This week, the NYS Assembly passed A.3172-A, our bill to allow carriers to waive CARCO inspections for the next four years, by a vote of 116-25. The bill was sent to the Senate, where it must pass the Insurance Committee and floor vote before being sent to the Governor. This is a major advancement in our campaign and it would not have not have been possible without the engagement of our agents, and the leadership of the bill's sponsor, Assemblyman Ken Zebrowski. With passage by the Assembly, we are increasingly optimistic about the prospects of this bill being passed and signed into law this session.
Also this week, the Assembly unanimously passed Big I NY priority legislation to require insurers to verify an applicant's driving history before binding coverage. Currently, certain insurance carriers will bind auto coverage based on an initial quote and questionnaire. The insurer later runs the insured's motor vehicle record (MVR), typically resulting in a higher premium. This practice is misleading to consumers. Like our photo inspection bill, this bill now heads to the Senate for a committee vote.
Lastly, on March 22nd, Senator Neil Breslin introduced S.5896, a Big I NY priority bill to exempt certain commercial lines insurance transactions from the diligent effort requirement. This bill would eliminate both a process and excessive data reporting which provides no benefits to insureds. The bill is currently in the insurance committees in both the Senate and Assembly.
UPDATE: This bill passed the Assembly on March 29th.
Recently, we shared the news that the Senate and Assembly removed photo inspection reform legislation from their “one house" budget proposals, meaning it is unlikely that our bill will be included in the final budget. However, this is not a death blow to the campaign and in fact, we are still in a strong position to pass the bill this session.
First, a quick refresher. In 2022, the Senate and Assembly both passed our bill to allow carriers to waive CARCO inspections. That bill was sent to the Governor, and in November of 2022, she vetoed it. Following the veto, we worked closely with her office and reached a compromise: allow carriers to waive CARCO inspections for the next four years. Governor Hochul then reaffirmed her commitment by including the bill language in her executive budget proposal. We rallied behind her and urged the legislature to follow suit in their own respective budget proposals. The legislature declined, not because they oppose the bill, but because they prefer the budget to focus only on fiscal matters. Now, the Governor and legislative leaders will negotiate on the final budget, due April 1st.
We don't expect photo inspection reform will survive the budget negotiations. But the state budget is just one way to pass a bill; we can also pass a stand-alone bill, like we did last year. And we are already moving swiftly. A bill identical to the Governor's proposal has been introduced in both houses, and already the Assembly passed the bill through the relevant committees and to the floor. On March 22nd, it was laid out for consideration, and "laid aside" for further debate. This is a strong sign it poised to pass the full chamber. We feel strongly the Senate will do the same. Given the Senate and Assembly both passed a nearly identical bill last year, little objection has been raised to passing these bills again. That just leaves the Governor…and it's the same bill she included in her own budget.
So, what's next?
The bill could be up for a vote by the full Assembly as soon as this week, so we need everyone to call their Assemblymember. Then, stay tuned as we push the Senate to follow suit. We can't - and won't let up the pressure!
This week, the Senate and Assembly released their “one-house" budget proposals, which are a statement of each house's priorities for the state budget. Both the Senate and Assembly rejected virtually all the Governor's policy proposals, including legislation to allow carriers to waive photo inspections for the next four years. This means it is unlikely, but not impossible, that photo inspection reform will be adopted as part of the final state budget.
While disappointing, this outcome was not entirely unexpected.
In recent years, the state legislature has increasingly pushed back on the inclusion of legislative policy in the budget, preferring to address only matters with a direct fiscal impact to the state. We have confirmed that photo inspection reform was removed for this reason, not due to substantive objections with the bill. We will continue to advocate for the inclusion of this proposal in the state budget, and have already secured commitments from the bill's sponsors to advance it as a stand-alone bill once the budget has been completed.
Also this week, the Senate Insurance Committee voted in favor of Big I NY-supported legislation to allow an insurer to retroactively cancel a policy in the event of fraud or a staged accident. This would eliminate an incentive to commit insurance fraud and help contain rising auto insurance costs. The bill must pass a vote by the full senate, as well as a committee vote and floor vote in the Assembly, before being sent to the Governor to sign or veto.
Big I NY is ready, willing, and able to help your agency with ANY
talent challenge you may have.
Did you know that we:
- Can help you recruit talent using our partner IdealTraits. Hire The Ideal Fit For Your Team
- Have partnerships with many colleges and universities and can help you in your search for an intern. Agency Internships
- Can help your new employees get licensed. We offer pre-licensing classes quarterly. Pre-licensing
- Have GREAT "new hire training" available from our friends at New Level Partners. New Hire Training
- Can coach anyone in sales. Sales Coaching
- Have Leadership Academy - the perfect program for your future leaders. Leadership Academy
- Offer a free service through the National Big "I" for our members and state associations to help job seekers find the perfect job opportunity. There are over 450 active job postings! Big I Jobs
Please contact me directly to set up a time to review any and all of the above OR to craft an individual strategy just for your agency.Jim LombardoAVP of Learning & Development(315) 432-4226
The New York State Department of Financial Services (DFS) said in communications to its licensees today that it has addressed problems with license renewal application processing. If you've run into problems submitting a license renewal application in the last two months, you should try again.
