Following repeated requests from Big I New York, the New York State Department of Financial Services has
announced that insurance producers will be allowed to send the required COVID-19 premium payment rule notices to clients by email, regardless of whether the clients have given prior consent. This will relieve them of the requirement to mail or deliver such notices. Guidance is available on DFS's website.
The notices are required by
emergency regulations the DFS issued on March 30. Those regulations implemented the
governor's executive order declaring a moratorium on insurance policy cancellations, non-renewals and conditional renewals for 60 days. They also prohibited insurers from taking certain punitive actions against policyholders who make premium payments late, and to make alternative premium payment arrangements for those suffering financial hardship because of the pandemic.
In addition to requiring insurers to advise their policyholders of these rules in premium bills, the regulations require producers to send notices of the rule changes to individual and small business policyholders by April 13. The regulation requires producers to "mail or deliver" the notices.
Big I New York President and CEO Lisa Lounsbury contacted a DFS official multiple times last week, asking the department to relax its rules on electronic communications with clients. In the past, the department has consistently interpreted New York's Electronic Signatures and Records Act as requiring the client's prior consent before insurers and producers may send records to them electronically. Lounsbury repeatedly asked the DFS to relax this stance due to the short deadline and the abnormal working conditions created by the pandemic.
The department responded to our requests today and posted on its website:
"Second, the Department is accommodating Producers by reducing their burden to fulfill the Notice Obligations during the current state of emergency. Specifically, for the duration of the current state of emergency, Producers may comply with the Notice Obligations by emailing the notices to the consumers for which the Producers have email addresses, regardless of whether the consumers have consented to receiving this notice via email. ..."
The department also instructed producers who have websites to post the information there as soon as possible. Further, the department encouraged "supplemental dissemination of the content of the Notice Obligations by other means, including social media."
The notice told producers to maintain records of their communications with consumers, "electronic or otherwise," to satisfy the notice obligation for at least the duration of the statute of limitations (six years, according to court decisions,) or longer if the policy or a claim is in dispute.
The department included model wording for the life and annuity and property/casualty notices in its announcement, but warned that only the relevant version be sent to consumers to avoid confusion. Big I New York also provided model wording for members last week. Our notice was crafted with our legal experts at Keidel, Weldon & Cunningham, LLC.
Big I New York encourages members to prepare and deliver the notices to their personal lines customers and their commercial lines customers who have 100 or fewer employees as soon as possible. The notices must be delivered by Monday, April 13.
*IMPORTANT REMINDER: The notices to property/casualty policyholders only apply to certain kinds of policies and therefore may only be sent to holders of those specific kinds of policies to avoid consumer confusion. The types of policies are explained in general terms in the property/casualty notice. The precise categories of policies are set forth in detail in the emergency regulation, which is posted here
: Specifically, see 11 NYCRR § 229.2(m) in the emergency regulation for the definition of “Property/casualty insurance policy.”
We thank the department for working with us to lessen the burden on producers in this challenging time.
Visit the Coronavirus Resource Page on this website for more information.
The New York State Legislature approved an abridged 2020-21 state budget on April 2. The budget did not include the types of policy changes lawmakers have customarily added in other years. For insurance agents and brokers, this means the proposal to expand the powers of the Department of Financial Services were not part of the final product. Big I New York members argued strenuously against this proposal on Advocacy Day in Albany last month. The proposal’s failure is a testament to their persistence.
As part of the CARES ACT recently approved by Congress, $350 billion will be available through various SBA lending programs to help small businesses – like your agency and those of your clients – survive and recover from losses suffered during the COVID-19 crisis. The new Paycheck Protection Program (PPP) is designed to help cover your short-term operating expenses so you can remain open and keep your local economies thriving.
