Effective March 1 all covered entities will be required to conduct due diligence on their third party service providers. Per the NY DFS, due diligence of Third Party Service Providers (TPSPs) is a two way street in the case of agents and brokers and carriers. The Big I New York board of directors' position is to take a reasonable approach to conducting due diligence that minimizes the burden on both agents and carriers.
Over the past few weeks, Big I NY leadership and staff have met with or had conference calls with over twenty carriers to share our board's position and to ask carriers to consider a simplified approach to compliance with the TPSP requirements of section 500.11 of the regulation. We also presented a carrier specific webinar on this subject on February 13, with 66 company reps in attendance. Should a carrier choose to use a questionnaire as part of their third party risk assessment, we have asked that they consider using a simplified approach or accepting an attestation from their carrier partners. We shared a simple questionnaire agents and carriers can use. If a carrier uses a contract or amends contract provisions as part of their due diligence process, we strongly suggest that they make any requirements mutual.
We have had excellent conversations with and feedback from the carriers and many are considering our suggested approach. Our goal is to support our members and the carriers they do business with and to ease confusion and frustration by providing resources and education on this important area.
Yesterday, Governor Cuomo released his proposed 2019-20 state budget. There are a few issues of interest to independent agents and brokers:Universal Health Care:
The Governor called for the creation of a commission to comprised of health policy and insurance experts to develop options for achieving universal access to healthcare. This commission will “consider all options for advancing access to care, including strengthening New York's commercial insurance market, expanding programs to include populations that are currently ineligible or cannot afford coverage, as well as innovative reimbursement models to improve efficiency and generate savings to support expanded coverage. (Emphasis added). We are encouraged to see that the commission's charge seems to be focused on improving and building upon the existing health insurance marketplace, rather than enacting a single government-run “single payer" system.State Insurance Fund Audits:
Current law allows SIF to cancel a WC policy only for non-payment of premiums. Private WC insurers may cancel a policy on any ground merely by providing the policyholder with 30 days' advance notice. If a private insurer has difficulty obtaining an audit, it may either cancel the policy or refuse to renew the policy at the next policy anniversary. SIF, however, must continue to provide coverage unless the policyholder defaults on its premium payments even if SIF is unable to gain access to the policyholder's books and records.
This bill authorizes SIF to cancel a workers' compensation policy based on the policyholder's failure to cooperate with a payroll audit when: 1) the policyholder fails to keep at least two appointments with a payroll auditor; or 2) fails to furnish relevant business records in the course of a payroll audit. Prior to cancellation, SIF will be required to provide policyholders with 45 days advance notice, giving policyholders time to act and avoid losing coverage.What's Next:
The Assembly and Senate will each release their own budget proposals, called “one house" budgets, typically in mid-late February. Then, the legislative leaders and Governor will negotiate to reconcile the final budget, which must be passed by April 1.
Big I NY Has your Back:
The Governor's proposed budget is relatively benign compared to past years. However, the one-house budgets may vary considerably from the Executive budget, and are likely to contain other issues of interest. We will continue to keep a close watch on budget proposals and weigh in on any provisions which impact the agent/broker community. Contact Scott Hobson
with any questions.
On December 22nd, Governor Cuomo signed legislation to extend for an additional five years the grandfathering of mid-sized groups with 51-100 employees that currently self-fund health benefits with stop loss coverage.
Due to changes made in the law to reflect the provisions of the Affordable Care Act, stop loss insurance was prohibited in New York in 2013. Fortunately, during the past two legislative sessions, the law was amended to create a “grandfather period” to allow for stop loss coverage to continue for certain, eligible self-funded, midsized groups.
Big I NY supported this bill because it will help ensure some continuity and certainty to those mid-size groups that self-insure and want to continue to do so.
We have been informed by the Department of Financial Services that exemptions filed in 2017 and 2018 have expired. Any DFS regulated entity or licensed person that is currently entitled to an exemption must file an Initial Notice of Exemption prior to the February 15, 2019 due date for the annual Certification of Compliance. This is due to an upgrade with their systems, and it is anticipated that you will not have to re-file for the exemption in future years.
The Department is planning to send notice to all licensees who have currently filed for any exemption under the cybersecurity regulation advising them of the need to re-file.
DFS has made many changes to the online portal based on feedback and problems they experienced last year and they've created a new resource center to help licensees make the filing. The notice will provide information on how to make the filing. We will also share the new filing instructions when they are available.
DFS is also changing the portal so that there will be an option for initial filing, amendment, and termination. Originally licensees could file the limited exemption, but couldn't amend it. If a change was warranted they'd have to file a new exemption. The hope is that this new approach will eliminate the need to do a limited exemption filing each year.
Another change the DFS made was on how information is input. They changed the system so the first entry point is the producer license #. They are trying to avoid manual entry of producer name which resulted in a lot of mismatches last year. They are also collecting some additional information to ensure matches.
