Big I New York participated in last week's annual meeting of the New York State Insurance Fund's producer council. Held at the State Fund's New York City office on Feb. 15, It was the second meeting of the producer council formed last year.
Representing Big I New York were Jack Smith of William A. Smith & Son in Newburgh and former Big I New York chair of the board; Valerie Geasor of The Signature B&B Companies in Garden City; John Costello of Key Insurance & Benefits Services, Inc. in Rochester, former Big I New York chair of the board and a current member of the executive committee of the Independent Insurance Agents & Brokers of America; Lisa Lounsbury, Big I New York president and CEO; and Tim Dodge, Big I New York assistant vice-president of research.
NYSIF staff demonstrated the new broker portal, which gives brokers access to their insureds' information pages, monthly bills, account statements, rating information, and more. The new streamlined online policy application was also demonstrated. Staff also reviewed the Premium Audit Scheduling System (PASS), which has almost doubled the rate of successfully completed audits since its introduction in 2015. A representative from the claims department explained how insureds can give their brokers access to their claims information.
NYSIF staff also said that they are working on these future projects:
- Integration of the broker portal with popular agency management systems
- A service website that will permit employers to upload their payroll records directly to the Fund's auditors
- Post-audit customer satisfaction surveys
- Getting NYSIF certificates of insurance into the hands of auditors before they perform an audit of another NYSIF insured, so the subject of the audit will not have to produce the certificates
- A system upgrade to permit multiple auditors to work on a single large employer's audit simultaneously
- A customer perception survey that will be administered by a third-party survey firm
- Software to permit brokers to upload information directly to the Fund
NYSIF leadership also stated that, though the Fund is not subject to the Department of Financial Services cybersecurity regulation, it is nevertheless voluntarily complying with it.
The meeting ended with an open discussion of several issues of concern to the members of the producer council.
The Department of Financial Services (DFS) is reaching out to Big I New York seeking producer candidates interested in serving as an Alternate Public Member on the Peer Review Panel of the New York Auto Insurance Plan (NYAIP). The panel is scheduled to meet four times a year but recently has met only once a year. Interested candidates should email a letter of interest to Lorraine Milo at AIPSO with a copy to Serge Moreau at the DFS.
BIG I New York Meets with DFS on Life Proposal
Representatives from the Big I New York met yesterday with Department of Financial Services Executive Deputy Superintendent for Insurance, Scott Fisher, and Deputy Superintendent for Life Insurance James Regalbuto, to discuss the department's proposed changes to Regulation 187. The DFS proposes to add life insurance to the current regulation which deals with annuity suitability requirements, and to also add a new best interests of the customer standard to both life and annuity transactions.
The association shared several concerns and questions about the proposal, and the DFS explained in more detail some of its concerns and expectations regarding the proposed changes. Big I New York will be submitting written comments on the proposal next week. Attending the meeting for the association were President and CEO Lisa Lounsbury; Assistance Vice President of Research Tim Dodge; Legislative Representative Jill Muratori, and Director Michael Vanderwerker.
Big I New York Opposes Increased Fines in Budget
The Big I New York submitted testimony to the joint budget committee on Health this week to oppose a provision to increase fines under the Insurance Law. Even though the provision is included in the health portion of the budget, it would apply to all insurance licensees, not just health insurers, and would apply to any violation of the Insurance Law.
The proposal increases the penalties for any insurance licensee's violation of any provision of Insurance Law where the violation relates to either the failure to pay a claim or making a false statement to the superintendent or the department, to the greater of $10,000 for each offense or two times the damages attributable to the violation or the economic gain realized from the violations
Big I New York told the committee that independent insurance agents and brokers are small businesses and a penalty of $10,000 per violation could result in substantial hardship, even putting some out of business and that there is simply no reason to increase the already sufficient penalties that exist in the current law.
BIG I New York supports CE Credit Bill
The Big I New York urged the Senate Insurance Committee this week to approve legislation (S.3960/A.7012) allowing membership in a statewide professional association to be used as six credits of a producer's continuing education requirements. The association told the committee that statewide professional insurance associations promote professionalism and good business practices helping insurance producers better serve their customers. The Committee approved the bill and it now heads to the Senate for a vote.
30-Day Amendments Released
The Governor has just released the 30-day amendments to his budget proposal. Big I New York is reviewing all the changes, which include more details on the proposed tax reform, including a new optional payroll tax. More details to follow.
