The New York State Department of Financial Services (DFS) today proposed revised changes to its cybersecurity regulation. Today's publication in New York State Register, the state's weekly compilation of regulatory changes, modifies amendments DFS proposed last fall. The revisions proposed today respond to comments Big I New York and others submitted earlier this year on the first proposal.
Most Big I New York members are agencies with eight or fewer employees. Much of the impact of the proposed amendments is on larger organizations such as carriers and banks. However, our preliminary review of today's proposal found some changes that affect all agencies and brokerages.
Last fall's proposal would require all covered entities to implement multi-factor authentication (MFA.) MFA is a technology that helps prevent unauthorized access to computer networks. Many cyber insurance companies require their insureds to implement it. The revised proposal limits the impact on agencies eligible for the limited exemption. These smaller companies will have to use MFA for:
- Remote access to the company's network (such as when staff log in offsite.)
- Remote access to third party software applications from which individuals can access non-public information.
- All system administrator accounts.
The first proposal expanded the annual Certification of Compliance requirement. It would have forced all entities to disclose areas of the regulation where they were not in compliance. Big I New York objected, saying, “Requiring covered entities to document noncompliance and identify specific areas of vulnerability will put NYSDFS in possession of a list of prime targets for cyberattack or extortion, which bad actors will seek to access and exploit." DFS agreed and has dropped the requirement. Instead, entities will have to produce reports upon request.
Last fall's proposal deleted wording from the Third-Party Service Provider (TPSP) section that an “agent, employee, representative or designee" of a covered entity who follows its TPSP security policy need not create its own. Some observers worried that removing it imposed new duties on individuals. DFS confirmed that they removed it because the section on Exemptions has similar wording.
We requested longer transition periods for some new requirements. DFS rejected most of these suggestions but did lengthen the transition period for implementing MFA. That period will be two years from the amendments' effective date, whenever that may be.
DFS rejected other Big I New York's suggestions, including:
- Making entities eligible for the limited exemption if they have less than $10 million in New York gross revenue instead of the current $5 million.
- When determining whether an entity has less than 20 employees (and thus qualifies for the limited exemption,) including only independent contractors who are in the insurance business.
- Clarifying the MFA section to state that entities that do not have a chief information security officer (CISO) may use more secure alternatives to MFA.
- Removing “image and reputation" and “other organizations" from the list of risks entities must identify when they perform their risk assessments.
- Requiring entities to perform risk assessments annually only if their cyber risks have materially changed.
- Under the TPSP security policy section, exempting agencies from having to perform due diligence on carriers and other covered entities, and vice versa.
- Limiting punishable acts only to intentional failures to comply and lengthening the minimum violation period to 72 hours.
DFS has not adopted the proposed amendments yet. Members of the public may submit comments until August 14 by emailing Joanne Berman of DFS. We encourage all of you to review the proposal and the assessment of public comments (see the links below) and submit appropriate comments on the new proposal.
Big I New York will continue to keep you informed on developments regarding this important regulation.
For more information, see:
We are excited to announce that Big I New York has earned a Diamond Elite 2023 Excellence in Insurance Education award from IIABA! This award recognizes states that have received a Diamond Award for ten years in a row.
The criteria for this award includes creation of new programs, ways to deliver education in our "new normal," innovation, and marketing.
We are honored to continue to deliver you award-winning education opportunities!
By Julie Furst
What matters when choosing a new team member:
- Communication style
- Potential for growth and learning
- Work ethic
- Willingness to collaborate
What doesn't matter:
- What they look like
- Who they love
In fact, diversity in your team helps you understand, empathize with, and serve more people. More customers.
And different experiences and viewpoints just make life more interesting.
This week, the New York State legislature adjourned until January of 2024. The legislature passed thousands of bills, including several that will have impacts for your agency. Big I New York actively lobbied on these issues and we are pleased that two of our highest priority bills have passed the legislature and will soon be sent to the governor for action.
Photo Inspection Reform
What the Bill Does: Allow insurance companies to waive CARCO inspections for the next four years. After four years the change will sunset and photo inspections will again be required, unless the bill is extended or further modified.
What it Means for You: This bill will dramatically reduce the amount of photo inspections that are required for insurance. We anticipate that the vast majority of carriers will cease to require photo inspections as they are burdensome and unnecessary to prevent insurance fraud. Data from CARCO testimony in other states suggests the number of inspections required will drop by around 90%. This will save significant staff time for your agency and greatly improve customer experience. Most importantly it will help avoid situations in which customers lose coverage because they were unable to complete an inspection in time.
What's Next: The bill will soon be sent to the governor at which point she will have 10 days to sign or veto it. This bill is the same as the proposal the Governor included in her executive budget proposal, so we are in a strong position for her to sign it. It will take effect 180 days after signature into law.
