Volume 129 Number 11 | June 25, 2018
Music to their ears...
PIA STARS IN A.C. AGENT GALA Trust, but Verify...
A Perspective on Compliance PAGE 14
Is Your Offer Letter State-ofthe-Art New HR Column
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Volume 129 Number 11 | June 25, 2018
10 PIANY/PIANJ Annual Joint Conference
Contents
4 Foreword: Hello, but I Must Be Going Steve Acunto, Publisher 6
On the Level: Foundations in Marketing for the Digital Age N. Stephen Ruchman
14
Guest Article: Trust, but Verify Pete Sfoglia
16 Guest Opinion: How President Trump Can Turbo-Charge Patient Freedom and Lower Medical Costs Elizabeth Lee Vliet, M.D. 18
In the News: The Schinnerer Group to Rebrand as Victor
19 HR Update: Is Your Offer Letter State-of-the-Art? Alfred T. DeMaria 20 On My Radar: A Contract of Insurance is a Binding Contract Barry Zalma 22
Looking Back: August, 1968
24 Courtside: Florida Insurers May Rescind Auto Policies in NY Accidents, but Proof Must Comply with NY Law Plaintiff ’s Failure to Respond to 90 Day Notice is Fatal to PIP Suit Lawrence Rogak info@insurance-advocate.com www.insurance-advocate.com
26 Guest Article: Why Do We Need a Right-to-Try Bill in America? Jane M. Orient, M.D. INSURANCE ADVOCATE / June 25, 2018 3
[ FOREWORD ]
STEVE ACUNTO
Hello, but I Must Be Going. uIFNY wound up hosting a beautiful breakfast meeting with Scott Fisher (pictured) which turned out to be his very last appearance as Executive Deputy Superintendent of the NYDFS. Scott resigned a few days prior. Not saying yet where he will be going, but he is a bright man who did nicely at the DFS in our view and will surely land on his feet. We hope so.… Speaking of IFNY, one of its directors, Huhnsik Chung, has left Baker & McKenzie LLP for the downtown pastures of Stroock—long a home of legendary insurance mayvens like Marty Minkowitz, Bill Latza, Vince Laurenzano and Don Gabay, who has slipped away to Florida, but makes it back to the real world very frequently. We wish Huhnsik well; he’s a top gun and shoots straight.… OK, there’s more: IFNY President, Nick Pearson, reminds the world that the Federation’s big event, the IFNY Annual Award Luncheon is set for November 9th at the Union League Club. Not to be missed!… Speaking of mayvens, Martin Koles, who applies his engineering background each day to the orderly and strategic delivery of service and product to his growing clientele – including some major NY brand names these days, took the time to call our attention to the latest creation of Stu Fries—a long time advocate of the Advocate and a friend to every agent and broker in New York. Martin sent the following missive sent by Stu to his office: “I have some very exciting news for many licensed insurance brokers in New York State. As you know, current legislation under consideration respects the various licenses for entities in New York State, that currently have different expiration dates for Brokers, Agents, and Life Licenses. Now there is a change being considered to have the SAME expiration license dates so that entities have each of their different types of licenses, with a common expiration date. New and Renewal BROKERS’ Licenses, issued starting sometime in May, 2018, NOW have the following language printed on the License: An insurance broker with the property/casualty lines is authorized to act as such with respect to any and every line of authority except life insurance and variable life and variable annuity insurance. This language follows the Law in New York State, and, therefore, ALL licensed brokers are now shown to be eligible to provide ACCIDENT & HEALTH insurance and receive commissions, without the necessity of a current LIFE insurance license. (Those agents that received a Life Insurance license many years ago, were NOT qualified to sell Accident & Health insurance. Today, those persons obtaining the LIFE license DO qualify to sell Accident & Health insurance.)” - Stuart Fries The saga of Stu’s wide awake work for agents and brokers continues. More on this as it develops.… NYSPFD has been well covered in these pages, largely through the transmission of the award winning communications undertaken by Richard White and the professionals at ShelterPoint. Now the state is presenting some updates worth knowing by health care providers and others. A new series of Paid Family Leave webinars for health care providers, detailing what they need to know – and do – to help employees use the state’s landmark Paid Family Leave benefit will review the health care provider’s role in medical certification (including who can certify leave and which conditions qualify), and address top questions from providers. “It’s vital that health care providers fully understand our strongest-in-the-nation Paid Family Leave policy so they can support patients and their families,” Workers’ CONTINUED ON PAGE 8 4 June 25, 2018 / INSURANCE ADVOCATE
S I N C E
1 8 8 9
VOLUME 129 NUMBER 11 JUNE 25, 2018
EDITOR & PUBLISHER Steve Acunto 914-966-3180, x110 sa@cinn.com CONTRIBUTORS Jamie Deapo Alfred T. DeMaria Kelly Donahue-Piro Christopher Paradiso Lawrence N. Rogak N. Stephen Ruchman Barry Zalma PRODUCTION & DESIGN ADVERTISING COORDINATOR Gina Marie Balog-Sartario 914-966-3180, x113 g@cinn.com SUBSCRIPTIONS P.O. Box 9001, Mt. Vernon, NY 10552 914-966-3180, x111 circulation@cinn.com PUBLISHED BY CINN Global Initiatives P.O. Box 9001, Mt. Vernon, NY 10552 (914) 966-3180 | Fax: (914) 613-1595 www.cinn.com | info@cinn.com President and CEO Steve Acunto
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INSURANCE ADVOCATE® (ISSN 0020-4587) is published bi-monthly, 20 times a year, and once a month in January, July, August, and December by CINN ESR, Inc., P.O. Box 9001, Mt. Vernon, NY 10552. Periodical postage pending at Greenwich, CT and additional mailing offices. POSTMASTER Send address changes to Insurance Advocate®, P.O. Box 9001, Mt. Vernon, NY 10552. Allow four weeks for completion of changes. SUBSCRIPTION RATES $59.00 US, Canada $65.00, International $135.00. TO ORDER Call 914-966-3180, fax 914-613-1595, email: circulation@cinn. com or write: Insurance Advocate® PO Box 9001, Mt. Vernon, NY 10552 or visit www.Insurance-Advocate.com. INSURANCE ADVOCATE® is a registered trademark of CINN ESR, Inc. and is copyrighted 2018. All rights reserved. No part of this magazine may be reproduced in any form without consent. Trademark registered U.S. Patent and Trademark Office.
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NEW YORK
PAID FAMILY LEAVE
It’s here!
Bonding
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Military Find out what you need to know:
www.newyorkpfl.com Copyright © 2018. ShelterPoint Life Insurance Company | Mktg#18-11 | G1 01/18
[ ON THE LEVEL ]
N. STEPHEN RUCHMAN, CPIA
Foundations in Marketing for the Digital Age Do what you do for the right reason and ask for referrals u I always get my continuing education while attending PIA events. I can collect several credits over a single day, while taking advantage of the excellent networking and trade shows on which PIA has built a reputation in the northeast. And, importantly, I always learn valuable information during the classes. One of the most recent events I attended was PIANY’s Long Island RAP in Woodbury, Long Island, which was conveniently close to my home, but also a great show. One of the classes I attended was taught by John Fear, CPIA, CISR. He gave some great advice about social media, the errors-and-omissions perils an agency should be careful about and also what agencies can do to maximize the use of social media. Anyone who has ever taken an E&O course knows you can walk out of it so frightened of the potential problems that you may not want to sell insurance anymore. But, this class was great be-
When clients work with us they have made a decision not to work with someone halfway across the country, who doesn’t understand the unique needs of their communities. They know we care.
cause John presented great suggestions about what a producer can do, in addition to what he or she can’t. One of the many great suggestions John discussed was making sure you get permission to connect with your clients on their Facebook or Twitter accounts (and, of course, getting their social-media information along with their email). One of
N. Stephen Ruchman, CPIA, is a retired independent agent and founder of Ruchman Associates Inc. the agency he started in 1961. A past president of the Professional Insurance Agents of New York State Inc., he is an active supporter of PIANY, and he has sat on or chaired nearly every committee including the Executive Committee and the Long Island Advisory Council and PIANY’s Political Action Committee. He can be reached via email at: nsruchman@gmail.com.