The DFS also improved the receipt for filing. It provides much more information and will enable each particular licensee to identify their particular receipt.
Be sure to carefully check your mail around the new year for the notice. For more information, see the DFS Cybersecurity webpage.
Big “I" was the only insurance agent/broker group to make list.
WASHINGTON, D.C., Dec. 18, 2018—The Hill, a leading political newspaper, has named Bob Rusbuldt, Big “I" president & CEO, and Charles Symington, Big “I" senior vice president of external, industry, and government affairs, among the top trade association lobbyists in Washington, D.C.
The Hill piece noted that “when the stakes are at their highest, these are the players at the top of their game, known for their ability to successfully navigate the byzantine and competitive world of federal policymaking." The Big “I" had notable legislative wins in the past year, including favorable treatment for C Corporations and pass-through entities in the new tax law, multiple extensions of the National Flood Insurance Program, and protection of the Federal Crop Insurance Program as part of Congressional action on the Farm Bill.
“Recognition from a leading publication on Capitol Hill points to the strength of our association in the government affairs arena," says Joe Leahy, Big “I" chairman and president of Leahy & Brown Insurance + Realty, Inc. in Springfield, Massachusetts. “Thanks to the hard work of president & CEO Bob Rusbuldt, Charles Symington and the entire government affairs staff, the Big 'I' is consistently named one of the most influential associations in the country."
Congressional leaders regularly tap the Big “I" federal government affairs team for its policy and political acumen including advising on insurance, financial services and economic issues, along with sitting on congressional steering committees, hosting political events, and strategizing to help members of Congress better serve their constituents and advance top issues. A vital component of the association advocacy efforts is InsurPac, the Big “I" political action committee.
“The Big 'I' stood out as the only group listed that represents insurance agents and brokers," says Angela Ripley, Big “I" government affairs committee chairman and president of VW Brown Insurance Service in Columbia, Maryland. “We know the interests of independent insurance agents and brokers are well represented on Capitol Hill with the Big 'I' leading the charge."
Founded in 1896, the Independent Insurance Agents & Brokers of America (IIABA or the Big “I") is the nation's oldest and largest national association of independent insurance agents and brokers, representing a network of approximately a quarter of a million agents, brokers and their employees nationally. Its members are businesses that offer customers a choice of policies from a variety of insurance companies. Independent agents and brokers offer all lines of insurance—property, casualty, life, health, employee benefit plans and retirement products.
It is crunch time for YOUR political action committee – InsurPac! With a newly divided Congress, a new Chairwoman of our primary committee for independent agents & brokers, dozens of new members of Congress that need education on independent agents, an important legislative agenda for independent agents, and more, it is imperative that every single Big I member contribute to your PAC.
Check out this new video on InsurPac. Please distribute it as you talk to your agency employees and colleagues about the need to support their PAC.
Online contributions can be made at www.insurpac.com/form or we can take checks payable to “InsurPac” – personal, LLC or partnership checks are accepted.
December 31 is the deadline for reporting purposes! We need a robust InsurPac to ensure YOUR voice is heard, and understood, on Capitol Hill!
Late last night, Governor Cuomo signed Big I NY's bill to simplify the license renewal process for agents and brokers. Now instead of three separate dates, all agent and broker business licenses will renew on the same date every two years.
Your Big I NY team developed this legislation and championed its passage. The Big I members who met with lawmakers, sent messages of support, and joined us in Albany for L Day 2018 were instrumental in this success. Thank you!
And there's more good news. The governor also signed another Big I NY-supported bill to allow property/casualty and personal lines agents and brokers to take their required pre-licensing courses in a setting other than a classroom.
We will continue to champion independent insurance agents like you in all we do. Rest assured that Big I NY always has your back.
Contact Scott Hobson at firstname.lastname@example.org if you have any questions.
This week, three important Big I NY-supported bills were delivered to the Governor's desk. He now has until December 7th to sign or veto the legislation. We have delivered letters of support to Governor Cuomo, and will update you as soon as action is taken.
Big I New York's Business Entity Licensing Simplification Bill (S.6445/A.8484)
Big I New York developed and championed passage of a bill it developed to address a major issue for members concerning their multiple business entity license renewal dates. Since agencies that sell insurance are licensed for all lines of insurance and are licensed as both agents and brokers, they must keep track of three separate renewal dates.
This bill will establish June 30 of odd-numbered years as the one common expiration date for all business entity licenses, making the renewal process much simpler for agents.
Pre-licensing Education (S.7634A/A.9527)
This bill will make it easier for those people who want to be licensed as property/casualty and personal lines insurance agents to complete their required pre-licensing education. Instead of requiring pre-licensing coursework to be conducted in a classroom setting, it allows the coursework to be taken through a correspondence course or a course offered over the internet.
