The New York State Department of Financial Services (DFS) on Tuesday told insurance carriers that it expects them to begin considering the financial effects of climate change if they are not already. While the department did not call for immediate action by insurance agents and brokers, you should expect to see changes in carrier underwriting guidelines.
DFS described the purpose of its circular letter to carriers as "to outline DFS’s expectations for the industry and begin a dialogue as to how DFS can best support your institutions’ efforts to manage the financial risks from climate change." The letter pointed to the increasing cost of climate-related natural disasters. "These risks," it said, "directly affect property/casualty insurers’ liabilities and the long-term viability of certain business lines." While praising certain insurers for the steps they've already taken to manage these risks, the letter said that the industry needs to do more and that DFS is prepared to help them.
The letter promised that DFS will publish detailed guidance "consistent with international best practices on climate-related financial supervision," and invited industry input. The department will organize a series of webinars to allow the exchange of ideas and lessons learned among industry participants.
In the mean time, the department said that it expects insurers to "start integrating the consideration of the financial risks from climate change into their governance frameworks, risk management processes, and business strategies." The letter acknowledged that every insurer's situation is different. "DFS understands that climate change affects each insurer in different ways and to different degrees depending on the insurer’s size, complexity, geographic distribution, business lines, investment strategies, and other factors," it said. "DFS appreciates that insurers do not have the same level of resources to manage these risks and are at different points in the process of incorporating these risks into their governance, strategy, and risk management."
The New York Automobile Insurance Plan has added a rule that will permit its policyholders to waive subrogation rights and make other concessions to third parties. The rule, which took effect on August 1, calls for a 3 percent premium surcharge.
The new Rule 60, which applies only to Bodily Injury and Property Damage Liability Coverage, states in its entirety:
If the insured requests, in writing, either a waiver(s) of subrogation or a primary and noncontributory—other insurance condition or both to comply with contractual requirements, increase the bodily injury and property damage total policy premium by 3%.
Attach the applicable endorsement(s).
The 3% surcharge applies whether the insured requests one or both; it is not added together to make 6%. The applicable Insurance Services Office (ISO) endorsements are:
- CA 04 44 10 13, Waiver Of Transfer Of Rights Of Recovery Against Others To Us (Waiver Of Subrogation)
- CA 04 49 11 16, Primary and Noncontributory—Other Insurance Condition
Insurers that do not subscribe to ISO forms will use different endorsements. Check with the insurer to determine the appropriate endorsement numbers.
The New York State Department of Financial Services (DFS) has announced that New York State of Health (NYSOH) will be the only authorized provider of certification training courses. NYSOH is the health insurance marketplace for New York, one of the marketplaces created under the federal Affordable Care Act.
All insurance brokers wishing to obtain individual or group health coverage for their clients through NYSOH must take a certification course and apply for certification. Previously, the certification course was available from third-party organizations such as Big I New York. The announcement on the DFS website states:
Effective August 31, 2020 you must contact NYSOH to register a new account and to access the NYSOH approved certification course. The certification course will not be offered by DFS approved education providers and the course is not approved for insurance CE credit.
The NYSOH registration process on the DFS licensee self-service portal will be shut off beginning Friday morning August 28, 2020.
Visit https://nystateofhealth.ny.gov/agent to create an account and learn more about the certification course.
The New York State Insurance Fund is offering its Workers' Compensation insurance policyholders a credit to offset the cost of purchasing personal protective equipment (PPE) for use during the COVID-19 pandemic. You may hear about this program from your clients soon.
The program offers employers a credit of 5% of their annual premium or $500, whichever is less. The credit is for the purchase of eligible items such as:
- Hand sanitizer
- Other COVID-19 safety related items
Employers can apply for the credit now on the Fund's website.
New York Automobile Insurance Plan has asked state insurance producer trade organizations to distribute the following message:
Section 4 of the New York Automobile Insurance Plan (NYAIP) manual provides for the Department of Financial Services to appoint 2 public members and at least 4 public member alternates to the Governing Committee of the NYAIP. The Superintendent also recommends eight public members who are subject to a majority of votes cast by Plan subscribers at the annual meeting.