the scenarios he shared was downright exciting: He suggested that an agency give a $5 donation for every policy they write to a local charity that the agency supports. Imagine this scenario: John Smith comes into the office for an auto policy because his new dog is a Great Dane and he needs a bigger car and he knows ABC Agency loves animals. ABC Agency makes sure to get a picture of John and his puppy, and asks if they can post it on the agency’s Facebook page. ABC’s Facebook post with the picture of John and Fido said something like this: “ABC congratulates John and Fido on their new Subaru. We are happy to share that ABC donates $5 to our local shelter for every new auto policy we write.” And, they include a hashtag and tag the shelter to which they donate. Now, of course, John loves his puppy and he is happy with his service from ABC Agency so, when the agency posts the photo and tags John, he “likes” it. All of John’s Facebook friends now know that ABC Agency is a community and pet friendly agency and they see John has given the agency a thumbs up. But it gets better—because the shelter and all of its supporters on Facebook CONTINUED ON PAGE 8
6 June 25, 2018 / INSURANCE ADVOCATE
[ ON THE LEVEL ] CONTINUED FROM PAGE 6
also will see this post, since ABC agency tagged it and is making the donation. All of John’s friends have an implicit referral. But, all of the shelter’s friends do, too. This practice makes great use of a new medium, but the marketing concepts on which it is based are older than me. The first is that the primary reason people use professional independent agents in the first place. We are local; we participate in our communities and for that reason, people know us and they have confidence when they work with us. When clients work with us they have made a decision not to work with someone halfway across the country, who doesn’t understand the unique needs of their communities. They know we care. I would argue that this age-old foundational relationship is even more important nowadays than it was before the millennials became a purchasing force. However, as John warned us, with new media we have new challenges, too. How many of us get calls on our cell phones and simply disregard them—we don’t even pick them up—because the number calling is unfamiliar? I know I do. If I do pick up a call because it’s a local number, but then realize the call is automated, I hang up automatically. We are growing more jaded about the communication we see, and with good reason. Media that makes communication more simple, makes scamming more simple, and so it goes. In the past, I was successful using telemarketers at my agency. I was able to pick up many good accounts using them, but with the current environment, I’m not sure telemarketing is going to work. So how do we pick up accounts? Cold calls aren’t my thing. They require a certain intestinal fortitude that most people, including myself, don’t have. I’ve always needed a referral. But having the door open a little, I was in! Telemarketing may be a thing of the past. We need to reinvent our communication accounts. But, we can still rely on the foundational concept that differentiates us as professional independent agents: Because we are active in our communities. We can still participate: in chambers of commerce; with local charities; at our houses of worship. We just have 8 June 25, 2018 / INSURANCE ADVOCATE
We are growing more jaded about the communication we see, and with good reason. Media that makes communication more simple, makes scamming more simple, and so it goes.
to do it for the right reasons. We can’t join to sell, we have to join because it’s the right thing to do. That genuine concern for our communities and our neighbors is what makes us better. I’ve told this story before, but it remains true: I was recommended by a friend to the first organization I ever joined. He was an attorney, and he told me: “People know what you do. Don’t join the organization to sell insurance, because if you do, you won’t be successful. Join for the organization because you believe in its mission.” He was right. Eventually, people on the board came to me and they became clients and they referred me to clients. This soft sell is effective. If you join a group and proceed with the hard sell, you will lose out. Nowadays, I know that many firms require their sales and marketing people employees to be on social media and to take part in civic and community activities. That’s great! But, the old tenents of marketing remain the same. Likewise with advertising: Investing in advertising is a smart thing. Doing it on social media, and in community forums is far less expensive than the old days, when we advertised in print and the Yellow Pages. But, the same rules apply: When you advertise, you can’t expect direct leads from a single post or run. Ads can’t be measured by direct leads, they serve to build a reputation and the more impressions you make, the more success you will have—eventually. Social media is great because it taps into the most time-tested and effective form of marketing: personal referrals. Every thumbs up; like; repost; and retweet is an endorsement that can get you in front of countless leads. This is a modern application of an age-old concept: Asking for referrals is the most effective and affordable way to market yourself.
Consider, for example, supplemental insurance for Medicare. This product is being pushed to many with sketchy sales pitches over the phone. People smartly are suspicious of these calls. But, if an agency has an expert who knows health coverages, it could be a great product to round out their book. You wouldn’t expect to sell this kind of coverage over social media (although Facebook is by far the most popular social media site for baby boomers, and they are 19 percent more likely to share content compared to any other generation, according to Digital Trends). But, your clients have parents and grandparents who may need this. Having this expertise may help you stand out as a specialist. If you know your product; know the competition; and you establish yourself as a trusted community member, who cares about your clients because you are local, you may get referrals from social media. Conversely, parents and grandparents who may consult you on this coverage can lead you to children and grandchildren who will become future clients. … all you have to do is ask for referrals. This is the best way to get leads! Never fail to ask to be recommended. In person or on the internet: Wherever you go, do what you do for the right reason and ask for referrals.[IA]
FOREWORD CONTINUED FROM PAGE 4
Compensation Board Chair Clarissa Rodriguez noted. “These sessions will equip providers with the information and tools they need to certify conditions under Paid Family Leave, making the benefit accessible to working families in New York.” The sessions are free and open to health care providers. Early registration is encouraged as space is limited. • Tuesday, July 31, 4:00 p.m. - 5:00 p.m. Register here • Tuesday, August 7, 4:00 p.m. 5:00 p.m. Register here Additional sessions will be scheduled as needed. Help is also available via a tollfree Paid Family Leave Helpline at 844-337-6303. Have a great 4th and do remind everyone what it stands for. SA
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PIA STARS IN A.C. AGENT GALA uSome
2,000 agents and insurance industry professionals took to Atlantic City at the PIANJ/PIANY Annual Conference Harrah’s Casino Resort in Atlantic City, N.J., June 10 - 12. The event, an ever-evolving industry tradition, brought a flood of insurance professionals to the shore, to network and be seen at exciting and fun events; packing an expansive trade show; and attending cutting-edge educational seminars with a host of topics important to agents for continuing-education credit. Sound waves from the music at the YIP Nitecap and a black-and-white pool party made the scene full of energy; and Comedian Tom Cotter, of America’s Got Talent fame, entertained attendees at a fun and filling Monday lunch.
Outgoing PIANJ President Kacy Campion Renna, CIC, ceremoniously passes the gavel to newly inducted new President Lloyd H. “Rip” Bush Jr., CPIA during the PIANJ Annual Business Meeting Sunday morning.
10 June 25, 2018 / INSURANCE ADVOCATE
TRADE SHOW AND EXHIBITION
The conference kicked off with a networking lounge at the center of the biggest insurance exhibition in the Northeast, featuring hors d’oeuvres and drinks. Insurance professionals joined colleagues for two days of making valuable contacts and getting up-to-date with events to help them grow their business. Hundreds of vendors, eager to meet with agents from some of the biggest PIA-affiliate states, came to check out the latest innovations, products and markets.
Education kicked off on Sunday with the opening general session, Managing the New ‘Social’ Insurance Industry, an interactive panel discussion moderated by Donna Chiapperino, PIANY past president and sales director at GuideOne Insurance. The panel was comprised of Amy Bryan, CIC, agency owner, Bryan Insurance Agency; Timothy Morales, managing partner, Synchronous–The Social Media Co.; and Christina Sarapuchiello, business development manager, Jimcor Agencies. Steven D. Lyon, CPCU, CIC, CRM, AAI, ARM, AIS, CRIS, MLIS taught two classes, each for three credits: Commercial & Personal Lines Renewal Review on Monday morning, and Insurance Quiz--Testing Your Knowledge in the afternoon. James Burger of The Service Insurance Co. taught Exploring Contract Surety, Risk Factors to Consider; and Gary Slavin, CLTC, LUTCF, CIC, taught Life and Health for the P&C Agent–Don’t Leave Commission Dollars on the Table.
