Despite the current moratorium on property-casualty insurers terminating policies, all policies issued by insolvent carrier Maidstone Insurance Co. cancelled on April 13.
New York State Supreme Court in Nassau County ordered on February 13 that Maidstone be liquidated due to its inability to meet its obligations to pay claims. The New York State Department of Financial Services was appointed as the liquidator. The order also required all Maidstone policies to be cancelled effective April 13.
Big I New York contacted the DFS recently to ask whether the department would petition the court to delay the effective date of cancellation, given the current moratorium. The department responded last night that, "No policyholder came forward with a claim of financial hardship." Consequently, the cancellations took effect as scheduled.
If you had clients insured with Maidstone, you should discuss alternative coverage arrangements with them, if you have not already done so.
The issue of the applicability of business interruption coverage has become one of the most hotly discussed insurance issues related to the COVID-19 pandemic. It is well-established that for virtually every commercial business interruption policy, there is no coverage for losses related to COVID-19. In response, both Congress and the New York State Legislature are currently considering legislation that would retroactively require insurers to cover losses related to COVID-19. We believe these proposals are misguided and would have catastrophic consequences.
On the Federal level, Rep. Brian Fitzpatrick (R, Pennsylvania) has sponsored the “Never Again Small Business Protection Act" that would require every commercial property-casualty policy which includes business interruption coverage to provide coverage for losses stemming from the closure of a business for practically any reason, which would include losses associated with a virus or pandemic. Recently, President Trump called on insurers to pay virus related claims if they are not excluded.
In New York State, Assemblyman Robert Carroll (D, Brooklyn) and Senator Andrew Gounardes (D, Brooklyn) have sponsored legislation to require COVID-19 related losses to be covered retroactively by business interruption insurance.
Why a Retroactive Coverage Mandate is Unwise - and Ineffective:
- First and foremost, pandemics are by nature uninsurable, and the losses associated with a pandemic are beyond what the existing insurance mechanism can afford to cover. Insurance policies contain exclusions for losses caused by events like war, nuclear and radiation accidents, and pandemics because the potential losses are so extreme and widespread that providing such coverage would threaten insurer solvency and force companies to charge premiums that would be cost-prohibitive.
- The magnitude of these losses is enormous and will threaten the financial health of many insurers, quickly send some domestic companies into insolvency, and destabilize an otherwise healthy economic sector. The insurance industry will be needed to support economic activity and help fuel our economic rebound when the restrictions are lifted, but it will not be positioned to do so if measures like this are enacted into law.
- Such proposals would require insurers to utilize the premiums collected for other specified risks and set aside to pay claims, and the outlays this would mandate will almost certainly exceed the amount of premium collected for all commercial property insurance.
- Legislatively rewriting existing insurance contracts by somehow nullifying the virus exclusion or the physical damage requirement would blatantly run afoul of the constitutional prohibition against the government impairing private contracts.
- Proposals that attempt to revise insurance contracts and compel insurers to pay for losses that were clearly excluded are misleading and offer false hope to businesses that are struggling through the crisis. Indeed, only 30% of small businesses have business interruption coverage. This proposal offers the majority of small businesses no relief.
- The insurance industry is working closely with the business community on a proposal that would enable those in need to receive compensation from the federal government. The federal fund that has been proposed would be open to all businesses adversely affected by the pandemic and not simply the small minority that bought business interruption coverage that excluded such risks.
Big I NY Has Your Back:
IIABA has joined a coalition of insurance trade associations in calling on congress to reject retroactive coverage mandates. Big I New York is working closely with our national Government Relations team to urge the state's congressional delegation to reject this misguided proposal.
On the state level, we are similarly opposing retroactive coverage legislation mandates. Keep an eye on your inbox for ways to contact your local legislators. We continue to advocate for a solution that will provide real, meaningful relief for our small business customers.
By Jim Lombardo, CPCU, AAI, AIM, MBA, AVP of Learning & Development
“A little more persistence, a little more effort, and what seemed hopeless failure may turn to glorious success.”
-- Elbert Hubbard
I had a “heart to heart” talk with my daughter recently - she is at a stage in her personal and professional life where things just aren’t synching for her...she is depressed, frustrated and not very motivated.