At the request of the Department of Financial Services, the NYAIP is soliciting producer trade organizations for qualified producers (at least five years of work experience) who are interested in serving in the capacity of public member or public member alternate on the NYAIP Governing Committee for the 2021 term. Public members on the Governing Committee represent a broad segment of the public obtaining insurance through the NYAIP. Public member alternates serve in the absence of any public member with the full powers, rights, and entitlements of a public member representative.
The Governing Committee is responsible for the oversight and direction of the NYAIP pursuant to Article 53 of the Insurance Law. It currently consists of twenty-two total members, eleven of which are insurers (known as subscriber company members), ten public members, and one limited assignment distribution (LAD) servicing agent. Pursuant to the NYAIP manual, the Superintendent is responsible for appointing two public members and at least four public member alternates to serve in the absence of any public member. The Superintendent also recommends eight public members who are subject to a majority of votes cast by Plan subscribers at the annual meeting . Each public member alternate serves for a term of one year. At the end of each term, public member alternates may request to be reappointed for the following term.
To facilitate the process, we have developed an electronic application. All applications will be provided directly to the Department of Financial Services for its consideration, and the Department will contact respondents for any further information if needed. Producers interested in serving on the GC should submit the required electronic application form to the DFS by no later than September 4, 2020. DFS will review all applications and submit its Public Member appointments and recommendations to the Governing Committee for its November 2020 Annual Meeting.
Application Link: https://www.surveymonkey.com/r/Y9L58W6
Candidates should know that:
- The Governing Committee meets 4 times per year (January, May, September and November). The January meeting is a teleconference and the 3 others are in person.
- In person meetings are conducted near the NYAIP offices in the Wall street area of NYC.
- Public members and alternates are expected to attend each meeting and receive a per diem for each meeting. Additionally, travel expenses are paid for by the NYAIP.
- Meetings generally last no more than 3 hours.
The NYAIP and the Department of Financial Services appreciate your assistance and participation in the Governing Committee Public Member and Alternate Public Member candidate process.
Please contact the NYAIP at NYAIPINQ@aipso.com if you have any questions.
The New York Automobile Insurance Plan
Property-casualty broker (BR) licenses for insurance agencies are coming up for renewal this October 31, and some of you who have renewed already are noticing a change. For as long as anyone can remember, BR licenses have expired on Oct. 31 in even-numbered years. That has changed.
In 2017, the New York State Legislature and Gov. Andrew Cuomo enacted a change in the licensing law, a change written by Big I New York. Any license, whether it is a broker license or an agent (PC or LA) license, issued to a business organization will expire on June 30 in odd-numbered years. Under the old law, agencies had licenses expireing on three different dates. Now they expire on one. This should be easier for you to remember and manage.
Consequently, when you renew your BR licenses this year, you will see that the renewals will expire on June 30, 2023. Traditionally, the New York State Department of Financial Services does not issue licenses for terms of less than two years. That is why your renewals will be for terms of close to three years.
Remember too that this change applies only to agencies. Licenses issued to individuals continue to renew on the licenseholders' birthdays.
A new Connecticut law will require many insurance agencies to implement cybersecurity programs. The requirements take effect in less than two months.
The Insurance Data Security Law
requires Connecticut licensees to develop, implement and maintain a
comprehensive written information security program based on a risk
assessment. The programs must include the administrative, technical and
physical safeguards for protecting their information systems and the
nonpublic information stored in them. The deadline for implementing the
program is October 1, 2020. The program must be commensurate with:
- The size and complexity of the licensee
nature and scope of the licensee's activities, including, but not
limited to, the licensee's use of third-party service providers, and
- The sensitivity of the nonpublic information the licensee uses or has in its possession, custody or control.
are also required to perform due diligence when they select third party
service providers with whom they will do business. By Oct. 1, 2021,
they must require these providers to implement their own information
security programs. These programs must safeguard licensees' systems and
nonpublic information to which the providers have access.
If a cybersecurity event occurs, the licensee must:
- Launch a prompt investigation
- Notify the Insurance Department
- Notify all individuals whose nonpublic information may have been accessed.
Insurers who experience cybersecurity events must notify the producer of record no later than when they notify the consumers.
Penalties for non-compliance are up to $50,000 per violation.
Some licensees are exempt from the law's requirements:
- Between Oct. 1, 2020 and Sept. 30, 2021, licensees with fewer than 20 employees including independent contractors
- On and after Oct. 1, 2021, licensees with fewer than 10 employees including independent contractors
- Licensed employees, agents, representatives or designees of licensees
Big I Connecticut successfully fought for the exemptions for small agencies.