Unfair Quoting Practices
What the Bill Does: Requires verification of driving history when used as a rating or underwriting factor for private passenger motor vehicle insurance. This bill takes aim at the practice by some carriers of binding coverage based on an initial quote and questionnaire with the insured, and then raising the premium following a check of the insured's driving history.
What It Means For You: This will help level the playing field between independent agents and direct writers, and protect customers from misleading unfair quoting practices.
What's Next: The bill will be sent to the governor at which point she will have 10 days to sign her veto it currently it is unknown when the bill will be sent, but it must happen by the end of the year. The law will take effect 180 days after it is signed by the governor.
What the Bill Does: Voids noncompete agreements and permits covered individuals to bring civil actions against employers or people alleged to have violated the law. The bill does not affect non-solicitation agreements or non-piracy agreements and employers will still be permitted to prohibit employees from disclosing trade secrets confidential information or soliciting agency clients.
What It Means for You: If signed into law, businesses will no longer be permitted to use noncompete agreements, However, existing non-compete agreements will remain enforceable.
What's next: The bill will soon be sent to the governor for her signature or veto, and would become effective 30 days after it is signed into law. Big I New York, along with the larger employer community opposed this bill and similar bills that have been proposed in the past. We will work closely with the business community to urge the governor to veto or favorably amend this bill. At a minimum, this legislation must include an exemption to allow non-competes in the sale of a business.
Wrongful Death Expansion
What the Bill Does: Expand the wrongful death law to allow emotional damages including for grief or anguish and loss of affection and companionship in wrongful death cases and add others such as siblings or cousins to the list of family members eligible for damages. Big I NY and a broad coalition of business, municipal, and healthcare groups strongly oppose this bill as it will significantly impact insurance costs and costs to taxpayers.
What it Means for You: If signed into law, we anticipate it will impact the cost and possibly the availability of insurance coverage, with the most severe impacts in general liability, municipal coverage, and medical malpractice. A recent study found that this legislation could increase average annual premiums for New York residents and businesses by $2.2 billion or 12.6%.
What's Next: This bill will be sent to the governor at which point she will have 10 days to sign her veto it currently it is unknown when the bill will be sent, but it must happen by the end of the year. The bill is substantially similar to a bill the Governor vetoed in January 2023, citing cost concerns to taxpayers and businesses. Big I NY will continue to work closely with our allies to urge this bill be vetoed.
The New York State budget enacted last month added new guaranty fund protections for health insurance policies. They took effect on May 3, 2023.
A series of provisions in the budget bills renamed The Life and Health Insurance Company Guaranty Corporation of New York Act as "The Life and Health Insurance Company Guaranty Corporation of New York Act." The purpose of the act was amended to include health care providers as among the protected groups. It also states that the protected groups include those who may benefit from health insurance policies issued by health insurance and property-casualty insurance companies.
If a health insurance company or a property-casualty company that issues health insurance policies becomes insolvent, beneficiaries have coverage for up to $500,000 per life for individual policies. According to the corporation's website, "No limit applies to group health insurance benefits."
More information is available at www.nylifega.org.
As we head into the second half of 2023, the insurance marketplace remains in a state of flux. We've seen some strong underwriting results from carriers leading to softening in some markets, while also experiencing some of the hardest market conditions we've faced in decades for others.
In February, we published our State of the Market – Q1 2023
and not much has changed since. These are common themes running through the property segment of almost every industry:
- Catastrophic weather events—major hurricanes making U.S. landfall in five out of the last six years, wildfires engulfing thousands of acres, unprecedented winter storms, Midwest flooding, etc.—have played a major role in hardening the insurance marketplace.
- Accounts with a large probable maximum loss and average annual loss continue to be in the spotlight. Carriers will offer less capacity and higher deductibles to manage their portfolio aggregates and concentrate on profitability.
- Carriers are seeking more non-CAT exposures which will marginally help to mitigate rate increases for those accounts.
Overall pricing in the casualty market remains on trend. In the primary space, renewals remain largely flat except for the usual challenged classes, including heavy auto-exposed, habitational, trucking, healthcare, hospitality, and liquor liability.
Carriers continue to analyze and reevaluate their books in challenging classes and venues, altering terms, adjusting rate, or exiting classes entirely. New carriers are not eager to move into these spaces, which results in less capacity at higher rates. Conversely, in less challenged classes and locations, more capacity has entered the market resulting in a more competitive rate environment.
In the U.S., there is a huge interest from carriers to diversify their books by focusing on smaller, middle market accounts ranging from $10,000 to $75,000 in premium. Some carriers are launching business units to focus on this space and are building efficiencies in quoting and binding to take advantage of the more transactional nature of that marketplace.
Professional lines of business have been relatively stable with rate increases slowing overall. There are notable trends occurring in the following segments.
- Directors & Officers Liability (D&O): Capacity is plentiful as new entrants to the marketplace aggressively price risks to capture market share. Previously these markets had been largely excess players, but many are now releasing and reprioritizing primary market share.