The issue was that individual agents and brokers were being asked questions about compliance with the
Cybersecurity Requirements For Financial Services Companies regulation. That regulation exempts from its requirements individuals who are covered by another entity's cybersecurity program. For example, producers and licensed customer service representatives who are employees of an agency are covered by their employer's cybersecurity program. These individuals are exempt from the regulation's requirements.
As a consequence, people attempting to complete the online license renewal application were unsure how to answer the cybersecurity-related questions. However, the DFS computer system would not allow them to proceed with the application without answering the questions.
In an email sent to licensees today, the DFS wrote:
"... if your question involves licensing renewals for Insurance Producers, DFS has identified and resolved issues with regards to renewal and relicensing processes.
Beginning on January 12, 2023, many producers who attempted to either renew a license or reinstate their license after it expired were unable to do so. As of today, these issues have been resolved. Insurance producers are encouraged to please resubmit their application at their earliest convenience.
If your license expired on or after January 7, 2023, you will now have until August 1, 2023 to submit a renewal application. If you continue to have issues or would like to speak with someone over the phone, please reply to this email with your phone number and best time to reach you and someone from our team will reach out as soon as possible. "
Based on this communication, we suggest you give it another try if you were unable to submit your application before.
On March 9th, the NYS Assembly unanimously passed Big I NY-supported legislation to eliminate an unnecessary burden on customers by repealing the anti-arson application statewide.
Section 3403 of the Insurance Law requires the completion of an “anti-arson application" for people seeking property insurance for fire or explosion to complete. If a policyholder fails to complete this application, which is required upon initial application for insurance and on each subsequent renewal of the policy, the insurer must cancel the policy.
Technology has advance dramatically since the application was first required, and the law has outlived its usefulness. Insurance companies today are required by law to have fraud prevention plans, which are filed with the State, on how they detect, investigate, and prevent fraudulent activities. These fraud prevention plans are far more effective than the anti-arson application form which simply asks a series of questions. The law is just a paperwork burden for policyholders who risk losing coverage if the paperwork is not completed. Recent legislation scaled back the current law to remove cities with a population of less than 1 million, leaving New York City as the last jurisdiction with this requirement.
Big I NY thanks the bill's sponsor, Assemblyman Daniel Rosenthal (D, Brooklyn) for championing this critical pro-customer reform. The bill must now pass the Senate and be signed by the governor before becoming law. Email your senator today and urge them to pass this bill!
By: Carey Wallace & Chris Peabody
In insurance, sometimes we like to think it's as simple as understanding our insureds, their risk profiles, and making sure they have the right coverage for their needs. There is a lot more to it, but the nuances of insurance feel endless sometimes. In this blog, we will dive into one of the more overlooked aspects of operating your agency in a fiscally responsible way: Trust Accounting.
As an agency owner, there is so much more to running your business than just selling insurance. You are also focused on building the right team, training them appropriately, focusing on marketing, keeping your pulse on financials and implementing the right technologies, and managing the various ways you engage with carriers and brokers just to name a few things that might keep you up at night. All of these areas require careful thought and planning, but some areas tend to be overlooked, like Trust Accounting. This is an area that is hardly ever talked about so many agency owners have no idea what trust accounting is, why it is important, and how to best position their agency until it is too late.
What is Trust Accounting?
For starters, let's define trust accounting, and then we can get into the details that you as an agency owner need to know. Trust Accounting or Account in Trust, defined by Investopedia, refers to any type of financial account that is opened by an individual or company and managed by a designated trustee
for the benefit of a third party per agreed-upon terms.
A basic example would be a parent who can open a bank account for the benefit of their child and stipulate rules as to when the minor can access the funds or assets in the account as well as any income they generate. In most cases, the trustee who manages the funds and assets in the account acts as a fiduciary, meaning the trustee has a legal responsibility to manage the account prudently and manage assets in the best interests of the beneficiary
In the insurance context, an example would be if an insured (third party) pays for their insurance policy in full, sending the entire premium payment to the insurance agency (trustee). The insurance agency is then responsible to ensure the insurance company receives the insured's payment minus any commission that is owed to the agency, so the insured's policy is in force. This arises in any situation where the agency bills the customer directly. The amount of agency bill business can vary greatly from agency to agency depending on the insurance marketplace, the type of business that the agency writes, and the particular carriers and brokers that the agency has access to through their direct appointments or partner relationships.
Why is Trust Accounting important?