“We have attended numerous conventions and conferences across the U.S., and the PIA Conference, by far is the best … beginning with the warm welcome on Sunday, to the final wrap on Tuesday, there was no doubt that the conference was on time, on point and detail-oriented,” said Greg Feeney, director of sales at Ontrak Solutions, one of the nearly 200 vendors that filled the trade show.
EDUCATION
Registrants could choose from more than half-a-dozen CE classes that captivated and offered valuable information for agents seeking to grow their businesses and profits. “I come to conference because I know I will leave with valuable knowledge I can use at my agency,” one member was heard saying. “Of course, it’s a good time and I love to see all my old friends, but where else can I get CE credit that is truly this useful?”
Steve Lyon
James Burger
Then, on Tuesday, the ever-popular John Fear, CPIA, CISR, taught the Closing E&O session: Errors, Omissions and Ethics in the Virtual Marketplace.
FUN AND FILLING LUNCH WITH COMEDIAN TOM COTTER
PIANY President Fred Holender, CLU, CPCU, ChFC, MSFS, opened the buffet networking lunch as master of ceremonies,) PIANJ immediate past President Kacy Campion CONTINUED ON PAGE 12 INSURANCE ADVOCATE / June 25, 2018 11
CONTINUED FROM PAGE 11
Renna, CIC, introduced the new PIANJ officers and newly inducted PIANJ President Lloyd H. “Rip” Bush Jr., CPIA, welcomed the new generation of professionals, including the new NJYIP administration before introducing Comedian Tom Cotter. Cotter’s show entertained the audience with side-splitting one-line humor that brought him to the second-place position in America’s Got Talent!
(L-R) PIANJ committee and board members Karen Hivry; Maria Escalona; Connie Mahoney; Yossi Alberty and Esther Tanez with Brian Mahoney at the black-and-white PIA Pool Party.
dinner stations and dancing in Harrah’s tropical pool club— wearing black and white attire – and fun.
PIANY President Fred Holender
President Kacy Campion Renna, CIC
YIP Nitecap Harrah’s Eden Lounge rocked with energy as PIA’s Young Insurance Professionals hosted an evening event Sunday that everyone enjoyed. The Eden Lounge was full; bartenders were fast and busy; and even the young at heart had fun, dancing to the music of Legends!
Lloyd H. “Rip” Bush Jr., CPIA
MUSIC, DANCING AND ENTERTAINMENT
PIA’s Poolside Party To The Max led the festivities at Harrah’s Pool Monday evening. Everyone had a great opportunity to meet up with old friends and make new connections, while enjoying appetizing
12 June 25, 2018 / INSURANCE ADVOCATE
Fun Run for Special Olympics: a 34-year, $4 million relationship The annual Fun Run for Special Olympics New Jersey, a 34-year tradition on the Boardwalk continued on Tuesday morning at 7 a.m. To date, PIANJ and NJYIP have raised some $4 million for SONJ. Participants ran, jogged and walked, and celebrated the fundraising and race accomplishments with Special Olympics athletes and officials during the celebratory breakfast that followed. Special Olympics athletes who have participated in the games for as long as 50 years addressed the breakfast crowd, bringing their audience to tears. Nearly 110 runners took part in the five-kilometer race. Franklin Mutual Insurance Co.’s Kyle Price finished first for the men with a time of 16:45; Alysse Merullo, a member of the Maiden Re team, finished first for the women with a time of 25:24. In terms of fundraising, FMI, a major-event sponsor for many years, was the company that raised the most money, contributing more than $85,000 to the Fun Run total. During
PIA NEW JERSEY ELECTS ITS 2018-19 BOARD OF DIRECTORS.
Sunday morning, PIANJ held its annual board meeting, at which the association named its 2018-19 board of directors and officers: PIANPIANJ 2018-2019 officers: • PIANJ National Director Keith A. Savino, CPIA • Immediate past President Kacy Campion Renna, CIC • Secretary Connie Mahoney • Treasurer Rip Bush, CPIA • Vice President Steven C. Radespiel • Vice President Michael DeStasio Jr. • First Vice President Bruce Blum • President Lloyd H. “Rip” Bush Jr., CPIA the annual conference, FMI also received the Community Service award from PIANJ for its commitment to the Fun Run and other events. Other top fundraisers included: Jimcor Agencies, top agency; and Jordana Nester of Maiden Re as top individual. In all, the Fun Run raised $112,000this year for the cause.
The Association’s Young Insurance Professionals Association also named its board and officers (pictured below): PIANJ-YIP officers (pictured below) • Immediate past President Aaron Levine, CIC • Secretary Michael S. DeStasio • Treasurer Alyssa Itzkowitz • Second Vice President Ryan Cervasio • First Vice President John DeFeo • President Logan True, CRIS
Big check for Special Olympics New Jersey (L-R): PIANJ Director and FMI Director of Training Lisa Glesias, PIANJ-YIP President Logan True present Special Olympics New Jersey President and CEO Heather Anderson with a check for $112,738.
The Newly Elected 2018-19 PIANJ Board of Directors
INSURANCE ADVOCATE / June 25, 2018 13
[ GUEST ARTICLE ]
PETE SFO GLIA, P H. D
TRUST, but VERIF DFS and “Third Party Service Provider” Cybersecurity Policy
A Perspective On Compliance from Insurun INTRODUCTION
Pete Sfoglia, Ph.D., is a Co-Founder and EVP of Insurun, a leader in comparative rating software and CyberSecurity Services. He was a Partner and CyberSecurity Services Leader at both Ernst & Young and Accenture. Pete started his career on Wall Street, but quickly saw his true calling in the area of Management Consulting. He helped pioneer the notion of the “Ethical Hacker” while a Manager at Price Waterhouse. Pete holds a BA in Political Science from Hofstra University, an MBA in Finance & Investments from The Baruch College Zicklin School of Business and a PhD in Economics from Columbia University. His academic focus has been on Financial Derivatives.
14 June 25, 2018 / INSURANCE ADVOCATE
On March 1, 2018, the “NY State Cybersecurity Requirement for Financial Services Companies” took effect in response to, “...the ever growing threat posed to information and financial systems by nation-states, terrorist organizations and independent criminal actors.1” While the notion of the importance of securing private data in computers is nothing new, especially to Financial Services Companies, this regulation is the first to mandate compliance with minimum baseline cybersecurity practices at the grass roots broker/retail level. Money centers, Broker/Dealers, Regional Banks, Insurance Carriers, Aggregators, Agencies and Brokers must ALL pony up in New York, and in the not so distant future, all remaining States as they adopt the NAIC Insurance Data Security Model Law2. Established Insurance Carriers have long been beholden to regulations requiring them to protect customer Non-Public Information3 (NPI) from unauthorized and illegal disclosure. What’s different in New York is its focus shift from the Insurance Carrier as the system of record, to information systems at retail level. After all, it’s the same data stored in two sets of entities, one that is at least adequately controlled, the other mere novices in both information technology as well as how to secure it. This presents a virtual cybercrime playground of the unscrupulous with an ample supply of store front, Mom & Pop, and basement-office agents as prey. The notion of being, or not being a target worthy of getting hacked is passé. Today, anything with an Internet Protocol (IP) address is fair game, even if for fun alone. Enter the 23 NYCRR 500 Section 11, “Third Party Service Provider Cybersecurity Policy” (NY DFS) due diligence requirement. This clause requires that Carriers, “…implement written policies and procedures designed to ensure the security
[ GUEST ARTICLE ] of Information Systems and Nonpublic Information that are accessible to, or held by, Third Party Service Providers.” A reasonable interpretation of this clause would include Retail Brokers as Third Party Service Providers. While this requirement on its face appears onerous, especially for national carriers with many thousands of retail appointees, detailed implementation requirements are not stated in the regulation, giving Carriers wide latitude and discretion on how to comply.
