Legislation supported by Big I NY, which would simplify and streamline the affidavit process and exempt commercial lines insurance transactions placed by wholesale insurance brokers from the requirement to obtain three separate declinations, has been placed on the Senate Insurance Committee agenda for a vote on Monday, April 29th.
New York’s excess line market is critical to providing insurance for risks that are not underwritten by admitted carriers – such as those which are unique, volatile, or lack loss history. Current law requires brokers to obtain three declinations from admitted carriers before an excess line policy can be obtained, and a detailed affidavit must be filed for each declination. New York is one of only ten states that require the filing of declination information.
The current system is burdensome and time consuming, and can lead to delays which are detrimental to prospective policyholders.
***Update: this bill passed the Consumer Protection Committee on 4/30/19***
Assemblyman Dinowitz has introduced a bill (A.7193
) to ban the use of non-compete agreements (NCAs) for employees earning $75,000 or less annually, and impose requirements on their use for higher-earning employees. The bill has been scheduled for a vote in the Consumer Protection Committee on Tuesday, April 30th.
The key provisions are:
- A complete prohibition on the use of non-compete agreements for any employee earning $75,000 or less (adjusted annually for inflation). The bill does not specifiy if this includes commissions, or is strictly base salary.
- Impose new requirements for the use of NCAs with employees earning over $75,000 per year:
- All NCAs must be written and signed by both employee and employer
- A NCA must be provided to a prospective employee the earlier of a formal offer of employment or 30 days before the NCA goes into effect
- Any NCA with a current employee must be provided 30 days before it goes into effect
- The NCA is no longer enforceable if the employee is terminated without cause
- Employees have a private right of action to sue their employer for violations of these requirements. The court is empowered to void the NCA, as well as award damages, attorneys fees, lost wages, etc.
The bill appears aimed at low wage workers, such as fast food workers, who are increasingly required to sign NCAs. However, we are concerned that the bill could have a significant impact on the independent agency community. We are closely monitoring this bill and seeking additional information about how the threshold will work with commissioned employees.
By Mary Byrnes, AAI-M, AU, Director of Education
As you can imagine, Big I NY gets a lot of licensing questions, and we'd prefer to receive calls with questions prior to making changes vs. the calls after the fact where you say, “I wish I had called first." Before you jump into the pool and make licensing changes, consider who really can be named a sub-licensee. The DFS lays it out pretty clearly under NY Ins. Law §2104 (b)(2) (McKinney 2000 and Supp.2006), which I'll paraphrase to save you the legalese.
Under a license for a corporation, only the officers and directors of the corporation can be sub-licenees. For an LLC, which falls under firm/association, members of the LLC can be named as well as non-member managers. Now they also talk about being eligible to hold a license and paying the licensing fees, but you know that. If you want more info on this you can visit our Licensing section under the Big I NY Answer Center. There's also a pretty easy to read opinion issued by the Office of General Counsel from January 2006.
For both the Corporation and LLC licenses, there must be at least 1 sub-licensee. But is 1 enough? Think outside the box, if something were to happen to the only sub-licensee and they couldn't make the decisions for the agency either for a few months or permanently, would that one sub-licensee be enough for the continuity of the agency? Would it create a mad scramble to come up with a plan “B" if needed?
There are some carriers that require an agent to also have an individual license, so if you've let it expire, get ready to reapply for one if you encounter one of these carriers.
REMINDER: Entity licenses (Corp, LLC & Partnership) for PC & LA are up for renewal effective 6/30/19. Missing the renewal date will require a paper application to the NYS DFS Licensing Department and they are not issued overnight. On the paper application, there's a question about whether or not you've conducted business under the expired license (nobody wants to have to answer that awful question).
Please call Big I NY Education if you have any licensing or CE questions.
By Mary Byrnes, AAI-M, AU, Director of Education
Having worked in commercial lines for almost all of my adult life, I realized that there are just some coverages that sell themselves, if they’re explained correctly. The “Management Liability” class of coverages fit that bill. There are cases that are so newsworthy, that they’re instantly recognizable by anyone. If you hear Bernie Madoff or Enron, you know exactly what the issue was. Most insureds think that because they’ve got crime or GL coverage that they’ve got it covered, but they are sooooo wrong!
Did you know that if your insured has a 401K program for their employees and they have the plan administered by a third party fund manager, your insured can still be personally (yes PERSONALLY) liable? Back to Bernie Madoff. There were plenty of third party fund managers who placed the 401K and pension plan funds in investment programs with Bernie Madoff, after all, it looked good on paper and showed a great return. You know the rest of the story, it hit the fan in a big way. You may know someone who lost their pension due to this situation. Here’s where it hits home…If the CEO of your insured picked the fund manager, and something goes very wrong, (like the fund manager totally mismanages it, leaves town with it etc), your insured’s CEO picked the fund manager. The CEO is personally liable for the decision and the fall out. Scary stuff for an insured and for the agent if the appropriate coverage hasn’t been discussed with the insured.
Find out about Directors & Officers (D&O), Employment Practices Liability (EPLI), Fiduciary Liability (FLI), & Employee Benefits Liability (EBL) in our upcoming webinar. Chris Amrhein will guide you through what each of these coverages does. You can’t really control what your insureds do from a management standpoint, but you can save the day with the right coverages.
