| As session draws closer to the scheduled adjournment date of June 19th, activity at the capitol has risen to frenetic levels. Here's a closer look at where we stand on the issues that matter most to independent agents. Opposition to “Unfair, Decpetive, and Abusive Practices" bill ramps up: We continued our full-throttle efforts to block legislation that significantly increase agencies' legal exposure by permitting costly lawsuits for a wide range of “unfair, deceptive, or abusive" practices. We continued our call-in campaign, focusing this week on rallying constituents of Senators and Assemblymembers in their districts. During the week had productive meetings with the Senate and Assembly leader's offices, and they confirmed they have been hearing a tremendous amount of opposition to this bill, from agents and other groups. Equally importantly, agents making calls have been professional and courteous. We also met with key members of the Senate and Assembly to voice our concerns. Big I NY continues to work closely with other business groups, representing nearly every sector of the economy, to coordinate our opposition for maximum impact. For the time being, we have been successful in keeping this dangerous legislation from being brought to a vote in either the Senate or the Assembly. However, we're not out of the woods on this one. The final few days of session can be wild and unpredictable. Lead paint prohibition exclusion passes Assembly: Despite our strong opposition, legislation to ban the use of lead paint exclusions in habitational coverage for rental properties passed the Assembly on Thursday. This would severely impact the cost and availability of habitational coverage and harm renters who can least afford to pay more for housing. We continue to work closely with insurance industry associations to block this legislation's passage in the Senate. We urge all agents to call their Senators to oppose this harmful legislation! Efforts to repeal anti-arson application continue: We continue to push for the passage of legislation to repeal the anti-arson application requirement in the Senate, after its unanimous passage by the Assembly. Big I Local associations Big I Tri-County, Big I Western New York, and Big I Rochester submitted letters in support of the legislation to members of the Senate, while Queens-area Big I member Larry Robotti's letter to the editor was published in the Queens Chronicle. “Storm Chaser" bill passes the Senate: Legislation to protect consumers from unscrupulous roofing contractors, often called “storm chasers" passed the Senate this week. We support this legislation, and are working with a coalition of insurance trades and other groups to push for its passage in the Assembly this year. Acting DFS Superintendent Lacewell to face confirmation vote: Linda Lacewell, the acting Superintendent of the Department of Financial Services since her appointment by the Governor in January, will be considered by the full Senate in the coming days. The Senate is expected to vote in favor of confirmation. “Best Interest" Regulation lawsuit ruling expected: We expect the trial court to rule on our joint lawsuit with PIA-NY against the Department of Financial Services in the near future. All papers have been fully submitted to the court, and the case is currently being reviewed by Judge Henry Zwack. While the exact timing is unknown, we anticipate a ruling prior to the August 1 effective date of the regulation.
Governor calls for stricter sexual harassment standards:
On Wednesday, Cuomo convened a press conference in Albany, where he called for the passage of legislation to eliminate the requirement to demonstrate sexual harassment was "severe or pervasive" in order to prove it created a hostile work environment.
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| Committee passes legislation to extend NFIP for five years. WASHINGTON, D.C., June 12, 2019— The Independent Insurance Agents & Brokers of America (the Big “I") thanks the House Financial Services Committee for passing a measure to extend the National Flood Insurance Program (NFIP) for five years.
“The Big 'I' applauds the committee for voting to extend the NFIP for five years," says Charles Symington, Big “I" senior vice president of external, industry & government affairs. “The Big 'I' especially wants to thank Chairwoman Maxine Waters (D-California) and Ranking Member Patrick McHenry (R-North Carolina) for recognizing the critical role the NFIP plays in the lives of millions of Americans. They have previously lead efforts in the House to guarantee flood insurance remains available to those who need it. Now they are now playing a critical role in reauthorizing the program on a long-term basis while making needed reforms that will increase take-up rates through the NFIP and the private market."
Congress must periodically reauthorize the NFIP, which is currently set to expire on Sept. 30. However, Congress has yet to pass a long-term NFIP extension as debate continues regarding options for reforming the program. This has already resulted in a series of stop-gap extensions and a few brief lapses in 2017 and 2018. The committee-passed measure would extend the program for five years and make needed reforms to the program. The Big “I" strongly supports a continuous coverage reform clarifying there is no penalty if consumers leave the NFIP for the private market and then need to return to the NFIP because conditions change.
“Following the bipartisan passage out of the Financial Services Committee, the Big 'I' urges the U.S. House of Representatives to pass this legislation," says Wyatt Stewart, Big “I" senior director, federal government affairs. “This legislation would provide much needed stability to the more than five million NFIP policyholders and countless others who depend on the program. The Big 'I' would also like to thank Rep. Kathy Castor (D-Florida) and Rep. Blaine Luetkemeyer (R-Missouri) for their hard work in making sure that their continuous coverage legislation was included in the five-year reauthorization."