Representatives from the association are scheduled to meet with the Department of Financial Services next week to discuss concerns with the department's proposal that would expand the current regulations dealing with annuity sales. The proposal would add life insurance transactions to the regulation and also add a best interests of the customer standard for both annuity and life insurance transactions. The proposal would expand the standard so that it would apply not just to sales, but also to changes on in-force policies. We are concerned that the proposal, which adds an unnecessary layer of complexity to the processes, would negatively impact sale of these important products.
Senate Insurance Committee to Hear Big I NY supported CE bill.
The Senate Insurance Committee is scheduled to consider S.3960/A.7012, a bill that BIG I New York supports that would give producer 6 CE credits for their membership in a state-wide association. Big I New York will be providing testimony in support of the proposal.
Big I NY to Testify on Increased Fines.
The Joint Budget Committee for Health will meet next Monday to consider the Executive proposal that includes increased insurance penalties. Big I New York will provide testimony to oppose the increase, which we believe is unwarranted and potentially devastating for some agencies. The proposal increases the penalties for any insurance licensee's violation of any provision of Insurance Law where the violation relates to either the failure to pay a claim or making a false statement to the superintendent or the department, to the greater of $10,000 for each offense or two times the damages attributable to the violation or the economic gain realized from the violations
Budget Committee Hears Tax Concerns.
The Joint Budget Committee considering taxes in the Governor's budget proposal met this week. Budget Director Robert Mujica testified that the Governor wants to separate the state's tax rates from the federal rates to restore deductibility of state and local taxes that were largely eliminated from the federal tax overhaul. Cuomo plans to detail the proposal in his 30-day amendments which are due February 15, 2018.
The Governor's 30-day amendments to his budget will be released February 15, 2018. Here is the Joint Legislative Schedule for Adopting this year's State Budget:
- Feb 28: (on or before) Economic / Revenue Report Released (Senate and Assembly)
- Feb 28: (tentative) Joint Revenue Forecasting Conference
- March 1: (on or before) Revenue Consensus Report
- March 14: Senate and Assembly One-House Budget Actions
- March 14: Joint Budget Conference Committees Commence
- March 22: Joint Budget Conference Committees End
- March 27-29: Joint Legislative Budget Bill Taken Up
Jill Muratori, Esq.
The New York State Insurance Fund (NYSIF) has been working diligently to provide brokers with the most efficient way to obtain online policy and claims information. In the past two years, they have added electronic access to policy info pages and audit documents, enhanced certificate renewal and validation processes, streamlined online quote/eApp processes and enabled policyholders to grant brokers access to claims information.
Easy access to claims data is critical for you to manage costs for your clients. NYSIF recognizes this and has added new options to the “Claim Search" query in your nysif.com accounts. Already able to search by claim or policy number, you can now search by WCB claim number and by the claimant's name.
They are also enhancing access to policy documents. The new policy reports include certificate list by policy, accident analyses, loss runs, test ratings and more. Brokers can also access Statement of Account information for the policies they manage, providing monthly billing statements and deposit premium bills.
Big I New York applauds NYSIF for its ongoing commitment making it easier for you to do business with them and serve your mutual clients.
Kathy Weinheimer, CPCU, AAI
Senior VP Industry Relations
Senate Majority Leader John DeFrancisco announced this week that he'll be throwing his hat in the ring as a potential Republican candidate to take on Governor Andrew Cuomo in November. The announcement makes him the third GOP candidate, along with Assembly Republican Minority Leader Brian Kolb of Canandaigua and former Erie County Executive Joel Giambra, to join the bid to run against Democratic Gov. Andrew Cuomo in November.
DeFrancisco was first elected to the New York State Senate in 1992 and re-elected by substantial margins in each of his subsequent races. He currently serves as Deputy Majority Leader of the State Senate. Prior to being named Deputy Majority Leader, Senator DeFrancisco served as Chairman of the Senate Finance and Judiciary Committees.
DeFrancisco has said he will likely not seek another Senate term should if his gubernatorial bid fails.
Special Election Date Announced. The Governor announced he will hold special elections for the 11 legislative vacancies in the Senate and Assembly on April 24.
The special election is key to fulfilling a deal that would unite mainline Democrats and the Independent Democratic Conference (IDC) in the Senate.