I’ll be there too!
The state legislature is on recess and will return to session Monday, April 29th. Here are the latest on what's happening in Albany:
Senator Sanders Sponsors Bill to Repeal Anti-Arson Application Requirement
Senator James Sanders (D, Queens) has sponsored legislation to repeal New York City’s anti-arson application. Senate bill 5126, which Big I NY supports, would repeal section 3403 of the Insurance Law. This section requires property owners to fill out a lengthy anti-arson application as a condition of obtaining property insurance. While originally intended to deter arson by providing insurers with information to assist in an investigation, the application has long outlived its usefulness. Insurers now have access to a vast amount of information via third parties, and no longer rely on the information included in on the anti-arson form.
The anti-arson application has outlived its usefulness, is burdensome for customers and agents, and puts property owners at risk of losing coverage if it is not submitted properly. To date, Rochester and Buffalo have repealed this requirement, leaving NYC as the last remaining jurisdiction in NY to require it. Big I NY is working with other carrier and producer groups to advance this bill in the 2019 session.
New Sexual Harassment Bill Introduced
Assemblywoman Nily Rozic and Senator Andrew Gounardes have introduced legislation to define what constitutes sexual harassment. The bill (A.7167/S.3377) would also make sexual harassment and sexual discrimination a part of New York Human Rights Law.
Under the bill, where a case is brought for sexual harassment or for unlawful employment discrimination based on sex, liability would attach if the plaintiff demonstrates that the conduct complained of was motivated in whole or in part by the person’s sex, regardless of the level of pervasiveness or severity of conduct. The removal of the “severe and pervasive” standard that is currently applied in sexual harassment cases is sure to cause concern for many businesses.
However, the bill would permit an employer to assert an affirmative defense to liability if the conduct consisted of “no greater than what a reasonable victim…would consider petty slights or trivial annoyances.”
New Poll Finds 48% of New Yorkers Support Single-Payer Healthcare, Majority Believe it is Harder for Businesses to Succeed
A recent Siena poll
found that 48% of New Yorkers support a state single-payer healthcare system, while 44% are opposed and 8% are undecided. Legislation to enact single-payer healthcare, which would replace the existing private healthcare system with a single, government-funded system, has passed the Assembly in previous years. The Senate intends to hold public hearings on the issue, while the Governor has not indicated support for single payer, and has instead created a committee of experts to study a universal health care plan. While the issue has grabbed headlines and enjoys vocal support from progressive lawmakers and activists, this latest poll demonstrates that the New Yorkers, overall, have mixed feelings.
Asked about the ability of businesses to succeed in New York, only 11 percent say it’s gotten easier in the last five years, while 51 percent say it’s gotten harder and 29 percent say it’s stayed about the same.
By Mary Byrnes, AAI-M,
AU, Director of Education
We are asked pretty frequently, “Why does my Agent’s License show as inactive?”
An Agent’s License (PC or LA) is all about the relationship between the insurance company and the licensee. The Agent’s license is only good for that relationship. If someone has either a PC or an LA license that’s showing as ‘inactive,” it’s because there isn’t a direct relationship (company appointment) which is required between the licensee and the insurance carrier. When the agent’s license is issued, if there isn’t an insurance company appointment filed, the agent’s license goes into “inactive” status. The NYS DFS allows one renewal of an “inactive” agent’s license. After that first renewal, it will expire on the next renewal date.
Why is it so common to see “inactive” agent’s licenses? One reason is that the licensee who previously worked for a direct writer might have joined your staff, and those direct writing agencies will only allow their staff to have an agent’s license, since they only represent 1 carrier, and they have an insurance company appointment. The agent’s license follows the relationship between the carrier and the licensee, it doesn’t follow the person licensed.
It also seems to be a misconception that if you work for an agency you’d need an agent’s license. Not so! An agent’s license is only needed is if the licensee has an insurance company appointment. That’s not to say that it never happens that an individual does have an insurance company appointment, but it’s more common for insurance company appointments to be under the agency name.
So if you have an “inactive” agent’s license, you should weigh whether you really do need an agent’s license or if you need a broker’s license that follows the person and doesn’t require an insurance company appointment. Only you can know.
Want more info? Check out our Licensing section of the Answer Center, where you can find FAQs, helpful tools, and laws, regulations, and legal opinions. You'll need to be logged in to access this great resource - but it's worth it!
The New York State Workers' Compensation Board has announced that the maximum weekly benefit for disability claims will increase to $934.11. The new limit, up from $904.74, applies to claims with dates of accident starting July 1, 2019 and ending June 30, 2020.
New York Workers' Compensation Law requires the board every July 1 to set the maximum weekly benefit at two-thirds of the New York State average weekly wage for the previous calendar year. The New York State Department of Labor has determined that the statewide average weekly wage in 2018 was $1,401.17. The new maximum benefit is two-thirds of that figure.
The New York Compensation Insurance Rating Board (NYCIRB) has announced an increase in the amount of construction contractors' payroll that can be counted when carriers calculate Workers' Compensation insurance premiums. Effective July 1, 2019, an individual employee's payroll will be capped at $1,401.17 per week. This is an increase from the current level of $1,357.11.
New York Insurance Law requires the construction industry payroll limitation. The law requires the amount to be adjusted every July 1 based on the New York State average weekly wage.