IFY
APPROACH
Insurance Carrier ABC, a pseudonym for an actual NYbased Property & Casualty Insurance Carrier, partnered with Insurun Advisory Services in developing, documenting and deploying a comprehensive and innovative 23 NYCRR 500.11 due diligence solution. The solution was predicated upon the following assumptions: • Licensed brokers that write business in New York State knew that as of the date of ABC Carrier’s due diligence process, the deadline for filing a Certification of Compliance with the NY DFS Cybersecurity directive had passed, and, • Licensed brokers that write business in New York State, as good citizens and upstanding business owners, are fully compliant, or at the very least, working diligently towards compliance with the NY DFS as a “Limited Exempt Covered Entity,4” ABC Carrier’s solution was predicated upon a simple questionnaire aimed at capturing, processing and interpreting data relevant to its broker appointee’s compliance with the directive; or lack thereof. The tasks and timing of the solution: 1. Task: Crafted an email utilizing ABC Carrier’s proprietary “skin” to assure recipients that the email came from a trusted source. The email: a. Was addressed to Agency Principals, RESULTS
Today, anything with IP address is fair game, even if for fun alone.
b. Contained the text, “Cybersecurity Questionnaire” in the subject, c. Emphasized ABC Carrier’s commitment to securing customer NPI as well as its commitment to fully comply the NY DFS Cybersecurity directive, d. Extended help to its appointees in achieving compliance with the directive, e. Requested that appointees complete and submit a short survey to the best of their abilities, f. Provided a link to a Third-Party Cybersecurity service provider (insurun.com) for appointees wishing to engage competent help to achieve compliance, and, g. Designated 26 days hence as the deadline for completing and submitting the questionnaire per 1.e above. 2. Task: Developed an online questionnaire containing the following: a. Asked the appointee if it was compliant with the NY DFS Cybersecurity directive, b. If the broker answered “Yes” to 2.a, a “drag and drop” box appeared requesting a copy of the receipt it received from the NY DFS confirming its online Certification of Compliance, and, c. If the appointee answered “Yes” to 2.a, three additional “drag and drop” boxes appear requesting copies the three documents required by the directive: a Cybersecurity Risk Assessment, Cybersecurity Policies & Procedures and a Cybersecurity Program. These documents were requested for the purpose of both reviewing them for compliance with Third Party Service Provider cybersecurity requirements and to offer appointees advice on improving document content. CONTINUED ON PAGE 18
INTERPRETATION OF RESULT
A. 48% of the emails sent were opened by recipients
More than half of the email recipients took no action whatsoever on the email, indicating apathy towards cybersecurity issues, or perhaps a lack of awareness of the DFS. (confidence level = low)
B. 41% of the recipients completed the questionnaire
Less than half of the email recipients who opened the email elected to complete the questionnaire indicating a lack of willingness to disclose to ABC Carrier that they were not compliant with the DFS. (confidence level = medium+)
C. Of those recipients who completed the questionnaire, 15% failed to demonstrate compliance with the DFS directive
Only a small group of the recipients who were aware of the content of email complied with its requirements, indicating that the Majority of ABC Carrier’s broker appointees either did not perceive that they are compliant with the NY DFS, or were unwilling to disclose their compliance status, even to a trusted third party. (confidence level = high)
D. 8% of the recipients clicked through the link to www.insurun
Less than 10% of the recipients who read the initial email believed that they needed help to achieve compliance with the NY DFS directive (confidence level = medium) INSURANCE ADVOCATE / June 25, 2018 15
[ GUEST OPINION ]
ELIZ ABETH LEE VLIET, M.D.
How President Trump Can Turbo-Charge Patient Freedom and Lower Medical Costs uFree markets in medicine are not “broken;” they have not been allowed to work since 1944 when wartime federal policies began disturbing market forces. Federal control of prices and service delivery further expanded following the Medicare Act of 1965. In 2010, Obamacare crushed medical insurance plans, doctors, hospitals, pharmaceutical companies, medical device makers and home health agencies under an avalanche of expanded government control. Costs exploded. Patients suffered with fewer options for doctors, hospitals and access to treatment. President Trump now seeks ways to unleash patient choices by eliminating many Obama-era rules and regulations that drive up costs and limit medical freedom. Step One: Trump is urging the Department of Labor expand the use of Association Health Plans (AHPs). AHPs allow Americans of shared interests and connections to join groups that form health insurance plans they control. AHPs offer three major advantages: potentially huge cost savings, escape from state-based required coverages, and employees more easily able to keep current health plans if they change jobs. AHPs are estimated to cost about $9,700 per year less by 2022 than the individual market. Step Two: Trump proposes that the Department of Health and Human Services (HHS) expand access to Short Term Health Plans and allow guaranteed renewability. Under President Obama, these plans were limited to 90 days of coverage and could not be renewed. Secretary Azar is expected to extend the Short Term Plan limit to 364 days. Coverage is estimated to cost on average $342 a month, vs. $619 per month for an Obamacare Exchange plan. If consumers are allowed to retain renewable plans long term, these plans 16 June 25, 2018 / INSURANCE ADVOCATE
President Trump now seeks ways to unleash patient choices by eliminating many Obama-era rules and regulations that drive up costs and limit medical freedom. would resemble what medical insurance used to be, and patients with expensive illnesses would not be forced back on the higher cost Obamacare Exchanges. Step Three: Turbo-charge free market changes by allowing patients to use their Health Savings Account funds for direct payment to physicians who offer “direct-pay” practices free of insurance controls. Such practices may be called Direct Primary Care (DPC), Concierge Medicine, or simply “FeeFor-Service.” Before the 1980s when managed care came to dominate, patients paid doctors directly. Costs were lower, and insurance company bureaucrats did not have to “approve” treatment. Some direct pay practices also offer medications at far lower costs than available on Medicare Rx plans. Directpay options are sweeping the country as patients yearn for more quality time with their doctors at an affordable price. Direct Pay advantages should be obvious, but shockingly, the Internal Revenue Service under President Obama blocked the use of DPC for the 30 million Americans with HSAs. John Koskinen, the same IRS commissioner who stonewalled efforts by Congress to investigate Lois Lerner’s IRS retaliation against conservatives, issued a letter prohibiting patients from contributing to their HSA if they are in a Direct Pay practice. Further restricting consumers’ freedom, Koskinen’s letter prohibited HSA funds from being used for Direct Pay practices.
Dr. Vliet has been a leader in patient centered, individualized medical care. Since 1986, she has practiced medicine independent of insurance contracts that interfere with patient-physician relationships and decision-making. Dr. Vliet focus is medical freedom and free market approaches to healthcare. Dr. Vliet is the founder of Vive Life Center and Hormone Health Strategies with medical practices in Tucson AZ and Dallas TX, specializing in preventive and climacteric medicine with an integrated approach to evaluation and treatment of women and men with complex medical and hormonal problems from puberty to late life. Dr. Vliet has appeared on FOX NEWS, Cavuto, Stuart Varney Show, Fox and Friends, Sean Hannity and many nationally syndicated radio shows across the country as well as presented hundreds of Healthcare Town Halls addressing the economic and medical impact of the 2010 healthcare law and free market reforms, as well as seminars and radio shows on healthcare reform, Men’s Health and Women’s Health. Dr. Vliet speaks as an independent physician, not as an official spokesperson for any organization or political party. Dr. Vliet has no financial ties to any health care system or health insurance plan. Her allegiance and advocacy is to and for patients.