Others are considered to be compliant if they meet other requirements:
- Licensees who are subject to and in compliance with the Health Insurance Portability and Accountability Act of 1996 (HIPAA)
- Licensees who are compliant with the requirements of another jurisdiction approved by the Connecticut Insurance Department
department may issue regulations that name the jurisdictions. Licensees
who comply this way must submit a certification to the department by
Feb. 15 each year.
For more information, see Insurance Department Bulletin IC – 42.
Liberty Mutual Insurance announced that they are rolling out updated guidelines for their 2020 commercial lines profit-sharing agreement and will be waiving the 10% written premium growth requirement to earn a profit-sharing bonus.
"Despite the incredible challenges they've faced during the pandemic, independent agencies never stopped working hard. They continue to help customers protect what matters most, while keeping their teams safe and businesses afloat. But our shared customers have been hit hard and agencies need carrier support," said Big I NY's Chair of the Board, David T. MacLachlan, CPCU.
"I commend Liberty Mutual for leading the way, waiving the growth requirement for agencies in profit-sharing. There continues to be much economic uncertainty. Liberty’s move is just one way to help agents move more confidently towards the future, and I strongly encourage other carriers to follow suit."
New York members requested this leeway when asked how carriers can best support them at this point in the pandemic. The Big I NY exclusive report 'Independent Agency Approach to Visits During COVID-19' explains how agencies are handling in-person and virtual visits, and the safety precautions being implemented. Read the report.
Read the full IA Magazine article sharing this Liberty Mutual news.
The New York State Department of Financial Services today announced that it was again extending the expiration of individual insurance agent and broker licenses. These licenses will now expire on August 7. The move grants producers an additional 30 days to renew their licenses. The requirement that a monitor be present to complete producer continuing education and pre-licensing course exams online also remains suspended.
Be aware that this extention applies to individual licenses only. It does not apply to licenses issued to business entities.
On March 25, the department announced that it was suspending the expiration of producers' licenses for 60 days, through May 24, due to anticipated difficulty for producers to meet continuing education requirements during the current pandemic. All licenses with expiration dates between those dates were automatically extended to expire on May 25. The department subsequently extended the deadline to July 8. Today's announcement pushes that expiration date back to August 7. For example, a license scheduled to expire on July 2 will now expire on August 7.
Visit the Big I NY Education Calendar to find webinars that you can take to meet the continuing education credit requirements.
The new emergency regulation issued by the New York State Department of Financial Services on Sunday limits the number of times that a policyholder can benefit from the moratorium on policy terminations and changes and the relaxed premium payment rules. The rule makes it clear that policyholders suffering financial hardship because of the COVID-19 pandemic may benefit from these provisions only once.
The regulation, labeled Regulation 216, replaced a version of the same regulation that was issued on March 30 for three months. Like its predecessor, it imposes a 60-day moratorium on insurers' ability to cancel, non-renew or conditionally renew policies issued to individuals and small businesses suffering hardship because of the pandemic. Insurers must permit policyholders who miss payments to make up the overdue amounts over a 12-month period. They may not cancel these policies for non-payment, nor can they charge late fees or report the policyholders to credit reporting agencies.
The new version contains provisions that were not in the original. Section 229.5 now includes this:
(c) Nothing herein shall entitle a policyholder who demonstrated a financial hardship as a result of the COVID-19 pandemic and either received a moratorium for a specific policy or obtained relief for an amount due under the prior regulation, to obtain under the Executive Order and this Part an additional moratorium for a
specific policy or further relief for an amount that comes due while this Part is in effect.
A similar provision has been added to the regulation governing premium finance companies:
(d) Nothing herein shall entitle an insured who demonstrated a financial hardship as a result of the COVID19 pandemic and already obtained relief for an amount due under the prior regulation, to obtain under the Executive Order and this section further relief for an amount that comes due while this section is in effect.
The effect is that once an insurer has granted a moratorium to a policyholder and/or worked out a payment arrangement for overdue premiums, they are not obligated to do so a second time. Similarly, premium finance companies, who must extend grace periods for missed payments, are obligated to do so only once.
The regulation is scheduled to expire on July 6.