While trust accounting sounds simple in practice, scaling up and tracking agency bill transactions without the right processes in place gets difficult. Agency bill transactions can become difficult to track if the right processes are not in place. Remember, as the insurance agency you are the fiduciary of your client's policies from a financial standpoint. When payments are late from your clients or a policy cancels, headaches start to creep in and carriers come knocking for their premium dollars. If an agency does not keep close track of transactions or even worse, combines the agency funds with the funds that are being held on behalf of the carrier, the agency can quickly become 'out of trust.' Being 'out of trust' means that the agency does not have enough funds to pay the carrier the amount that is due and it will be difficult to unravel the mess.
How can you best position your agency?
Here are the key things you need to do to stay in trust and avoid any unnecessary issues in maintaining your accounting records:
Open a separate Trust Account. This account is where you will deposit all of your agency bill receipts. By having a separate account, you can easily track the agency bill accounts and keep track of the funds that you must remit to the carrier related to these accounts. This will also limit the transactions that will need to be reviewed if a problem occurs making it easier to reconcile.
Create clear processes and procedures. The people who are involved with receiving income in the agency must have a clear understanding of what distinguishes agency bill and direct bill and how to manage the different types of income that is being collected by the agency. You will need to outline the receipts that can be deposited in the operating account as well as those that must be deposited in the trust account. For those receipts where the correct deposit account is uncertain, establish a clear process on how to resolve these questions. Providing clear guidelines on how to manage agency bill and direct bill income will minimize errors and ease the process of reconciling accounts.
Limit access to the operating account and trust account. Do not allow anyone that does not have a clear understanding of these processes to have access to the accounts. It is important to note that a CPA or accounting firm most likely will not understand the trust accounting rules that are unique to an independent insurance agency, so the agency owner needs to make this clear from the beginning of any new accounting relationship.
Be consistent. Reconcile each account and ensure that the carriers are paid the portion that is owed to them. Once that has been completed, you can calculate the amount that the agency can keep for each of the policies. Once a month move the agency's money into its operating account being sure that you have clear documentation for each account that makes up the total amount being transferred each month. Adopting this process will allow you to limit the number of transfers with a limited number of transactions to research if there is ever a problem.
Documentation is key.
Clear records of how you reconciled each customer account is critically important. This will be essential if your agency is ever subject to an audit and ensure that the process goes smoothly.
There are a lot of things to consider when setting up the policies and procedures that you will follow to ensure that your agency is well-protected and remains financially sound. Agencies that have clean financial statements and well-thought-out policies and procedures are much better positioned in both internal and external ownership transitions than those that have messy books and questionable liabilities, so not paying attention to this can be very costly for some agencies in more ways than one. Trust Accounting is one of those areas that is not often talked about but can cause a great deal of issues if it is not managed properly. We have highlighted some of the key steps you can consider implementing to ensure that your agency stays in trust, we encourage you to dive deeper.
This week, independent agents from across the state participated in virtual meetings with state lawmakers, urging them to pass photo inspection modernization as part of the state budget. Governor Hochul's executive budget proposal includes legislation to allow carriers to waive CARCO inspections, and we are pushing the Senate and Assembly to follow suit in their respective budget proposals.
Independent Agents Advocacy Week began with a kickoff session keynoted by Senator Neil Breslin, chairman of the influential Senate Insurance Committee and sponsor of photo inspection reform legislation. “On photo inspection, we're pushing it again very hard…hopefully we'll get it passed and signed into law and we'll all be happy," said Senator Breslin.
Throughout the week, Big I NY members met with nearly two dozen senior lawmakers and staff members who have direct influence on the legislative budget proposals. Agents shared stories of how their customers are impacted by this antiquated requirement and urged lawmakers to act swiftly to pass common-sense reform. The response from lawmakers was overall positive.
Additional legislative meetings will be held in the coming weeks, as the budget process advances toward the April 1st deadline.
One question we frequently get from members is whether a specific type of information is "nonpublic information" that the New York cybersecurity regulation requires them to protect. We've created an easy-to-use decision tree to help you figure that out. Simply answer the yes-no questions in order and you will be able to determine whether the regulation requires you to protect it or not.
This file will be permanently posted in the Compliance Resources section of the Cybersecurity page on our website (www.biginy.org/cyber). Click here to download it now. Note: If you want to print it, you may have to adjust the print settings to shrink the file to 95% or so.
We are happy to announce the new and improved Answer Center in the Big I New York website. In the Answer Center you can find information on New York insurance laws and regulations that affect your business every day, including:
- Laws and regulations that apply to agents and brokers
- Laws and regulations that apply to carriers and banks
- Licensing and continuing education issues
- Information on coverages such as auto and flood
- Special issues such as COVID-19
- Market acces
and more. A "Frequently Asked Questions" page is coming soon.
The Answer Center is a member benefit that your dues pay for, so you will need to log in with your email address and password to access this valuable content. If you don't know your password, call 800-962-7950 and someone will retrieve it for you.
We hope you will take frequent advantage of this special resource.