I told her I absolutely understood and agreed that these are crazy times and everything seems like we are just stuck in a rut…. BUT I also said to her, this is something we will always look back upon and consider it a life altering time. It is up to us (her) to get up every morning, do her normal routine and hit the ground running. Call your clients, check in with your friends, go visit Gramma (while maintaining your social distance!)…
I told her that she has the power to knock that feeling off her shoulder and replace it with positivity. It sounds corny but it is true.
So, take the time to better yourself - be that leader- offer some hope - give some reinforcement—
On behalf of Big I NY we wish you, your staff and your family well!! Stay Safe - Stay Strong – Stay Positive...and don’t forget to sign up for our upcoming Annual E+O Webinars
Here are some upcoming CE webinars you may find interesting…
Reg 187 - It's In YOUR Best Interest
ABEN Agency Errors & Omissions - ACSR 4 -
ABEN Professional Dev & Acct Management - ACSR 5 - Part 1
ABEN Risk Mgmt & Insurance-Why Agents Are NOT Risk Managers
NYAIP Certification Program
By Jim Lombardo, CPCU, AAI, AIM, MBA, AVP of Learning & Development
Well, not much to say here except I might suggest, if you haven’t seen Groundhog Day starting Bill Murray, you might want to…
During these crazy times, we look to our leaders for guidance, example, wisdom and just a simple show of strength. We WANT our leaders to lead, right?
I am reminded of a wise adage from the former CEO of GE- Jack Welch…he once opined, “ Before you are a leader, success is all about growing yourself. When you become a leader, success is all about growing others.”
So I have to ask you to ask yourself….are you an Agency owner? Principal? Mid-level Manager? Senior CSR? Sales Development Manager? Mother? Father?
Pay attention to who is watching you. Pay attention to who is listening to you. Have you been leading? Complaining? Blaming others? Now is the time to be a leader…how you are perceived now will be a lasting impression.
We at Big I NY wish you, your staff and your family all the best. Stay safe. Stay strong and Stay positive.
Take a peek at some upcoming CE webinars that you may find interesting.
Commercial Additional Insured Endorsements Status & Purpose
ABEN When Words Collide...Ins Coverage & Claim Disputes
Reg 187 - It's In YOUR Best Interest
A new “frequently asked questions” (FAQ) page on the New York State Department of Financial Services website clarified the current moratorium on terminating and changing insurance policies.
- IF the terms of the policy permit the carrier to cancel, non-renew or conditionally renew it on a specific date;
- AND the policyholder can demonstrate financial hardship because of the pandemic;
- THEN the 60-day moratorium begins on that date.
For example, suppose the insurer sent a non-renewal notice on February 1. The policy will expire April 16. The policyholder demonstrates financial hardship. The insurer must delay the non-renewal until June 15. It may terminate coverage at that time.
The FAQs also clarified that:
- The requirements apply to policies that were in effect on March 30, 2020
- The requirements expire when the governor's executive order does on April 28. Big I New York has asked the department to confirm that the governor's extension of NY PAUSE did not change the regulation's expiration date.
For example, an insurer may non-renew a policy that is scheduled to expire on May 1.
Check www.biginy.org/coronavirus for further updates on the pandemic.
Progressive donation to provide relief to Big ‘I’ members facing pandemic challenges.
ALEXANDRIA, VA, April 16, 2020— The Independent Insurance Agents & Brokers of America (the Big “I”) is pleased to announce that Progressive Insurance has donated $2 million dollars to establish the Trusted Choice® COVID-19 Relief Fund in response to the economic and operational challenges the coronavirus crisis has presented to independent agencies.
The grant will be dispersed directly to independent agencies via a Big “I” application process to meet those agencies’ critical needs in the midst of the pandemic. Independent agencies can apply for assistance online
“The Big ‘I’ is so grateful for Progressive’s generosity in leading the charge to support the independent agency community during these unprecedented times,” says Bob Rusbuldt, Big “I” president & CEO, who created a video message
to address the donation and new fund. “Big ‘I’ agents and agencies are facing unforeseen obstacles even as they seek to help their clients and communities in their time of need. To see Progressive step up and provide tangible, innovative support is a powerful reminder that we’re all in this together. I know this will make an enormous difference to our agencies as they provide essential services across the country.”