InsurBanc, recognized as a Preferred Lender by the U.S. Small Business Administration, is prepared to work with eligible businesses to obtain the emergency financing offered through the PPP. InsurBanc President & CEO Dave Tralka recorded a webinar
covering everything you need to know about this new program, which could be critical for your agency and commercial lines clients. As InsurBanc
was created specifically for independent agencies, they are in a unique position to fully understand your business needs during this difficult and uncertain time.
by Andrew Frisbie, Chief Information Security Officer at LCG-LLC
Zoom is a popular cloud communications application that is front-and-center in the COVID-19 response as we all shift to working from home. With all the attention, Zoom has been a popular topic of discussion amongst cybersecurity professionals and a popular target of bad actors. Here are two very current issues that many media outlets are writing about:
March 30, 2020 – Zoom Bombing Attacks
The FBI issued a warning of ongoing “Zoom-bombing attacks” on video meetings. “Zoom Bombing” occurs when an unscrupulous individual joins a Zoom video conference for the purpose of disrupting it. Zoom-Bombing has been used to inject profanities, pornography and other disturbing material into the meeting. To defend against Zoom Bombing do the following:
• Do not make meetings or classrooms public (use a password or use the waiting room feature to control guest admittance and access)
• Do not share Zoom conference links on social media (provide links directly to attendees)
• Manage screen-sharing options (for large meetings, where you are not likely to be able to view all the participants, disable participant screen sharing and allow “host only” screen sharing)
• Keep your Zoom client software up to date (the January 2020 update from Zoom enabled meeting passwords by default and other critical vulnerabilities have been fixed in prior updates)
March 31, 2020 – Credential Theft
Various media outlets report that a user’s Microsoft Windows credentials can be stolen from within the Zoom client during an active meeting. Technically, this is not a Zoom vulnerability, it is a function of how Windows “UNC” paths work. The issue with Zoom is that it converts a UNC path into a clickable link, which causes Windows to send your credentials to the remote computer. If the remote computer is under the control of a bad actor, they could capture this and potentially decrypt your password. Here’s how do deal with this issue:
• Recognize the difference between a URL and a UNC path – A URL is something you are used to typing into your web browser, such as https://lcg-global.com. A UNC path begins with two slash marks “\\” and looks like this “ \\192.168.1.1\foldername where the numbers represent the IP address of a computer.
• The good news – Zoom issued a fix for the UNC injection issue on April 1 according to CEO Eric Yuan (see screenshot below). We tested sending a Zoom chat with a UNC link from a Windows computer to a Windows Computer and the UNC links were not clickable.
• The solution – 1) Update your Zoom client software now and 2) Turn of the chat function in your meetings.
Zoom is a good platform that has been pushed to the max, but like any other software you need to know how to use it and you need to be aware of its shortcomings.
In this webinar, our cybersecurity expert, Andrew Frisbie, Chief Information Security Officer at LCG-LLC, shares how to help protect your data, systems and agency while your team is working remotely. Proper cybersecurity measures are critical to protecting your E&O exposure, NYS DFS compliance, and business operations. Watch the webinar
LCG is offering a 20% discount to the general public for certain cybersecurity services until April 30th. Your membership in BIG I NY earns you another 5% discount.
Save BIG on compliance and security obligations for your 2021 filing. Learn more
A bill introduced in the New York State Assembly on March 27 would force insurers to cover some business income losses resulting from the COVID-19 pandemic, even if their policies excluded coverage. Big I New York is joining other industry groups in opposing the measure.
The bill, A.10226, was introduced by Assem. Robert Carroll (D – Brooklyn). Assem. Carroll announced his intention to introduce the bill in a series of Twitter posts on March 24. Big I NY AVP of Research and Information Tim Dodge posted several replies to the assemblyman's tweets; no counter-replies have been posted.
The bill would require business income policies to cover the insured business for losses it sustains if it must shut down due to the COVID-19 pandemic. This would apply regardless of whether those policies contain virus exclusion. The mandate would apply to policies insuring organizations that employ less than 100 workers who normally work 25 hours or more per week. The bill would authorize DFS to assess for contributions every insurance carrier authorized to do business in this state. The department would then use those contributions to reimburse carriers forced to pay for these losses. The bill would apply retroactively to all policies in force on March 7, 2020.
The bill has been referred to the Assembly Insurance Committee. No similar bill has been introduced in the Senate. The New York State Legislature is currently focused on enacting a 2020-21 state budget, so the bill will likely not be on their agenda before the summer.
We believe that this bill would cause great harm to the New York insurance marketplace. Big I New York is working with the national Big I as well as other industry trade groups to defeat it.