Small Business Regulatory Relief (A.8205/S.4120)
This bill will provide regulatory relief to many small agencies that violate a state agency regulation. It requires all state agencies to allow a first-time small business rule violator with the opportunity to cure or take ameliorative action before a penalty is imposed. This bill would prevent DFS from levying fines and penalties against small insurance agencies that may have simply made a mistake.
While the DFS was understanding of our concerns, they do not intend to change their position on the TPSP issue.
Under Section 500.11, effective March 1st 2019, all covered entities (agencies and brokerages) will be required to:
Create and implement a written third party service provider policy designed to ensure the security of nonpublic information that is accessed by TPSPs (including, but not limited to, technology/software vendors and insurance carriers). The policy must consider, to the extent applicable, the risk posed by the third party, minimum cybersecurity standards to be met by TPSPs, due diligence processes to evaluate the adequacy of TPSPs, and periodic risk assessment of TPSPs.
Include in that written third party service provider policy guidelines and/or contractual protections relating to TPSPs, including, to the extent applicable: the TPSP’s policies and procedures for access controls; use of encryption; notice to the covered entity of a cyber event; and representations and warranties addressing the TPSP’s policies and procedures that relate to the security of the covered entity’s own information systems.
Per the DFS, due diligence of TPSPs is a two way street in the case of agents/brokers and carriers. Carriers must conduct a risk assessment and due diligence on all of their agents, while at the same time agents must also conduct a risk assessment and due diligence of all carriers whose policies they write.
Big I New York Has Your Back:
Big I NY strongly advocated for the agent/carrier relationship not to be treated as a third party service provider relationship, as both entities already must certify compliance with the cyber regulation to the DFS annually. The DFS’s recent decision is disappointing, and we are concerned it will cause confusion and result in significant costs to independent agents and brokers.
We are currently developing resources to assist agents in complying with the third party service provider requirements. Our goal is to provide a template third party service provider policy, suggested guidelines, and a questionnaire or other resource to help with the identification of third party service providers and assesment of their security policies and practices.
Contact: Scott Hobson
, Big I New York Director of Government Relations
FOR RELEASE: November 16, 2018
ALBANY, N.Y.—New York’s biggest and most influential insurance agent and broker associations announced today they have filed a lawsuit against the New York State Department of Financial Services (DFS) over amendments to NY Insurance Regulation 187, which would alter the agent/broker-customer relationship in the sale of life insurance and annuities, and ultimately harm consumers. Big I New York and the Professional Insurance Agents of New York State, who collectively represent thousands of insurance agents and brokers across New York State, are challenging the DFS on the basis that it acted beyond its authority when it adopted an amendment to Regulation 187, imposing a vague and subjective standard of care for insurance agents and brokers that is contrary to existing law.
The amendment, which is slated to take effect on August 1st 2019, would require agents and brokers to only consider the “best interest” of a customer in the sale of life insurance and annuities. Big I NY and PIANY assert that this standard changes the current law, as well as good business practices, which requires that insurance agents and brokers obtain the insurance coverage that is specifically requested by a customer, and act with honesty and trustworthiness in the process. Both Big I NY and PIANY note that this new standard is wildly subjective, and fails to instruct agents whose best interest they must consider, be it the applicant, insured, beneficiary, or owner of a policy – interests which are rarely, if ever perfectly aligned. In fact, Big I NY and PIANY contend, the new standard will not serve to protect consumers but instead will be detrimental to them.
“Life insurance is not a uniform, one-size-fits-all product and coverage recommendations should not be regulated. Restricting how an agent communicates with his or her client does a disservice to that client, and will potentially lead to less access for consumers” said PIANY President Jamie Ferris, CIC, AAI, CPIA. Mr. Ferris further remarked “In a highly competitive business environment, independent producers’ best marketing strength is their concern for their clients. Restricting open, honest discussion, driving out business, ultimately weakening the market will harm New York state’s insurance-buying public.”
The lawsuit identifies six separate legal grounds which challenge the amended regulation. Among the key contentions are: the DFS overstepped its authority; violated the State Administrative Procedures Act; created an unconstitutionally vague regulation; and acted in an arbitrary and capricious manner. During the amendment’s public comment period, both Big I NY and PIANY attempted to work in good faith with the DFS to create a balanced approach that would serve customers’ interests while protecting consumer access to the market.
“The DFS is failing one of its most important responsibilities: to ensure New York’s public has access to a healthy insurance market, with multiple products and options for customers’ coverage needs. This amendment will drive business out of the state and leave the insurance-buying public with reduced access to affordable coverage choices,” said Big I NY Board Chairman Louis Atti, CPCU. “That’s in nobody’s best interest.”
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Big I NY and PIANY are trade associations representing professional, independent insurance agencies, brokerages and their employees throughout New York State.
Read more on our Reg 187 Resource Page