Founded in 1896, the Independent Insurance Agents & Brokers of America (the Big “I") is the nation's oldest and largest national association of independent insurance agents and brokers, representing more than 25,000 agency locations united under the Trusted Choice brand. Trusted Choice independent agents offer consumers all types of insurance—property, casualty, life, health, employee benefit plans and retirement products—from a variety of insurance companies. |
| Big “I" Professional Liability will hold a free webinar for Big I Members “Ready, Set, Cyber! Coverages Claims and Carrier Contracts". Join us next Wednesday, June 19 at 2 p.m. ET for this free session designed specifically for Big “I" member agencies. Did you know that nearly all insurance agencies and most other businesses have a cyber exposure? Our goal is to provide you with the tools you need to protect not only your agency, but also your clients' businesses from cyber exposures. Panelists will include Shawn Ram, cyber underwriter, and Catherine Lyle, claims lead, both from Coalition, who will explore cyber exposures, coverages and claims examples. Eric Lipton, senior counsel, Big “I" Office of General Counsel, will also discuss the trends that are becoming more and more prominent in agent-carrier agreements due to recent cybersecurity regulations. Finally, Carla McGee, cyber insurance program manager, Big I Advantage®, will show members how they can access Coalition and present a number of resources available to Big “I" members. Register today for Ready, Set, Cyber! Coverages Claims and Carrier Contracts.
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| It's been awhile since a member sent me a juicy example of subtle policy wording that resulted in an uninsured loss. My thanks to a member in Suffolk County for providing this one. Here is the transcript of our correspondence, edited slightly for clarity. I will leave the name of the carrier and the publisher of its form anonymous. Question from a Big I NY member: One of my friends has a Dwelling Fire policy with a NY carrier that uses non-ISO forms. He had a tenant who went through a divorce, lost his job and stopped paying rent on the house. The insured started eviction proceedings and had him evicted (which took months.) When they got in to the premises, they found vandalism damage and items removed. The tenant also stopped buying heating oil and when he left, some of the pipes had frozen and broken, causing more damage. The carrier denied coverage citing Exclusion 4, Dishonest or Criminal Acts, stating that he “entrusted" the property to this tenant who caused this intentional damage. As a former claims guy many years ago, I remember having an arson case once where the family was going through a divorce and the husband torched the house. We still had to pay the innocent spouse and the bank for the claim. That guy went to jail, but that is another matter! This seems the same in principle to me. This is an innocent insured who rented to a family. They went through a divorce and the husband snapped and caused damage. He couldn't legally get the guy out until he was formally evicted. What do you think? Answer: If I've tracked down the correct form, it states – We do not pay for loss or damage caused directly or indirectly by any of the following; such loss or damage is excluded regardless of any other cause or event that contributes concurrently or in any sequence to the loss. … 4. Dishonest or Criminal Acts-means loss caused by or resulting from any dishonest or criminal act by you, any of your partners, employees, directors, trustees, authorized representatives or anyone, to whom you entrust property for any purpose: a. Acting alone or in collusion with others; or b. Whether or not occurring during the hours of employment. This is [SIC] exclusion does not apply to acts of destruction by your employees; but theft by an employee is not covered.
Contrast that with what the ISO Causes of Loss – Special Form, CP 10 30 09 17 says: 2. We will not pay for loss or damage caused by or resulting from any of the following: … h. Dishonest or criminal act (including theft) by you, any of your partners, members, officers, managers, employees (including temporary employees and leased workers), directors, trustees or authorized representatives, whether acting alone or in collusion with each other or with any other party; or theft by any person to whom you entrust the property for any purpose, whether acting alone or in collusion with any other party. This exclusion: (1) Applies whether or not an act occurs during your normal hours of operation; (2) Does not apply to acts of destruction by your employees (including temporary employees and leased workers) or authorized representatives; but theft by your employees (including temporary employees and leased workers) or authorized representatives is not covered.