- Employment Practices Liability Insurance (EPLI): Carriers are writing new business and rates seem to be tapering off. London markets are starting to reduce rates, especially for target industries such as property managers and staffing (outside of California).
- Cyber: Pricing across most industry classes seems to have stabilized. We suspect the rightsizing of network security controls mandated by carriers over the last 18 months is beginning to have a positive impact on loss ratios. Rates seem to be contingent on historical rating factors rather than market trends, with max increases at 20% to 30% on primary. However, it's now common to see flat rates for insureds with strong or improved controls.
The Amwins team of specialists in New York is focused on helping you deliver the best products the market can offer. Through our deep industry knowledge, creative problem solving, access to exclusive products, and value-added tools and data, we are always ready to help you navigate the challenges that lie ahead. Learn more about who we are and what we do here
By: Carey Wallace
There are several key benchmarks that independent insurance agencies use to measure their success. They include retention rate, sales velocity, profitability, and revenue per employee – just to name a few.
In many cases, the historic metrics for each of these benchmarks are being redefined by agencies that are thinking differently about how the work within each role inside an agency is accomplished. Those that are able to rethink “the way we have always done it" at the task level are finding ways to drive efficiency, unlock capacity, and drive up the profitability inside their agency.
The core metric that measures efficiency is revenue per employee, and the following are some examples of how thinking differently is blowing up this metric. The revenue per employee ranges from $135K-$257K according to the 2022 Best Practices Study published by IIABA and Reagan Consulting. This metric varies based on the agency's size, book of business makeup, staffing, technology, and infrastructure.
There are three main roles within an agency – sales, service, and administration. How can new metrics have impacts in each of these roles?
Agencies that think through the tasks required to complete the sales process are identifying the repetitive tasks that can be automated, eliminated, or transferred to another person in order to increase the capacity and overall productivity of their producers. This includes the data entry that is required to set up a new customer in their system, data collection to quote a new prospect, appointment setting, and remarketing legwork just to name a few.
Leveraging technologies like InsurGrid to collect accurate policy data for prospects or utilizing virtual assistants to complete administrative tasks that are embedded in the sales process is a game changer. Utilizing commercial raters or tools like SALT to streamline the personal lines quoting process are all examples of how technology can drive efficiency into the sales process. Knowing what resources and technology will drive the best results for your agency is key, as it is not a one-size-fits-all but instead depends on your agency's makeup.
Everyone knows that being responsive to our customer's needs - especially in a claim situation - is critical to the success of any agency's performance. Providing great service to customers is what drives high retention rates and customer satisfaction scores, so this is a huge area of need.
Leveraging tools like Ask Nicely that provide a Net Promoter Score and insights into which customers need extra time and attention to maintain a high retention rate is incredibly impactful for your service staff. As an agency, we want to be proactive in our efforts and this is one example of how to find ways to determine the best way to allocate our limited resources. Utilizing tools like Glovebox allows your customer to self-serve, access their insurance documents, and answer common service and administrative requests when they want to and how they want to. This improves the customer experience and also creates internal capacity.
Streamlining parts of the administrative process can be accomplished with RPA automation or bots to perform repetitive tasks such as downloading carrier reports, reconciling statements, and entering information into your agency management system. In situations with agency billed policies, solutions like Ascend can help automate labor intensive and costly financial operations such as collections, financing, carrier and commission payables allow agencies to operate without incurring large back office associated costs. It also reduces the chances of human error by relying on software to handle these repetitive and manual tasks while increasing the speed at which carriers are funded and commissions are received.
Rethinking these kinds of tasks can be most impactful as agencies grow and these costs build up (whether via hiring additional headcount to manage or through increases in external bookkeeper hours) as you sell more policies, eating away at your margins.
In every role inside an agency, there is an opportunity to think differently about how to go about completing specific tasks that are only small parts of each role but have a massive impact on the performance of the agency when you add up all of the time they require to complete those tasks. By removing, eliminating, and/or automating these types of tasks you will create the capacity to focus on the high-impact tasks that require expertise and drive performance, growth, and profitability inside the agency.
Agencies that are doing this have higher retention rates, growth, profitability, and revenue per employee metrics. In addition, they also tend to have higher staff retention. No one enjoys completing monotonous work, so identifying and minimizing those parts of the process can make a significant difference in the overall job satisfaction of your team.
Time is money.
There is no question about it, there are tasks inside every role that can be optimized. These are just a few examples of how thinking differently and utilizing technology, tools, and alternative staffing resources can have an incredible impact on the agency's performance, capacity, profitability, and VALUE.
By talking to your staff to find out what tasks they do each and every day that are time-consuming, repetitious, and low impact, you can identify the right options for you to consider. Every agency is estimated to spend 60% of its time on administrative and repetitive tasks, reducing the time, and cost, and redirecting that time will change your performance, efficiency, and the value of your agency.