During this week's Independent Agents Advocacy Week, more than 70 independent agents conducted virtual meetings with more than 40 state legislators to call for pro-policyholder reforms. Key issues included making the auto photo inspection requirement voluntary, streamlining the process for placing coverage in the excess market, repealing the anti-arson application, and preventing no-fault insurance fraud.
The event gave Big I NY members the opportunity to meet face to face with their elected state representatives. Kelly Gonyo, owner of the Blue Line Insurance Agency said,
“I am so fortunate to have been given an opportunity to use my voice to directly speak with our lawmakers who represent us in Albany. As IAs we know our industry best – It's so important to come together during this week and not only advocate for our industry, but also assure that we maintain very best interest of our valued customers. For 20 years I have been sitting behind a desk wondering how I can be part of the change for the IA in New York, and I am so thankful to Scott and the Big I team for giving me opportunity to be a part of their movement."
The week began with a major victory, when the Senate unanimously passed the legislation to streamline the excess lines process. Big I NY spent the remainder of the week lobbying members of the assembly to advance the bill in that house.
"This was a great experience for me and our local agents, I am proud to do what is best for our customers. Our state lawmakers listened to our concerns, and many of them committed to supporting our bills. As agents, we always try to be part of the solution," said Neil Levy, with Assured Partners and Chair of Big I Tri-County.
Thank you to all the agents who made their voices heard this week!
An endorsement to the Insurance Services Office (ISO) Homeowners insurance program, which Big I New York initially proposed, has been approved by the New York State Department of Financial Services (NYSDFS). The form gives homeowners coverage for damage to underground utility service lines. It will allow you to offer better protection against very expensive losses to your Homeowners clients.
Since 2012, Big I New York has been a member of the Mid-America Insurance Conference, a forum where independent agents, trade association staff, and representatives of industry standards-setting organizations discuss topics such as property-casualty coverage, rules, forms, and other technical aspects within the industry. ISO, the National Council on Compensation Insurance (NCCI) and the Association for Cooperative Operations Research and Development (ACORD) attend the forum. When there isn't a pandemic, the conference meets each year in early November in Kansas City, MO.
In response to a Big I New York member inquiry, we proposed at the 2016 meeting that ISO create an optional Homeowners insurance endorsement that would insure against loss or damage to underground utility service lines, such as natural gas, water and sewer lines. While ISO has no obligation to adopt the attendees' proposals, in this case they did and reported at the 2019 meeting that they intended to file such an endorsement with regulators across the country.
The NYS DFS approved the endorsement for use in New York on November 3, 2020.
The endorsement is HO 06 69 12 20, Utility Line Expense Coverage. It insures against damage to utility lines on the insured's residence premises, located outside the home and below the ground's surface against causes of loss such as wear and tear, deterioration, rust, corrosion, leakage or blockage. The premium charge is based on individual insurer rate filings, with a modification based on the age of the construction.
If any of the insurers you represent use ISO Homeowners forms, they have the ability to adopt this form so that you can offer it to your clients now. We encourage you to ask your carriers whether they offer this important new coverage.
Lumber prices are, if you'll pardon the pun, going through the roof.
Last Thursday, February 18, the price per 1,000 board feet of lumber on the Chicago Mercantile Exchange hit a record $1,004.90. By the close of trading Friday, it had retreated to $997.90, but this was up from $478.30 on October 29. One market watcher speaking to CNBC last week predicted another 30 to 35% increase from current prices.
A boom in home renovation activity in the wake of state stay-at-home orders during the coronavirus pandemic has boosted demand for lumber and steel, experts report. At the same time, lumber mills expected mass job losses last spring to hurt demand, so they cut production. That coupled with other supply chain disruptions has combined to reduce available supplies, resulting in soaring prices.
Iron and steel costs are also rising, up more than 15% in the past year, according to the Associated Home Builders and Contractors.
What does this mean for you? Some of your homeowners insurance clients may suddenly be underinsured. The replacement cost of their homes has gone up - the average price of a new single-family home has increased $24,000 since last April.
Some insureds may be protected if their insurers have attached one or the other of two ISO endorsements:
- HO 04 11 05 11, Additional Limits of Liability for Coverages A, B, C, and D, which applies to the limits of insurance for the Dwelling, Other Structures, Personal Property, and Loss of Use coverages
- HO 04 20 05 11, Specified Additional Amount of Insurance For Coverage A—Dwelling, which applies only to the limit of insurance for the Dwelling coverage
Both endorsements apply when there is a loss to the dwelling that exceeds the Dwelling insurance limit. They automatically increase the Dwelling limit to equal the current replacement cost of the building. Endorsement HO 04 11 05 11 increases the Other Structures, Personal Property and Loss of Use limits by the same percentage. These limit increases apply under two conditions:
- The insured has allowed the insurer to adjust the Dwelling limit and premium in accordance with property evaluations the insurer made and increases in inflation; and
- The insured has notified the insurer, within 30 days of completing any improvements, alterations or additions to the insured dwelling which increase the building's replacement cost by 5% or more
Insurers who do not use ISO forms may offer similar endorsements. If you have homeowners insurance clients whose policies do not contain these types of endorsements, you may want to invite them to contact you to discuss possibly increasing their coverage. Check home values using the cost estimator the insurer on each policy provides. Bear in mind, though, that the carriers themselves might not have updated their cost estimators to reflect these wild price hikes.
Commodity prices often fluctuate, but these types of increases are extreme. What goes up may come back down, but for now many people may not have enough insurance to rebuild their homes.