The ISO form excludes only theft by any person to whom the named insured has entrusted the property; the form your friend bought excludes all dishonest or criminal acts by such a person. It appears to me that the ISO form would cover your friend's loss, but the form he bought does not. I found an Illinois court decision that upheld a denial by an insurance company citing wording similar to that in your friend's form. In that situation, the tenants took off with a lot of property that had been inside the premises. The court concluded that the insureds had entrusted the property to the tenant and that the tenant committed a dishonest or criminal act. Based on this, it appears to me that your friend's policy does not cover this loss. **************************************************** Once again, a very subtle difference in policy language. ISO covers all losses other than theft caused by the dishonest acts of someone entrusted with the property; this other form does not cover any of them. The insured is looking at thousands of dollars in uninsured damage. I'll say it again: Insurance is not a commodity. The only way to know how a policy will apply to a given loss is to review all of its terms and conditions. There's no indication that this insured made the purchase decision based only on price, but readers of this blog know too well that people do that every day. Sometimes, they find out later that they bought the wrong policy. Postscript: Steven Peiper, an insurance attorney with the Buffalo law firm of Hurwitz & Fine, P.C. and a regular contributor to that firm's always-informative Coverage Pointers newsletter, emailed me an important point that I neglected to mention. Had this been a fire loss, coverage would have applied. The Standard Fire Policy is written into New York Insurance Law Section 3404. All fire coverage issued to New York risks must be at least as broad as that described in Section 3404. The SFP does not have a "dishonest acts" exclusion, so such an exclusion cannot apply to fire losses. Since the loss described above resulted from vandalism, not fire, the insurer was able to exclude coverage. |
| By Mary Byrnes, AAI-M, AU, Director of Education We've all recently gone through the Cybersecurity filings, Annual Certification of Compliance, and the seemingly never ending Third Party Service Provider requirements. For many, when Cybersecurity is mentioned, those are the first things that come to mind. There was a wake-up call to remind us all about the real crux of the Cybersecurity Matter. Just last week, it hit the news that the records of a medical testing lab may have been breached through a billing collections vendor that they had used. The info was out there for about 7 months. It's alleged that an employee of one of the firms sold the info on the dark web. It may have impacted 11.9 million customers.
Talk about a nightmare!
But what does this have to do with Cybersecurity for insurance agencies? Not to get too morose, but all of that work that you've been doing on Third Party Service Providers and making sure that they're in compliance etc. has got to now count for something. Can you now breathe easier knowing that you questioned all of the Third Parties and that they too, should be questioning any vendors that they may use are doing the same thing? Don't get me wrong, I know it's a pain. But hats off to all of you who have taken it all so seriously and applied your due diligence! Keep up the good work, we'd rather see headlines for good works done by so many of you than about...well, you know.
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| The New York Compensation Insurance Rating Board (NYCIRB) has announced the addition of two new classifications for Workers' Compensation insurance. The classifications, for employees in the banking and insurance industries, will apply to policies effective on and after October 1, 2019. The new classifications are: - Code 8855, Banks & Trust Companies - All Emmployees & Clerical, Outside Salespersons, Drivers
- Code 8723, Insurance Companies & Clerical, Salespersons
Code 8723 applies to insurance agencies as well as carriers. The NYCIRB also said that classification code 8810, Clerical Office Employees Not Otherwise Classified, has been revised to exclude banking and insurance risks. Until the board collects sufficient loss data for the new classifications, they will take the same loss cost as code 8810. Big I New York members should expect to see the new classification on their Workers' Comp policies renewing on October 1 and later. Read the NYCIRB bulletin |
| With state legislative session scheduled to adjourn on June 19th, only seven full session days remain. Expect a flurry activity on bills, both supported and opposed, in the coming weeks.
Big I NY and our members continue to fight business liability expansion bill: This week, we continued our call-in campaign to oppose legislation that would significantly increase independent agencies' liability exposure by allowing lawsuits for a sweeping and broadly defined array of “unfair, abusive, or deceptive" business practices. Well over 100 agents called Senate Majority Leader Stewart-Cousins to voice their concern, while other business and insurance groups did the same. Big I NY signed on to a joint letter calling on legislators to reject this devastating bill, and spent the week meeting with key lawmakers. The bill currently is on the “floor calendar" in the Senate, meaning it can be placed on the “active list" (the list of bills to be voted on for the day) at almost any time on short notice. In the Assembly, the bill sits in the Rules Committee, where it must pass a majority vote before being sent to the full chamber for a vote. We continue to vociferously oppose this bill and will have more opportunities for Big I NY members to get engaged when lawmakers return to session next week. New data breach notification bill passes Senate: On Wednesday, the New York Senate passed the SHIELD Act, which imposes new data breach notification requirements on all businesses. Big I NY worked with insurance industry partners to support amendments to the bill to help harmonize it with the NY Cyber Regulation. The final version of the bill imposes significant requirements on NY businesses, but the majority of these are already required of agencies under the Cyber Regulation. The main provisions that will affect our members are a requirement to notify the Attorney General in the event of a breach that affects over 500 customers, as well as a presumption that failing to comply with the SHEILD Act, and by extension main provisions of the Cyber Regulation, will be a considered a violation of the General Business Law, enforced by the Attorney General. We believe this legislation is likely pass and be signed by the governor. Big I NY meets with key lawmakers on anti-arson application repeal and “storm chaser" bill: This week, we continued our efforts to advance two affirmative priorities, meeting with key senators to help push the bills to a vote before the end of session. The first is legislation to repeal the anti-arson application in NYC, the last remaining jurisdiction in the state where it is required. This bill passed the Assembly last week, and has cleared all key committee votes in the Senate, requiring only a passage by the full chamber before being sent to the Governor for signature. The second bill relates to protecting consumers from fraudulent or unscrupulous roofing contractors, often referred to as “storm chasers." Costly wrongful death bill continues to advance in Assembly:
On Tuesday, legislation to expand the categories of damages which a plaintiff may recover in a lawsuit for alleged wrongful death passed the Assembly Codes committee. Big I NY is working with a broad coalition of insurance, business, and local government groups to strongly opposes this legislation as it would have a significant impact on New York's insurance market. A recently-released study found that the bill could lead to an 12.6% average increase in annual premiums for New York policyholders, or $2.2 billion. Small business cure period bill gains momentum:
A measure designed to protect small businesses from fines for first-time regulatory violations, which Big I NY supports, is gaining traction in the final days of the session. The bill would waive fines for small businesses that are facing infractions for violating regulations for the first time. It would also provide a grace period for the business to come into compliance. It does not apply to regulatory violations that are considered to be done on purpose, threaten safety and health or the environment. Fraud and civil rights violations are also not protected.