This flawed IRS decree, not legislation, is yet another example of Obama-era Democrats trapping patients in government regulations restricting patients’ freedom to choose lower cost medical care. Senators Ted Cruz and Ron Johnson wrote Treasury asking for a reversal. In addition 1,125 patients and doctors have asked Congress to pass the Primary Care Enhancement Act (HR 365/S 1358) and force the IRS to change its misguided interpretation of law. CONTINUED ON PAGE 19
IN THE MATTER OF THE LIQUIDATION OF FRONTIER INSURANCE COMPANY Supreme Court County of Albany Index No.: 000097/2006 NOTICE Pursuant to an order of the Supreme Court of the State of New York, County of Albany (“Court”), entered on November 16, 2012, the Superintendent of Financial Services of the State of New York and all successors in office were appointed as liquidator (“Liquidator”) of Frontier Insurance Company (“Frontier”) and, as such, have been directed to take possession of Frontier’s property and liquidate its business and affairs pursuant to Article 74 of the New York Insurance Law (“Insurance Law”). The Liquidator has, pursuant to Insurance Law Article 74, appointed David Axinn, Special Deputy Superintendent (“Special Deputy”), as her agent to liquidate the business of Frontier. The Special Deputy carries out his duties through the New York Liquidation Bureau, 110 William Street, New York, New York 10038. The Liquidator has submitted to the Court a Verified Petition seeking an order: (i) authorizing the Liquidator to sell the real property located at 195 Lake Louise Marie Road, Rock Hill, New York, (the “Property”) consisting of approximately 15.23 acres of land, as more fully described in the Commercial Contract of Sale (“Contract”) annexed as Exhibit B to the Verified Petition, that includes a building, improvements and a portion of a parking lot located thereon to The Center for Discovery (“Buyer”) for $3,600,000; (ii) approving the terms and conditions of the Contract; (iii) authorizing the Liquidator to execute all necessary closing documents and take the necessary steps to effect, carry out and consummate the sale of the Property to the Buyer; (iv) disallowing, extinguishing and barring any other ownership claims to the Property that were or could have been submitted to the Liquidator in this liquidation proceeding; and (v) providing for such other and further relief as this Court may deem just and proper. A hearing is scheduled on the Verified Petition on the 7th day of September, 2018, at 10:30 a.m. (“Return Date”), before the Honorable Richard M. Platkin, J.S.C., Supreme Court of the State of New York at Albany County Courthouse, located at 16 Eagle Street, Albany, New York. If you wish to object to the Verified Petition, you must serve a written statement setting forth your objections and all supporting documentation (“Answering Papers”) upon the Liquidator at least 7 days prior to the hearing and filing the Answering Papers with the court on or before the Return Date. The Court will not consider any opposition that is not timely served and filed. The Liquidator may reply to any opposition prior to the Return Date. The personal appearances of the Liquidator and any party opposing the requested relief are directed on the Return Date; provided, however, the Liquidator may request that its appearance be excused if there is no opposition to the Order to Show Cause. Service on the Liquidator shall be made by first class mail at the following address: Superintendent of Financial Services of the State of New York as Liquidator of Frontier Insurance Company, 110 William Street, New York, New York 10038, Attention: John Pearson Kelly, General Counsel. The Verified Petition is available for inspection at http://www.nylb.org. In the event of any discrepancy between this notice and the documents submitted to Court, the documents control. Requests for further information should be directed to the New York Liquidation Bureau, at (212) 341-6580. Dated: June 21, 2018 Maria T. Vullo Superintendent of Financial Services of the State of New York as Liquidator of Frontier Insurance Company
David Axinn Special Deputy Superintendent and Agent of Maria T. Vullo, Superintendent of Financial Services of the State of New York as Liquidator of Frontier Insurance Company
INSURANCE ADVOCATE / June 25, 2018 17
[ GUEST ARTICLE ]
[ IN THE NEWS ]
CONTINUED FROM PAGE 15
3. Timing, day 0: Released the email described in 1 above. 4. Timing, day 14: Released a reminder email. 5. Timing, day 22: Compiled findings and documented the above due diligence process as required by Section 11.
FINDINGS
A statistically significant sample of ABC Carrier’s P&C Agency appointees were sent the initial email, this sample representing a statistical sample relevance of 96%. Emails were sent out well past the NY DFS August 1, 2018 deadline for completion of the Cybersecurity Risk Assessment, Cybersecurity Policies & Procedures and the Cybersecurity Program. ABC Carrier stopped gathering results approximately one week after the questionnaire submission deadline. While these findings are relevant only to ABC Carrier Insurance’s broker appointees, inference can be extended to the NY independent insurance brokers as the sample is primarily NY based, implying that that the sample can be regarded as a microcosm of the NY P&C Insurance Market. Overall, the ABC Carrier Third Party due diligence exercise indicates that as of this writing there exists a profound lack of awareness amongst the vast majority of NY Independent P&C Agency principals of the NY DFS Cybersecurity Requirements for Financial Services Companies directive and what it means to be “compliant’ with the same. This finding is supported by Insurun’s consultancy field work in helping Agents comply with the directive. Agents sell insurance, they are generally not attorneys or Cybersecurity experts. The directive is written in legal/techno speak, leaving virtually all of the few Agents who’ve read it confused and confounded. Most Agencies and Agents who have filed their Certifications of Compliance with the NY DFS, have done so without developing the required documentation. Others use compliance documentation templates that bear no relationship to their IT infrastructure. This amounts to a race to comply prima facie, with no tangible impact on the original intent of the directive: the protection and preservation of NPI. We expect the findings arising from future years’ due diligence work to morph as the degree of awareness and understanding of the NY DFS directive increases, and morph still when the DFS begins to audit and sanction non-compliant Agencies.[IA] 1 See NY DFS 500.00 2 See http://www.naic.org/store/free/MDL-668.pdf 3 NPI is broadly defined in NY DFS 500.01(g) as business information that if disclosed would result in “material” damage to the broker; customer name, number, personal mark, SSN, drivers’ license number, non-driver identification number, account number, credit/debit card number, security code, biometric records; and health or behavior health records relevant to the customer or the customer’s family. 4 Per 23 NYCRR 500.22, a Covered Entity is categorized as “Limited Exempt” if its total revenue from commissions on NY based business has been less than $5,000,000 for the last 3 years, and has 10 or fewer employees, and has less than $10,000,000 in GAAP assets. Brokers meeting these criteria are required to both document and abide by a set of core cybersecurity requirements that are less onerous than their “Non-exempt Entity” counterparts. Limited Exempt entities make up 88% of NY’s 30,000 retail brokers. 5 See 23 NYCRR 500.09 6 See 23 NYCRR 500.03 7 See 23 NYCRR 500.02 18 June 25, 2018 / INSURANCE ADVOCATE
The Schinnerer Group to Rebrand as Victor u LOND ON—The S chinnerer Group announced that it is rebranding as Victor, a name reflective of the firm’s history and its new global operating model. Victor is the world’s largest managing general underwriter (MGU), currently servicing greater than $1 billion in premium. The Schinnerer Group’s businesses Christopher Schaper will take up the Victor brand over the next year, and combine to operate as a global entity. This includes Victor O. Schinnerer & Company in the US, ENCON in Canada, Bluefin Underwriting in the UK, Mees & Zoonen in Italy and the Netherlands and Schinnerer’s operation in Bermuda. Recent Schinnerer Group acquisitions, ICAT and Dovetail Insurance, will also be part of the Victor global business but retain their current names. “By unifying our companies under a global brand and combining capabilities in analytics, underwriting and technology, we will be able to more quickly offer innovative insurance products and services to our clients around the world,” said Victor CEO Christopher Schaper. Victor’s strategy is founded on four key components: •U nderwriting: Combining extensive underwriting experience with modern data and analytics capabilities. •T echnology: Providing cloud-based solutions that enable agents and brokers to quote, bind and issue insurance policies in real time – all in one place. • Distribution: Enabling a global network of more than 25,000 active insurance agents and brokers. • Capital: Collaborating with leading insurance carriers and alternative capital providers to offer organizations innovative coverage solutions. Mr. Schaper added: “Disruption in the insurance industry creates an opportunity for a new approach to the business. Through advanced technology and an innovative global approach to risk analysis, distribution and capital, Victor is well positioned to succeed in the changing environment, building our business organically and through strategic acquisitions.” The Schinnerer Group includes Victor O. Schinnerer & Company in the United States, ENCON in Canada, and other MGU enterprises globally. The Schinnerer Group transacts on behalf of numerous insurance carriers, through a large network of active agents and brokers. As a result of the rebranding, the holding company The Schinnerer Group will rebrand to Victor Insurance Holdings.[IA]