“Other insurance carriers and industry partners are welcome to provide resources to support this new 501(c)(3) charitable fund,” Rusbuldt says. “With the impending loss of premium from retail and service businesses, independent agencies are now beginning to experience what many of their business clients are experiencing. Some agencies are also facing equipment shortages, staffing challenges and other barriers during the coronavirus pandemic.”
The donation is part of Progressive’s broader Apron Relief Program, which will also return approximately $1 billion in premiums to customers; provide an expedited claims experience for insured first responders and health care workers in a car accident; cover health insurance co-pays for Progressive employees’ telemedicine visits and cover costs of coronavirus medical treatments and donate to charities focused on hunger, health and homelessness and more, according to the press release
“Our Apron Relief Program is designed to help Progressive assist our four key stakeholders—employees, customers, communities and agents—and doing so ultimately will serve our shareholders as well,” says Tricia Griffith, Progressive president & CEO. “Partnering with the Big ‘I’ in its dedication to serve independent agents gives us the ability to provide grant assistance quickly and broadly to agents across the country who are affected by this pandemic. By sticking together, we’ll come through this stronger.”
In response to the coronavirus pandemic, Progressive has created a resource page on their agent portal, ForAgentsOnly.com, to provide up-to-date information to agencies. The Big “I” also has a coronavirus resource page
with original articles, tools, webinars, news items and more to assist its members and their clients.
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.
Similar to the requirements that have had property-casualty insurance producers emailing their clients for the past week, a new state regulation requires health insurance producers to notify their clients about new temporary rules.
An emergency regulation issued by the New York State Department of Financial Services last week requires health plans and insurers to make certain concessions to customers experiencing financial hardship due to the COVID-19 pandemic. DFS issued the regulation to comply with an executive order issued by Gov. Andrew Cuomo on April 7.
The regulation, which is in effect from April 7 to May 7, applies to insurers, health maintenance organizations (HMOs), and student health plans and any individual, small group, or student blanket comprehensive health insurance policies they issue. The insurers, HMOs and plans must extend the period for the payment of premiums to the later of the expiration of the applicable contractual grace period and 11:59 p.m. on June 1, 2020 for any policyholder or contract holder who can demonstrate financial hardship from the pandemic. Insurers, HMOs and plans must pay claims during that time. Also:
- They cannot retroactively cancel policies, charge late fees, or report overdue payments to consumer reporting agencies or debt collectors for those in financial hardship
- They must provide information about alternative policies and plans they offer, along with contact information for New York State of Health
- They must, by April 21, mail, email or deliver written notice to every policyholder and contract holder of the regulation's provisions and a toll-free number to call to discuss billing and make alternative payment arrangements
- Notify insurance producers and any third-party administrators with whom or which the insurer does business, by April 21, of the regulation's provisions
"A licensed insurance producer who procured the individual, small group, or student blanket comprehensive health insurance policy for the policyholder or contract holder shall mail or deliver, which may include email, notice to the policyholder or contract holder of (the regulation's provisions)" by April 21.
In a communication to Big I New York last week regarding the notices to property-casualty policyholders, DFS said that producers are not required to send these notices through U.S. Mail.
Insurers must accept written attestation from the policy or contract holder of financial hardship from the pandemic. The regulation's new restrictions apply only to policy terminations resulting from non-payment of premium and not for any other cause. The rules clearly state that this is a deferral of premium payment obligations, not a waiver or forgiveness of them.
Members can download a sample letter developed by the New York State Association of Health Underwriters from the Coronavirus Resource Page on this website. The content of this notice is for informational purposes only, and is not intended to provide legal advice. You should contact your legal counsel for legal guidance.
Onsite employees of businesses that remain open during the COVID-19 state of emergency must wear protective masks starting Wednesday, according to a new state order. New York Gov. Andrew Cuomo issued the executive order Sunday to all "essential businesses" operating in the state. Essential businesses are those that the state government has exempted from a previous order that businesses have 100% of their employees offsite. the state government included insurance on the list of essential businesses.
