbent on the party seeking disclosure to demonstrate that the method of discovery sought will result in the disclosure of relevant evidence or is reasonably calculated to lead to the discovery of information bearing on the claims" (Vyas v Campbell, 4 AD3d 417, 418, 771 NYS2d 375 [2d Dept 2004]; Crazytown Furniture v Brooklyn Union Gas Co., 150
AD2d 420, 421, 541 NYS2d 30 [2d Dept 1989]). Plaintiff 's counsel has not demon-
strated how the invoices or bills of the companies hired by the defendant are relevant to the issues herein. Therefore, the branch of the motion seeking documents responsive to demands 2, 4 and 6 in the Second Notice, is denied at this time. The court will now address the demands in the Second Notice to which the defendant's counsel objected on the basis that the documents were prepared after the date of the Denial Letter. "[T]he payment or rejection of claims is a part of the regular business of an insurance company. Consequently, reports which aid it in the process of deciding which of the two indicated actions to pursue are made in the regular course of its business" (Landmark Ins. Co. v Beau Rivage Rest., 121 AD2d 98, 101, 509 NYS2d 819 [2d Dept 1986] [internal quotation marks omitted]). Reports prepared by insurance investigators and adjusters before the decision is made to pay or deny a claim are thus not privileged
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[ COURTS I D E ] and are discoverable (see id.; see also Bertalo's Rest. v Exchange Ins. Co., supra). However, once an insurance company "has rejected the claim...reports made to it to aid in the resistence of the claim are made for the purpose of litigation and are protected by CPLR 3101 (subds. [c], [d])" (Landmark Ins. Co. v Beau Rivage Rest., supra at 101). The relevant date in determining whether an expert's report was prepared exclusively for anticipated litigation or trial, is the date of the insurance company's decision to deny coverage (id.). The Second Notice seeks: 1. All estimates and/or proposals prepared by Certified Restoration Services Inc. with respect to damages sustained to the [subject] premises by virtue of the Loss. *** 3. All personal property estimates and/or inventories prepared by Insurers World and/or SOS (Service on Site) with respect to damages sustained to the contents located at [the subject premises] by virtue of the Loss." *** 5. All estimates, proposals, restoration proposals and/or inventories prepared by PCI Restoration with respect to damages sustained to the contents located at [the subject premises] by virtue of the Loss. Defendant's counsel states, and it is not disputed that the building damages estimate prepared by Certified Restoration dated January 20, 2010 was previously provided to plaintiff 's counsel, as was the damage inventory of personal property prepared by Insurers World/SOS dated February 18, 2009. Defendant objects to the extent that the Second Notice seeks disclosure of material prepared after June 2, 2010, the date of the defendant's decision to deny the claim. It contends that documents prepared after June 2, 2010 are privileged as material prepared for litigation, and thus are not discoverable. Defendant's counsel posits that a second estimate dated June 14, 2011 prepared by Certified Restoration, and a second inventory received from SOS dated October 17, 2011, fall into this category. Similarly, defendant's counsel posits that PCI Services was
retained by the defendant on July 8, 2011 to prepare an estimate of the cost to clean the personal property in the subject premises. The estimate provided by PCI Services dated November 2, 2011, defendant's counsel maintains, is thus also protected from disclosure as material prepared for litigation. The court finds that the Certified Restoration estimate dated June 14, 2011, the SOS inventory dated October 17, 2011, and the PCI Services estimate dated November 2, 2011 were prepared after the defendant issued the Denial Letter. Thus these documents fall within the parameters of CPLR 3101(d), material prepared for litigation, and are immune from disclosure unless the plaintiff 's counsel can demonstrate a substantial need and the inability to duplicate the reports, which plaintiff has failed to do. Rather, plaintiff 's counsel makes the conclusory assertion that plaintiff would be at a decided disadvantage should she not have time to review the damages evaluations. However, this assertion is undermined by the fact that the defendant's counsel has produced the estimates and inventory reports prepared prior to the date of the Denial Letter. Accordingly, held in abeyance is a decision on that portion of the motion which seeks disclosure of the claim notes, in full, pending the court's in camera inspection thereof. Plaintiff 's motion is otherwise denied. [IA] 2012 NY Slip Op 22324 Decided on November 1, 2012 Supreme Court, Suffolk County Pastoressa, J.
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[ LOOKING BACKâ€Ś Insurance Advocate, 25 years ago]
November 14, 1987... What was happening and what were the issues.
44 November 12, 2012 / INSURANCE ADVOCATE
[ LOOKING BACK… Insurance Advocate, 25 years ago]
The way it was in 1987… from our archives. INSURANCE ADVOCATE / November 12, 2012 45
[ LAST WORD ]
By Richard Amerling, M.D.