www.insurance-advocate.com
GUEST OPINION CONTINUED FROM PAGE 16
Step four: President Trump promised to lower prescription drug costs and allow patients to purchase medications overseas, if similar quality and safety guidelines are in place. At present, the FDA appears to be sabotaging this promise by blocking several reliable Canadian and UK pharmacies from selling to Americans lower cost FDA-approved medications for which patients in the US pay exorbitant prices under “insurance plans.” One example is EstroGel (bioidential estradiol), developed and approved in Europe in 1974, which remains the most popular and lowest cost form of hormone replacement for women across Europe and Canada. EstroGel was not approved by the US FDA until 2004, 30 years later, and for about ten times the European cost. Step five: Eliminate the “safe harbor” that protects pharmacy benefits managers (PBMs) from risking prosecution under the Anti-Kickback Statute. These companies, such as Cover My Meds and others, are paid to restrict physicians from prescribing many medications for patients unless they first do a burdensome “Prior Authorization.” PBMs interfere with patient care, add delays, and drive up costs with layers of costly bureaucrats. PBMs often make more profit from a drug than the manufacturer does. Step Six: President Trump should expand Health Savings Accounts three ways: 1) Allow contributions past age 65 since many people are healthy enough to work to age 70 or 75 and beyond. 2) Raise the maximum limit on amounts patients may contribute to the HSA they own. 3) Expand the healthcare services allowed to be purchased with HSA dollars that Obama-era Democrats restricted. Congress has broken its promise to repeal Obamacare. President Trump can keep his promises to free Americans from Obamacare’s disastrous costs and restrictions on medical freedom by either directing HHS to take these steps now, or by an Executive Order authorizing these changes. Patients and the health of the medical delivery system would be the winners. The only losers would be CEOs, bureaucrats, and crony capitalist middlemen enriching themselves at the expense of patients and those who care for them.[IA]
ALFRED T. DEMARIA
[ HR UPDATE ]
Is Your Offer Letter Stateof-the-Art? uA letter detailing an offer of employment to a candidate—an offer letter—is an important legal document and should be carefully drafted. A modern offer letter designed to reflect all of the numerous developments in employment law should include the following: • A clear description of what the job entails, to whom the employee will report, what and when the employee will be paid (including eligibility for any bonuses and employee benefits), the start date, and the expected weekly hours of work. • A statement that the employment relationship is “atwill,” which means that the employer or the employee can terminate the employment relationship at any time for any reason or no reason, with or without notice (subject to antidiscrimination laws). • A description of any conditions to the offer, e.g. satisfactory completion of a pre-employment background check or drug test, proof of eligibility to work in the U.S. • A description of any other documents that the candidate will need to sign before starting employment, e.g., a confidentiality, non-compete, and/or non-solicitation agreement. • For executive and other highlevel positions, consider whether to include a statement that candidates agree that they are not bound by any noncompetition or other obligation that would prevent them from working for your company. • The date by which the offer must be accepted and to whom the acceptance of the offer should be communicated. • A space at the end of the letter for the candidates to sign and date, signifying their acceptance of the offer upon the terms stated in the offer letter. Any existing offer letter should be compared with the foregoing requirements and standardized throughout the company.[IA]
Alfred T. DeMaria is a Senior Partner at Clifton Budd & DeMaria, LLP. He is recognized as one of the preeminent management labor attorneys in the field of combating union organizational campaigns. In addition, he has extensive experience in all areas of employment law including the negotiation of collective bargaining agreements in public education and the maritime, aerospace, airline, hospital and health care industries. Mr. DeMaria has conducted the annual Commerce and Industry Association seminar on White Collar Organizing, and has designed and conducted two of the country’s leading unionfree courses, “Maintaining UnionFree Status” and “How to Decertify a Union.” His handbooks, Maintaining Non-Union Status and Silence Is Not Golden, have been widely used in management in critical in union organizing campaigns for over twenty years. In addition, Mr. DeMaria has written a primer on labor relations entitled “Labor Law”; a manual for recapturing non-union status, The Process of Decertification; a leading management resource for defeating union organizing, How Management Wins Union Organizing Campaigns; and Combating the Resurgence of Organized Labor, a modern guide to union prevention and coordinates with the in-house video training program, Super Worker can keep union free, an award winning industrial training program. Prior to his work at Clifton Budd & DeMaria, LLP, he served as an attorney with the National Labor Relations Board.
INSURANCE ADVOCATE / June 25, 2018 19
[ ON MY RADAR ]
BARRY Z ALMA
A Contract of Insurance is a Binding Contract Appellate Court May Not Rewrite Insurance Policy u Construction contracts are risk transfer devices. They often require each subcontractor to name the general contractor and the owner as an additional insured. The requirement can include multiple additional insured. Insurance policies, even though they are written in easy-to-read language are the least read contracts in business. They should be read and understood or the parties must be ready to suffer the financial consequences. Failure to read and understand an insurance policy can be painful in the event of a loss and very expensive to he who did not read and understand the policy. Modern liability insurance policies issued to builders and owners of property under construction, rather than individually endorse a policy to name all additional insureds, allow the named insured, by contract, to make anyone an additional insured with whom the named insured has a contract to make someone an additional insured. In Gilbane Building Co./ TDX Construction Corp. v. St. Paul Fire and Marine Insurance Company, et al., Liberty Insurance Underwriters, 2018 NY Slip Op 02117, No. 22, Court of Appeals of New York (March 27, 2018) the highest court in the State of New York was asked to interpret an insurance policy wording to require it to accept a risk it claimed it never took.
FACTS
In Janu ar y 2002, D or mitor y Authority of the State of New York (DASNY) contracted with Samson Construction Company (Samson), a general contractor, for construction of a new forensic laboratory for New York City, to be built next to Bellevue Hospital. Although the lab was constructed for use by New York City’s Office of the Chief Medical Examiner, 20 June 25, 2018 / INSURANCE ADVOCATE
the construction documents identified DASNY as the owner. DASNY also contracted with a joint venture between Gilbane Building Company and TDX Construction Corporation (hereinafter, “Gilbane JV”) for Gilbane JV to be the construction manager for the project. DASNY’s contract with Samson provided that Samson would obtain general liability insurance for the job, with an endorsement naming as additional insureds: “DASNY, the State of NY, the Construction Manager [Gilbane JV] and other entities specified on the Sample Certificate of Insurance provided by DASNY.” Samson obtained general liability insurance coverage from Liberty Insurance Underwriters (Liberty). The Sample Certificate of Insurance listed as “Additional Insureds under General Liability as respects this project: . . . Gilbane/TDX Construction Joint Venture.” In 2006, DASNY sued Samson and Perkins Eastman, Architects, P.C., the project architect, alleging that Samson damaged the excavation support system in August of 2003 by negligently removing a section of steel plating which caused the foundation of the neighboring building to settle several inches. Perkins then commenced a third-party action against Gilbane JV in 2010. Gilbane JV provided notice to Liberty by letter in April of 2011, seeking defense and indemnity under the Liberty policy for Perkins’ suit against it, which Liberty denied in July of that year. Gilbane JV sued in September of 2012, arguing that it qualified for coverage under the Liberty policy as an additional insured. The trial court denied Liberty’s motion for summary judgment, holding that Gilbane JV is an additional insured under the policy. The Appellate Division subsequently reversed, granting Liberty’s motion.