Contact Scott Hobson with any questions
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| By Mary Byrnes, AAI-M, AU, Director of Education
GL Additional Insureds have caused a lot of head
scratching over the years and it’s with good reason. With so many policies having “Blanket
Additional Insured” endorsements attached, is it a slam dunk to think that they
solve all of your additional insured woes?
Uh, no. Here's the thing - it's all in the words.
If there's a blanket additional insured endorsement attached that that pretty much mirrors the CG 2033 ADDITIONAL INSURED – OWNERS, LESSEES OR CONTRACTORS – AUTOMATIC STATUS WHEN REQUIRED IN CONSTRUCTION AGREEMENT WITH YOU (04/13 edition), it states: Who is an Insured includes as an Additional Insured any person or organization….when you have agreed in writing in a contract or agreement….for BI, PD, or PI/AI caused in whole or in part by 1. Your acts or omissions; or 2. The acts or omissions of those acting on your behalf; in the performance of your ongoing operations for the additional insured… 2. If coverage provided to the additional insured is required by a contract or agreement, the insured afforded to such additional insured will not be broader than that which you are required by the contract or agreement to provide for such additional insured".
A person's or organization's status as an additional insured ends when your operations for that additional insured are completed. If there's no written contact between the named insured and the additional insured, etc. (go back to start & don't collect $200).
Then there's CG 2038 ADDITIONAL INSURED – OWNERS, LESSEES OR CONTRACTORS – AUTOMATIC STATUS FOR OTHER PARTIES WHEN REQUIRED IN WRITTEN CONSTRUCTION AGREEMENT 04/14 edition. This form is similar to the CG 2033 above, BUT it changes the additional insured description to: Who is An Insured it amended to include as an additional insured: 1. Any person or organization….when you've agreed in writing in a contract or agreement that they'll be added as an additional insured…and 2. Any other person or organization you are required to add as an additional insured under the contract or agreement described in Paragraph 1 above. You know that on a good sized job, the subcontractor is contracted by the GC. But, if a subcontractor is required in the general contractor/subcontractor agreement to add the project owner as an additional insured, this endorsement would include the project owner even though the subcontractor had no direct contract with the project owner. You should notice too that the above wording doesn't include Completed Operations, so if your insured's contact does need that coverage for the additional insured, you'll need to add another form (CG2037 Additional Insured-Owners, Lessees or Contractors-Completed Operations). This wouldn't take the place of the GC2033 (or equivalent), but would be in addition to it.
If there is no written contract between the parties, if you can get a carrier to attach the GC 2010 ADDITIONAL INSURED – OWNERS, LESSEES OR CONTRACTORS – SCHEDULED PERSON OR ORGANIZATION 04/13 edition, you'd need to name the additional insured or location, but that'd do the trick for “ongoing operations" for “Liability caused in whole or in part by the named insured". (You'd still need the CG 2037 for the completed operations, if needed).
If you need to add an additional insured for a lessor of premises, grantor of franchise, etc. etc. all bets are off because you'll need other forms.
It's all in the words, make sure the form that you need to cover the specific needs for that additional insured's relationship with your insured is the one you need. Big I New York has available for you to download an Additional Insured Request Form. This form helps to identify the correct additional insured endorsement for the exposure. It is also available in The Big I New York Big Book of Form Letters & Other E&O Tools, (click on products) available for purchase on our website.
This is a short synopsis of the forms with many sections paraphrased, the complete forms should be reviewed by you for their complete language and interpretation. This is meant to be a guide on the purpose of the aforementioned forms.
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