Defensive Medicine: How to Survive Obamacare
t’s been a horrible year for individual liberty. First, John Roberts re-writes the Obamacare legislation in order to side with the four liberals on the U.S. Supreme Court to uphold the constitutionality of the individual mandate. Then Mitt Romney, a moderate technocrat, failed to make the case to change course with the electorate, in my view largely because he was unable to
more important if you have significant medical problems. You will not get the care you need in Medicaid, or an “Accountable Care Organization,” the latest version of managed care. Doctors should strongly consider opting out of Medicare and other major thirdparty payers, as our practices will increasingly be under their direct control. If
Many of the blue states, such as California, New York, Illinois, and Michigan, are in dire financial straits due to high taxes, public sector unionism, and overspending on welfare programs, including Medicaid. If millions of productive conservatives (i.e., taxpayers) bail out, the fiscal picture worsens considerably and these states will either collapse or reform. Dr. Amerling
effectively challenge Obamacare. The federal noose is tightening inexorably around our collective neck! How can we, as individuals, defend our families and ourselves? These are desperate times and require desperate measures. Allow me to suggest a few. There is simply no way that greatly expanded federal control over medicine will be anything but a disaster. Central planners will tighten their grip using price controls and other heavy-handed means of “cost control” that will inevitably mean shortages and rationing. To understand how this happens, look no further than hours-long lines to get gasoline in New York and New Jersey. These are a direct result, not of Hurricane Sandy, but of the strict “anti-gouging” laws in these states that prevent retailers from raising prices in response to scarcity. Higher prices will signal suppliers to overcome barriers to delivering more supply. Gas lines would vanish overnight with suspension of price controls. In medicine, price controls on doctors and hospitals will mean shortages of both. To assure continued access to a personal physician, concerned Americans should immediately seek out and contract with a direct-pay or concierge doctor. This is even 46 November 12, 2012 / INSURANCE ADVOCATE
a critical mass of physicians opt out, it will be difficult for the federal government to compel participation. Under your doctor’s guidance, wean yourselves off expensive drugs by adopting a healthy lifestyle. Don’t take illicit drugs or tobacco, and limit alcohol. Avoid processed carbohydrates and high-fructose corn syrup. Exercise regularly and maintain ideal body weight. Most medications for hypertension, type 2 diabetes, high cholesterol, and osteoporosis are toxic, and don’t address the underlying problem. To pay for care, consider setting up a Health Savings Account, which somehow survived Obamacare, albeit with some restrictions. The HSA can be used to pay for routine care, such as office visits and tests. Get used to the idea of paying directly for your routine care. An HSA should be coupled with a catastrophic insurance policy with a high deductible. These too are still available. The Association of American Physicians and Surgeons has information on all of the above, and frequently sends updates on Twitter. This leads to my final recommendation: If you live in a blue state, consider relocating to a red state, particularly one that is not
complying with Obamacare. According to Twila Brase, we can add Montana, Alabama, and Wyoming to the list of states refusing to set up the Obamacare state insurance “exchanges.” The U.S. Supreme Court ruled that the federal government couldn’t force states to expand Medicaid, or set up exchanges. States that opt out effectively defend their citizens from some of the more objectionable aspects of Obamacare. There are other major advantages for conservatives who move from a blue to a red state. Your vote will suddenly count, and over time, the Electoral College and Congress will shift to favor red states. You will also enjoy lower taxes and cost of living, and if moving from the northeast, a better climate! Many of the blue states, such as California, New York, Illinois, and Michigan, are in dire financial straits due to high taxes, public sector unionism, and overspending on welfare programs, including Medicaid. If millions of productive conservatives (i.e., taxpayers) bail out, the fiscal picture worsens considerably and these states will either collapse or reform. Long term, this is the only way to win the non-shooting civil war that is raging between those who favor expanding the welfare state and those who desire a return to our founding principles of a limited federal government and maximal personal freedom. [IA]
Richard Amerling, MD is a nephrologist practicing in New York City. He is an Associate Professor of clinical medicine at Albert Einstein College of Medicine in New York, and the Director of Outpatient Dialysis at the Beth Israel Medical Center. Dr. Amerling studied medicine at the Catholic University of Louvain in Belgium, graduating cum laude in 1981. He completed a medical residency at the New York Hospital Queens and a nephrology fellowship at the Hospital of the University of Pennsylvania. He has written and lectured extensively on health care issues and is a Director of the Association of American Physicians and Surgeons. Dr. Amerling is the author of the Physicians' Declaration of Independence.
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