Under the agreement, the mainline Democratic conference and the IDC would unite as one, pending victories in the two Senate districts that would be filled in those elections. There's one in the Bronx and one in Westchester County.
The Bronx seat is expected to stay in Democratic hands. However, the Westchester County race will be hotly contested and is expected to be one of the costlier special elections.
Democratic Assemblywoman Shelley Mayer is running for the Westchester County seat, while Republicans Dan Schorr and Sarmad Khojasteh are vying for the Republican nomination.
If Democrats win both seats, the party would have a numerical majority in the Senate. Democrats would still have to work to win over Brooklyn Democratic Sen. Simcha Felder, a Brooklyn lawmaker who conferences with the Republicans and has said he would back whichever conferences offers the best arrangement for his constituents.
Cuomo Signs Lavern's Law. Governor Cuomo signed legislation, known as Lavern's Law, to extend the time for filing lawsuits for people whose doctors have failed to diagnose cancer or malignant tumors. The time for filing a lawsuit will now run from the time when the plaintiff has learned of the misdiagnosis (provided it's no longer than seven years from the misdiagnosis) or the date of the last treatment, where there is continuous treatment.
A three-way agreement between the governor and top lawmakers in the Assembly and Senate for the measure's final approval was announced over the weekend.
The bill was sponsored in the Senate by Sen. John DeFrancisco.
Jill Muratori, Esq.
The Senate Insurance Committee met this week to consider S.425 (Seward)/A.7077 (Crespo), a bill that would conform the definition of "small group" in the insurance law with the federal definition of "small employer" under the PACE Act, back to 1-50 employees or members.
The federal Affordable Care Act changed the definition of "small employer" from 1-50 employees to 1-100 employees, as of January 1, 2016. To conform New York's law with the ACA, New York State amended the definition of "small group" in the insurance law from 1-50 to 1-100 employees or members.
Unfortunately, the expansion of the definition of small group has had negative consequences for those groups of 51-100. Most have seen their insurance premiums rise and their coverage choices decline.
To remedy the unintended, negative consequences, Congress passed the PACE Act in 2015 to revise the ACA definition of small employer back to 1-50. Since that time, nearly every state has adjusted their small group size to remain at 50 or below.
The Big I New York urged the Senate to take action to do the same.
Big I New York Working to Roll Back Life Insurance Proposal.
We continue to coordinate with others in the industry regarding the DFS' proposal to amend Reg. 187 to include all life insurance products and to add a new “best interest" standard to life and annuity transactions. Big I New York is still preparing comments on the proposal, which are due February 26, 2018. We are concerned that the proposal will complicate the already cumbersome process of selling life insurance and will result is few life insurance sales to consumers.
Trial of Former Governor's Aide Begins.
The trial of Joseph Percocco, a former top aid to Governor Andrew Cuomo, began this week. Percocco is charged exploiting his access to the Governor by accepting more than $300,000 in bribes from Syracuse-area developer COR Development and Maryland-based energy company Competitive Power Ventures.
Jill Muratori, Esq
Governor Andrew Cuomo released his executive budget this week and it includes a proposal from last year's budget that Big I NY defeated that would raise fines under the Insurance Law from $1,000 to the greater of $10,000 or a multiple of two times the aggregate economic gain attributable to the violation, where the violation related to either a failure to pay a claim or making a false statement to the superintendent or the department.
The increases were included in an unusual place, the section dealing with Early Intervention Reform in the Health Article VII bill. The increased fines would apply to anyone who violates any part of the insurance law including insurance producers. One misstep could put a small producer out of business.
BIG I New York will make defeating this proposal a priority.
Cuomo's budget also includes lots of other new fees and taxes aimed at closing a $4.4 billion deficit, including a 14% tax on health insurer profits, a tax on opioid prescription drugs, and a tax on vaping products. Cuomo's plan also looks to bring in approximately $500 million from insurance provider conversions, when several large not-for-profit health care insurers sell themselves to for-profit firms.
In his budget address, the Governor talked about reforming the tax code to address the recent federal legislation which capped state and local tax deductions. The initial budget did not include any details on this, but the Tax Department has now released a comprehensive tax report on the proposal.
One idea for reform is a payroll tax, but there are other options outlined. The report also looks at the possibility of creating a state-run charitable organization that could allow taxpayers to deduct taxes when paying for essential services.