In the wake of the severe winter weather that hit the south and midwest in February 2021, this 13-minute presentation discusses the types of resulting losses that various homeowners insurance policies might and might not cover.
Big I NY and six other producer associations have issued a letter calling on the Department of Financial Services to exempt agents and brokers who maintain licenses but are not engaged in the process of producing insurance business from the full requirements of the cybersecurity regulation (23 NYCRR 500).
Such an exemption would eliminate a significant and unnecessary compliance burden on inactive licensees, who pose no risk to customers as they conduct no licensed activities nor hold any customer data. These are typically retired individuals, teachers, or trade association board members who chose to maintain their license for personal reasons.
Under the current regulation, individual licensees not engaged in actively selling insurance are exempt from some, but not all, requirements of the cyber regulation. However, they must still perform risk assessments, establish data retention and disposal policies, implement a third party service provider policy, and file an annual certification of compliance.
We believe a full exemption is necessary, reasonable, and would not increase the risks to consumers. In addition to Big I NY, signatories to the letter include the Excess Lines Association of NY, Professional Insurance Agents of NY, Professional Insurance Wholesalers Association of NY, Council of Insurance Brokers of Greater NY, National Association of Insurance and Financial Advisers of NY, and the New York State Association of Health Underwriters.
Read the full letter
The New York State Department of Financial Services today issued a warning of a "systemic and aggressive campaign to exploit cybersecurity flaws" in websites that provide instant insurance quotes. The department urged all entities that it regulates, if they have instant quote websites, to review them for evidence of hacking.
The alert, which DFS emailed to regulated entities and posted on its website today, said that two auto insurers reported attempts by cybercriminals to steal unredacted driver's license numbers. These insurers off instant quotes for auto insurance on their sites. The New York Cybersecurity Requirements For Financial Services Companies regulation requires "covered entities" to report certain "cybersecurity events" to DFS within 72 hours of determining that they occurred.
Last month, DFS notified a dozen entities that they might be targets of this campaign, after which another six reported suspicious events. Four of those insurers reported that the hackers had successfully stolen private information.
The department said that the campaign was one part of an overall increase in attempts to steal private information, and this appears to be linked to a growth in benefits fraud during the COVID-19 pandemic. New York has implemented enhanced identity requirements for pandemic benefits, and this may explain the search for driver's license numbers.
If you have a public website that displays or transmits consumers' non-public information, DFS suggests that you:
- Review whether it's necessary to display non-public information - even redacted - on the site
- Review the site's security controls
- Review the site for browser web developer tool functionality
- Confirm that any tools for redacting or obfuscating personal information are implemented properly
- Ensure that your privacy protections are up to date and working effectively
- Search and scrub "public code repositories" for proprietary code
- Block the IP addresses of suspected unauthorized users
- Consider limiting the number of quotes a user can obtain in one session.
You may need to consult with the vendor that hosts your website on many of these items.
More information about cybersecurity and the New York regulation are available in the Cybersecurity section of our website.
Also, this is a reminder that all agencies must submit a certification of compliance with the regulation on the DFS website no later than April 15.
The excellent American History Tellers podcast has just done a three-part series on the Great Chicago Fire of 1871. If you haven't listened to the show before, this is not a dry recitation of history. The host places the listener in the scene being described and relays the story of what happened from the viewpoints of people who were there.
The Chicago fire series barely mentions insurance, but it's a good reminder of why we have building and fire safety codes. In the fall of 1871, Chicago had all the key ingredients for a fire disaster:
- Thousands of wood frame buildings
- A drought
- High winds
The 30-hour fire that resulted devastated one of the country's largest cities. If, like your humble insurance geek, you find insurance history interesting, you might want to give these a listen. Each episode is between 35 and 45 minutes, making them the perfect length for a drive or a long dog walk.
Part 1: We Are Going to Have a Burn
Part 2: Fleeing the Flames
Part 3: The Great Rebuilding
Hello Big I Tri-County Members! We are excited to offer you an opportunity to earn 15 CE credits simply by taking our 15inONE program at the reduced rate of $150. With our self-study, simple exam and webinar, you’ll earn 15 CE credits while learning how to protect your agency. Our program will satisfy all licenses except TLA. Attend one of our special Big I Tri-County webinars in March and successfully complete the self-study & exam within 4 months and you’ve gotten yourself 15 CE! Please reach out to Sue Keegan at email@example.com or 315-432-4215 with any questions you may have or for help registering for this awesome opportunity. Learn more here.
By Jim Lombardo, CPCU, AAI, AIM, MBA, AVP of Learning & Development
Wow. Mid-February already. Things appear to be on the upswing. More and more people are getting vaccinated, a new vaccine is about to be released, workers are getting more comfortable with the technology, and kids are regularly attending “virtual" school. Well, ok not that last one (my wife is a teacher, and I hear her everyday struggling to get the kids' attention and/or actually have them show up in the first place!) but that is a story for another day.
As we approach one year of COVID-19, let's reflect on what we have learned.
Big I NY has been there every day the past twelve months with education, research, support, advocacy and topical messaging - whether it be about cyber, licensing, COVID-19 or news from the DFS. We have been there for you.
And, we have no plans to slow down. We are ramping up with new people, new technology, new methods, and new educational classes. Remember, we can custom design a class just for your agency and staff. Contact Sue Keegan at firstname.lastname@example.org or 315-432-4215.
Here are some upcoming classes you may find interesting.
ABEN Torts, Negligence and Legal Liability
Insurance Jeopardy! Testing Knowledge of P&C Lines
ABEN Top 5 Life Insurance Uses