Barry Zalma, Esq., CFE, has practiced law in California for more than 42 years as an insurance coverage and claims handling lawyer. He now limits his practice to service as an insurance consultant and expert witness specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes. He founded Zalma Insurance Consultants in 2001 and serves as its only consultant. Look to National Underwriter Company for the new Zalma Insurance Claims Library, at www. nationalunderwriter.com/ZalmaLi brary. The new books are Insurance Law, Mold Claims Coverage Guide, Construction Defects Coverage Guide and Insurance Claims: A Comprehensive Guide. The American Bar Association, Tort & Insurance Practice Section has published Mr. Zalma’s book “The Insurance Fraud Deskbook” available at http://shop.americanbar.org/eBus/ Store/ProductDetails.aspx?produc tId=214624, or 800-285-2221 which is presently available. Legal Disclaimer: The author and publisher disclaim any liability, loss, or risk incurred as a consequence, directly or indirectly, of the use and application of any of the contents of this blog. The information provided is not a substitute for the advice of a competent insurance, legal, or other professional. The Information provided at this site should not be relied on as legal advice. Legal advice cannot be given without full consideration of all relevant information relating to an individual situation.
[ ON MY RADAR ] The relevant portion of the Liberty policy is the “Additional Insured-By Written Contract” provision, which reads: “WHO IS AN INSURED (Section II) is amended to include as an insured any person or organization with whom you have agreed to add as an additional insured by written contract but only with respect to liability arising out of your operations or premises owned by or rented to you.” (emphasis added).
ISSUES
Gilbane JV has no written contract with Samson denominating it an additional insured, but argues no such contract is necessary, because that requirement would conflict with the plain meaning of the Liberty endorsement; with “well-settled rules of policy interpretation”; and with the parties’ reasonable expectations. Alternatively, Gilbane JV argues that the Liberty endorsement is, at most, ambiguous on that point, and therefore must be construed against Liberty and in favor of coverage. Gilbane JV is incorrect; the endorsement is facially clear and does not provide for coverage unless Gilbane JV is an organization “with whom” Samson has a written contract.
ANALYSIS
Generally, the courts bear the responsibility of determining the rights or obligations of parties under insurance contracts based on specific language of the policies. In determining a dispute over insurance coverage, we first look to the language of the policy. As with the construction of contracts generally, unambiguous provisions of an insurance contract must be given their plain and ordinary meaning. The endorsement would have the meaning Gilbane JV desires if the word “with” had been omitted. But Samson and Liberty included that preposition in the contract between them, and the appellate court must give it its ordinary meaning. The “with” can only mean that the written contract must be “with” the additional insured. Gilbane JV proposes other wordings that, in its view, would more clearly require the existence of a written contract between Samson and an additional insured, but those formu-
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CONTINUED ON PAGE 25 INSURANCE ADVOCATE / June 25, 2018 21
[ LOOKING BACK ]
INSURANCE ADVO CATE - 50 YEARS AGO
22 June 25, 2018 / INSURANCE ADVOCATE
INSURANCE ADVO CATE - 50 YEARS AGO
[ LOOKING BACK ]
INSURANCE ADVOCATE / June 25, 2018 23
[ COURTSIDE ]
LAWRENCE RO GAK
Florida Insurers May Rescind Auto Policies in NY Accidents, but Proof Must Comply with NY Law T & S Med. Supply Corp. v Ocean Harbor Cas. Ins. Co. Edited by Lawrence N. Rogak In this suit for NY no-fault benefits against a Florida insurer, the insurer moved for summary judgment based upon its retroactive voiding of the policy due to material misrepresentation. Reversing Civil Court’s grant of summary judgment, the Appellate Term held that while Florida law regarding rescissions applies, New York courts require the same standard of proof as New York insurers are held to: actual proof of mailing or proof of a standard office procedure.—LNR uAppeal from an order of the Civil Court of the City of New York, Kings County (Richard Montelione, J.), dated July 28, 2016. The order granted defendant’s motion for summary judgment dismissing the complaint. ORDERED that the order is reversed, with $30 costs, and defendant’s motion for summary judgment dismissing the complaint is denied. In this action by a provider to recover assigned first-party no-fault benefits, defendant moved for summary judgment dismissing the complaint on the ground that the automobile insurance policy in question had been issued in Florida, and that Florida law applied, pursuant to which there was a lack of coverage due to the valid rescission of the automobile insurance policy. Plaintiff appeals from an order of the Civil Court dated July 28, 2016, which granted defendant’s motion. It is undisputed that the vehicle in question was insured by defendant under a Florida automobile insurance policy. According to an affidavit submitted by an employee of defendant’s manag24 June 25, 2018 / INSURANCE ADVOCATE
Lawrence N. (“Larry”) Rogak has been practicing insurance law since 1981. He has defended over 23,000 lawsuits and arbitrations and has represented over 75 different insurance companies and self-insured corporations. Lawrence N. Rogak LLC is listed in Best’s Recommended Insurance Attorneys, a distinction that requires written recommendations from at least 12 insurance carriers. A 1981 graduate of Brooklyn Law School, Mr. Rogak has published more books and articles on insurance law than any other New York attorney in the field.
In order to show that it properly rescinded a motor vehicle insurance policy ab initio, an insurer must demonstrate that it had given notice of the rescission to the insured and that it had returned or tendered all premiums paid, in accordance with Florida law, all in a reasonable time after the discovery of the grounds in a reasonable time after the discovery for avoiding the policy... of the grounds for avoiding the policy ing general agent, an investigation conducted after the accident revealed that, at the time the policyholder had applied for automobile insurance, she did not reside at the Florida address listed on her insurance application, and that the insured vehicle was not being garaged in Florida for the period stated on the application. Consequently, defendant had rescinded the policy ab initio, pursuant to Florida Statutes Annotated, title 37, § 627.409, which permits the retroactive rescission of an insurance policy if there has been a material misrepresentation in the application for insurance. While the substantive law (see e.g. St. Chiropractic, P.C. v Geico Gen. Ins. Co., 53 Misc 3d 59 [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2016]) of Florida applies, New York’s procedural laws control (see St. Chiropractic, P.C., 53 Misc 3d at 61). In order to show that it properly rescinded a motor vehicle insurance policy ab initio, an insurer must demonstrate that it had given notice of the rescission to the insured and that it had returned or tendered all premiums paid, in accordance with Florida law, all
(see Leonardo v State Farm Fire and Cas. Co., 675 So 2d 176, 179 [Fla Dist Ct App, 4th Dist 1996]; see also United Auto. Ins. Co. v Salgado, 22 So 3d 594, 600-601 [Fla Dist Ct App, 3d Dist 2009]). As defendant’s motion papers failed to establish “actual mailing or ... a standard office practice or procedure designed to ensure that items are properly addressed and mailed” (Residential Holding Corp. v Scottsdale Ins. Co., 286 AD2d 679, 680 [2001]; see also St. Vincent’s Hosp. of Richmond v Government Empls. Ins. Co., 50 AD3d 1123 [2008]) demonstrating that the notice of rescission and the refund check had been mailed to the insured, defendant failed to establish its entitlement to summary judgment (see W.H.O. Acupuncture, P.C. v Infinity Prop. & Cas. Co., 36 Misc 3d 4, 6-7 [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2012], citing Leonardo, 675 So 2d 176, 179). Accordingly, the order is reversed and defendant’s motion for summary judgment dismissing the complaint is denied.[IA] 2018 NY Slip Op 50665(U) Decided on May 4, 2018 Appellate Term, Second Department
[ COURTSIDE ]
ON MY RADAR CONTINUED FROM PAGE 21
Plaintiff’s Failure to Respond to 90 Day Notice is Fatal to PIP Suit Midwood Total Rehab, P.C. v GEICO Ins. Co. Edited by Lawrence N. Rogak In this PIP suit, the Appellate Term holds that a plaintiff ’s failure to respond to a “90 day notice” is fatal to the lawsuit. Plaintiff was required to provide both a reasonable excuse and prove the merits of its case, and did neither.—LNR uPlaintiff commenced this action by an attorney-verified complaint to recover assigned first-party no-fault benefits in March 2011. Defendant interposed an answer on June 23, 2011. On December 1, 2016, defendant served a 90-day written demand pursuant to CPLR 3216 (b) (3). On May 3, 2017, defendant moved pursuant to CPLR 3216 to dismiss the complaint as it had not been served with a notice of trial. On May 5, 2017, plaintiff served defendant with a notice of trial. Plaintiff ’s counsel’s affirmation in opposition to defendant’s motion stated that the “delay in responding to [defendant’s] 90-day notice was neither willful nor contumacious, and does not evidence an intent to abandon the action.” By order dated July 12, 2017, the District Court denied the motion. Once a 90-day demand is served upon a plaintiff, the plaintiff must either comply with the demand by filing a notice of trial within 90 days (see CPLR 3216 [c]), or move before the default date either to vacate the demand or to extend the 90-day period pursuant to CPLR 2004 (see Felix v County of Nassau, 52 AD3d 653 [2008]; Katina, Inc. v Town of Hempstead, 13 AD3d 343 [2004]; A.M. Med., P.C. v State Farm Mut. Ins. Co., 22 Misc 3d 43 [App Term, 2d Dept, 2d & 11th Jud Dists 2008]). Since plaintiff failed to do any of these, it was required, in opposition to defendant’s motion to dismiss, to establish
Here, plaintiff’s bare statement in its attorney’s affirmation, after a two-month delay in responding to defendant’s 90-day notice, that its “delay in responding to [defendant’s] 90-day notice was neither willful nor contumacious, and does not evidence an intent to abandon the action,” failed to establish a justifiable excuse for its delay. Additionally, plaintiff’s attorney asserted no meritorious cause of action.