Lake Ontario Flood Funding. The executive proposal would allow additional flexibility for appropriating funding for flood relief because of Lake Ontario flooding from last spring.
SIF Investments. The budget includes a proposal to authorize the State Insurance Fund to diversity its surplus funds investment portfolio.
Autonomous Vehicles. The governor proposes to extend the current authorization for testing from April 1, 2018 to April 1, 2020 and removes the current requirement that all testing must be conducted with state police supervision. The bill further repeals the requirement that one hand be on the steering wheel at all times. Finally, the bill proposes additional reports that DMV is required to submit to the governor regarding testing.
Cell Phones and Seat Belts. Cuomo wants to ban hands-free mobile phone and electronic device use for junior permit and junior license holders (those under 18): He also wants to require all back-seat passengers to wear seat belts. Under current law, children under the age of 16 must wear a seat belt in the back seat.
BIG I NY Working to Oppose DFS Proposal on Life Insurance Sales. Big I NY has been working with interested stakeholders to coordinate efforts to defeat, or at least scale back, a proposal from the DFS that would apply a “best interest of the customer" standard for those selling any annuity or life insurance product.
A “best interests" standard is a higher duty than a “suitability standard" and will pose E & O problems and other concerns.
The proposal would apply this higher fiduciary duty to all life insurance transactions (including term life) in addition to annuities. It would also would apply to in-force policies and would expanding suitability requirements to all producers involved in the transaction, even those with no direct contact with the consumer.
We are currently preparing comments on the proposal which are due February 26, 2018 and will continue to work with others in the industry that share our concerns.
Jill Muratori, Esq.
If you are a Limited Liability Company (LLC) you will be interested in this. Several Big I New York members reached out to find out how they should complete the annual Certification of Compliance required by the NY cyber regulation 23 NYCRR 500. We want to let you know about a clarification we received from the Department of Financial Services (DFS) specific to LLCs.
When filing your annual Certification of Compliance with the DFS as required by the cybersecurity regulation you are asked to report who reviewed the Certification of Compliance – the Board of Directors or Senior Officer(s). Since an LLC typically does not have either we posed the question to the DFS, asking how an agency would properly respond. Here is the DFS response:
“Thanks for your inquiry. Section 500.01(m) defines “Senior Officer(s) as the senior individual or individuals (acting collectively or as a committee) responsible for the management, operations, security, information systems, compliance and/or risk of a Covered Entity, including a branch or agency of a foreign banking organization subject to this Part." Accordingly, Covered Entities will need to do a factual analysis of how this definition applies to their institutions in considering particular circumstance of their business, their data, their systems and their legal relationship to other Covered Entities.
Based on this response from the DFS, LLCs should analyze their operation and would generally check the box for “Senior Officer(s)".
Before filing the annual Certification of Compliance you should have already filed for the Limited Exemption (if you qualify). ALL covered entities (with or without the limited exemption) must file the annual Certification of Compliance NO LATER THAN February 15, 2018 (and every February 15 thereafter).
Click here for instructions on how to file the annual Certification of Compliance.
So what's next as far as deadlines for the regulation? Our chart provides a summary and you will see the next deadline is March 1, 2018 for conducting a periodic risk assessment. You should have already completed this when you were preparing your cybersecurity program and policy for the August 28, 2017 deadline, but in the event you did not you have until March 1, 2018 to assess your risk. The regulation is not specific on how to conduct the assessment and you can use any method that will measure your risk. Going forward the regulation says you must conduct “periodic" risk assessments, again not defined, so you can conduct the assessment as “reasonably necessary".
Kathy Weinheimer, CPCU, AAI
Senior VP Industry Relations
We've listened to our members and are bringing back a newer, leaner version of L Day on Tuesday, March 6, 2018! Based on your feedback we are planning an abbreviated legislative day, focusing primarily on appointments with legislators, to make the most of your time in Albany. We have a committee of agents representing all regions of the state and chaired by Big I New York director Ron Brunell who are planning this exciting event.
Over the years L Day has proven to be an important element of the success of our legislative team in Albany. After a three-year hiatus it's time to bring it back! Its success will be dependent on the support of our local associations and we hope that you can join fellow agents in Albany on Tuesday, March 6, 2018.
MARK YOUR CALENDAR FOR MARCH 6, 2018!