The new order stated:
For all essential businesses or entities, any employees who are present in the workplace shall be provided and shall wear face coverings when in direct contact with customers or members of the public. Businesses must provide, at their expense, such face coverings for their employees.
Insurance agencies and brokerages that are still having face-to-face contact with customers or members of the public should distribute masks to employees who have that contact as soon as possible. The order takes effect at 8:00 pm on Wednesday, April 15. Violation of the order is a misdeanor punishable by up to one year in jail, a fine of up to $2,000, or both.
This is an unprecedented time for us all and first and foremost we hope you and your loved ones remain safe throughout this ordeal.
We expect you are currently receiving inquiries from clients seeking guidance concerning what type of loss is covered under various policies you have procured on their behalf. We also understand providing excellent customer service is of key importance to your firm as it is ours. There is a natural tendency to want to respond quickly to questions being raised by anxious clients who are seeking immediate answers and this is a key point in time when agency employees should be empathetic while applying appropriate restraint.
The following is a non-exhaustive list of types of policies and some examples of types of claims that may arise:
- Commercial Property - Business interruption
- Entertainment - Event and production cancellation
- Private Company D&O - Bankruptcy risk
Below are some practical steps to follow for incoming queries:
- Issue a letter to all customers
Appoint “COVID-19 Managers" based upon assigned lines of business, who will have coordinating responsibility within your company for client inquiries to ensure quality control, consistency of service and that all notifications are properly and timely processed and acknowledged by insurers. Pay particular attention to reporting deadlines on “non-occurrence" trigger policies.
- Providing clear direction and a simplified process with agency contact points for COVID-19 related questions.
- Advising that insurance agents / brokers do not have any authority to make any coverage determinations and that only insurers are able to make such determinations.
- Advising your firm is prepared to provide assistance to clients by way of explaining policy requirements concerning reporting claims and/or notice of circumstances to insurers.
- It may be advisable to retain an attorney to assist you with drafting a thorough communication.
If your firm has agreed to report claims or circumstance to insurers on behalf of your clients, avoid “cherry picking" policies under which notifications of claims or circumstance will be reported. It is possible you may inadvertently fail to report the claim under a policy that may afford coverage. Instead, provide a single notification to all insurers with whom your firm has placed policies.
Ensure all Covid-19 inquiries and responses are preserved in the account file and in a master electronic file (account name, inquirer's name, date(s) of inquiry, date(s) of response, line of business, brief description date of notification to insurer, insurer name, date of acknowledgement from insurer. This will ensure your management's ability to track notifications and insurers' responses in one central location.
Direct your staff to avoid making any representations (verbal or written) concerning coverage, even if the answer appears to be obvious as only insurers are able to make coverage determinations.
Ask the client to put their inquiry in writing (via e-mail) so it can be handled expeditiously and allowing a clear paper trail. If the customer has multiple inquiries ask the customer to include all of them in a single e-mail correspondence which will form the basis for any notification to insurers.
If the client refuses to put their inquiry in writing, take detailed notes of the client's inquiries and send an email to the client asking them to confirm by return e-mail your understanding of the inquiry.
Document your file with details concerning all verbal communications.
Provide the client with a list of all policies procured by your firm on their behalf and be prepared to provide complete policies to your clients. Do not provide any additional commentary.
Explain claim notification requirements and/or notice of circumstances reporting requirements which will differ depending upon the policy and offer to assist the client to ensure their timely reporting to the insurer(s). Note: Claim reporting is a key area of E&O exposure for insurance agents and brokers, therefore tracking this activity at a management level is critical to ensure claims have been reported and acknowledged by all potentially involved insurers in order to avoid a claim for failing to report.
If reporting the claim or notice of circumstance on behalf of your client to the insurer(s), include all policy titles with corresponding policy numbers and effective dates. This will accelerate the insurers' response.
Your staff must immediately escalate all customer threats to your senior management in writing and the appropriate agency executive should contact Allianz Global & Corporate Claims in North America to discuss any specific situations where your firm's client has threatened to make a claim against the agency.
We hope you find these thoughts helpful for navigating through this unchartered territory and please know we are ready to respond to any questions you may have.
The content above has been adapted from a recent communication from Allianz regarding the COVID-19 Pandemic.