both a justifiable excuse for its delay in properly responding to the 90-day demand and the existence of a meritorious cause of action (see Baczkowski v Collins Constr. Co., 89 NY2d 499 [1997]; Felix, 52 AD3d 653; A.M. Med., P.C., 22 Misc 3d 43). Here, plaintiff ’s bare statement in its attorney’s affirmation, after a twomonth delay in responding to defendant’s 90-day notice, that its “delay in responding to [defendant’s] 90-day notice was neither willful nor contumacious, and does not evidence an intent to abandon the action,” failed to establish a justifiable excuse for its delay. Additionally, plaintiff ’s attorney asserted no meritorious cause of action. Accordingly, the order is reversed and defendant’s motion to dismiss the complaint pursuant to CPLR 3216 is granted.[IA] 2018 NY Slip Op 50763(U) Decided on May 24, 2018 Appellate Term, Second Department
lations are no clearer and, in any event, the endorsement’s meaning is plain and unambiguous. The appellate court did not try to undermine an industry market solution aimed at efficiently allocating risk among entities involved in construction projects. Rather, it merely required contracting parties who desire the result proposed by Gilbane JV to remove the word “with” from their future contracts or make sure their future contracts include a requirement that it be made an additional insured. Gilbane JV tried to change the situation by introducing extrinsic evidence of the intent of the parties. The court concluded, however, that extrinsic evidence of the parties’ intent may be considered only if the agreement is ambiguous, which is an issue of law for the courts to decide. Gilbane JV might have a claim against Samson for failing to obtain additional insured status for Gilbane JV, because of extrinsic evidence produced at trial, but that breach would not permit the appellate court to rewrite Samson’s contract with Liberty. The court refused to rewrite the contract of insurance and Gilbane JV received no coverage from Liberty.
ZALMA OPINION
The insurance policy required a written contract between the named insured and an additional insured if coverage was to be extended to anyone as an additional insured. Samson obtained general liability insurance coverage from Liberty Insurance Underwriters. Since Gilbane JV had no written contract with Samson denominating it as an additional insured, no coverage was available for Gilbane JV by Liberty. An unhappy, but accurate, result because of a failure by the parties to read the policy when it was acquired and a failure by Gilbane JV to include in the contract a requirement that it be named as an additional insured.[IA]
www.insurance-advocate.com INSURANCE ADVOCATE / June 25, 2018 25
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[ GUEST OPINION ]
JANE M. ORIENT, M.D.
Why Do We Need a Rightto-Try Bill in America? u Congress recently passed, and President Trump signed, the “Right to Try” bill that gives dying patients limited access to drugs that have not yet been approved by the Food and Drug Administration (FDA). Our Founders would be astonished that we need such a bill. Nowhere does the U.S. Constitution give the federal government the authority to regulate the practice of medicine. And it is a very good thing that federal intervention and standards didn’t begin in 1789. Standards are always based on what the authorities think are “best practices.” Until rather recently, most medical treatment was ineffective and often quite harmful: e.g. bleeding, purging, and toxic medications like calomel (mercury). Those were nevertheless the “standard of care,” accepted by the American Medical Association (AMA). The chances that a patient would benefit from seeing a doctor were probably no better than 50-50. Then came scientific medicine and modern medical miracles. Antibiotics conquered many infectious diseases; I may have seen one of the last patients with a thoracoplasty—his chest wall caved in from removing ribs to collapse a tuberculous lung. Leukemia used to be incurable. Kidney failure meant rapid death. We have many wonderful treatments today. But people are still dying. Their cancer, for example, may not respond to available chemotherapy. They may have heard of a promising new remedy. But it can’t possibly be approved for years, after at least a billion dollars’ worth of testing. It might not work for them—but there’s nothing else. It might be very toxic—just like other anti-cancer drugs. It might even kill them—but they are dying anyway. What have they got to lose? From this bill they might not have much to gain. It simply expands access to drugs already in clinical trials, for which a patient might not qualify, possibly because of being too sick. Opponents of this bill, and similar ones in various states, focus on the po26 June 25, 2018 / INSURANCE ADVOCATE
All treatments are potentially dangerous, and the dangers may not appear until many have been exposed. tential harm to society by weakening the gatekeeper role of the FDA. Patients might be enticed to spend money on “false hope.” Potential subjects might be less willing to volunteer for clinical trials—in which there is a chance they will be “randomized” to NOT receive the new drug. “Quacks” might take advantage of the law. Patients who are not wealthy wouldn’t be able to get experimental drugs not covered by insurance. Worst of all, future patients might not be willing to wait for the FDA—and the willingness of somebody to spend billions to win approval of a cheap or nonpatentable product that will never turn a profit. All treatments are potentially dangerous, and the dangers may not appear until many have been exposed. This is why many doctors are not “early adopters.” The patients enrolled in formal trials are just as likely to suffer harm as those who are not. The goal is to make the world aware of the danger sooner—which will happen only if unfavorable studies are honestly published instead of being covered up. Unfortunately, the evidence base for highly touted “evidence-based medicine” may be highly corrupted. The “most vulnerable” need to be protected, we often hear. But who is actually being protected? Patients? Or the academic research establishment? The prestigious organizations that write the “guidelines” and determine the “standard of care”? The medical journals that publish the approved research? The companies that sell the extremely expensive products that have no competition? Insurers that profit more from higher premiums to cover these treatments? Pharmacy benefits managers who collect a bigger “rebate” on higher priced products?
Jane M. Orient, M.D. obtained her undergraduate degrees in chemistry and mathematics from the University of Arizona in Tucson, and her M.D. from Columbia University College of Physicians and Surgeons in 1974. She completed an internal medicine residency at Parkland Memorial Hospital and University of Arizona Affiliated Hospitals and then became an Instructor at the University of Arizona College of Medicine and a staff physician at the Tucson Veterans Administration Hospital. She has been in solo private practice since 1981 and has served as Executive Director of the Association of American Physicians and Surgeons (AAPS) since 1989. She is currently president of Doctors for Disaster Preparedness. Since 1988, she has been chairman of the Public Health Committee of the Pima County (Arizona) Medical Society.
As Goldman Sachs pointed out, curing disease is bad for business. With speedy innovation, such as adult stem cells, “regulators have not been able to keep up,” according to a May 17 editorial in Nature. Therefore, scientists should consider slowing down? This “cruel sham” and “ugly placebo” powerful enough to do grave harm to the current regime won’t do patients any good, it is argued. It might harm them by shortening their last 4 weeks of life or making them sicker. Should patients not be allowed to choose to take that risk, at their own expense? One must suspect that the real fear is that the treatment might actually work. If innovators were allowed to take risks, our descendants might view 2018 medicine the same way that we see the treatments of 1789. And how the modern medical equivalents of buggy-whip manufacturers would suffer![IA]
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