"The New York State Department of Financial Services (DFS) today adopted an emergency regulation requiring New York State regulated issuers of life insurance and annuity contracts, property and casualty insurers and premium finance agencies to provide relief to New York consumers and businesses experiencing financial hardship due to COVID-19.
- Consumers experiencing financial hardship due to COVID-19 may defer paying life insurance premiums for ninety (90) days.
- Consumers and small businesses experiencing financial hardship due to COVID-19 may defer paying premiums for property and casualty insurance for sixty (60) days.
- Premium finance agencies are required to provide the same relief as insurers. Certain producers must notify insureds of this emergency measure pursuant to the regulation.
NYS DFS is requiring producers to notify insureds of the emergency regulation's cancellation rules. The deadline for sending these notices is Monday, April 13, 2020. Big I New York, with Keidel, Weldon, and Cunningham, LLC, have developed this sample wording for you to use in your notices.
We've been working directly with the DFS to confirm compliance details and advocate for softening requirements for you to execute this order. The latest from the DFS: "The purpose of the regulation is to provide immediate relief to policyholders facing a financial hardship as a result of the COVID-19 pandemic. As a result, we encourage dissemination of the notice by a variety of means, including posting on websites and social media, as soon as possible. The notice should also be sent by email (if the insured has consented to electronic transactions) or mail or physical delivery."
What you need to do (as of 4/3/2020, at 9:00am): Notify policyholders (individuals and small businesses that are independently owned and operated and have 100 or less employees) of the cancellation policy and grace period set forth in the emergency regulation. You may send a notice via email for insureds who have agreed to electronic transactions, the rest should receive a notice by mail. Social media can be used in addition to this to get the word out.
By when: Monday, April 13, 2020
We have your back: We have worked with our trusted E&O legal team at Keidel, Weldon and Cunningham, LLC to craft a template letter for you to use to comply. Download and customize it here.
By Jim Lombardo, CPCU, AAI, AIM, MBA, AVP of Learning & Development
Like many others, I have been working from home this past week. Our house is a bit crowded and our routines are obviously off, but we have made it!!! My wife hasn’t asked me to go back to the office ...yet.
That being said, we should all take this time to:
- Eat healthy- try to establish a diet with a bit more emphasis on fruits and vegetables
- Exercise – even if you start small- a walk around the neighborhood (just maintain your six feet of distance to the next person!)
- Do something different- take a guitar lesson (you’d be surprised what you can find on YouTube), learn how to knit a scarf, build a model car, clean the downstairs closet!!
- Be productive- have your staff call clients for pre-renewal reviews, scour policies for gaps and endorsement opportunities, work on a cross selling strategy, create a newsletter to send or email to your clients
- TAKE Continuing Education CLASSES!!! – Big I NY has many, many webinars for you to take from the comfort of your desk or home. AND, The DFS has made it easier for you... they have removed the requirement to have your exam monitored and they have softened their stance on taking CE classes on line.
You can now even renew your license without the 15 hours of CE provided you complete those classes after things settle down. So take the classes now…
Reg 187 - It's In YOUR Best Interest
ABEN There's Only Ethics
ABEN Risk Mgmt & Insurance-Why Agents Are NOT Risk Managers
ABEN Law of Ins Contracts & Rules of Policy Interpretation
ABEN Little This a Little That: New Threats & Possibilities
The New York State Department of Financial Services has asked the insurance entities it regulates to ease the financial hardship consumers and businesses are experiencing due to the COVID-19 outbreak
. The department called on the industry to take "reasonable and prudent actions" in a circular letter
published on March 19, 2020.
According to the letter, "In response to this crisis, DFS is issuing guidance to urge all regulated entities during this outbreak to do their part to alleviate the adverse impact caused by COVID-19 on those consumers and small businesses that can demonstrate financial hardship caused by COVID-19, including taking reasonable and prudent actions to support affected New Yorkers ..."
The department called on insurers and producers to take a number of measures where consumers are unable to meet obligations "due to COVID-19 disruptions" including:
- "Offering payment accommodations, such as allowing consumers to defer payments at no cost, extending payment due dates, or waiving late or reinstatement fees ..."
- Working with consumers to avoid cancellation of insurance policies for late payments of premiums; discovery of acts or omissions that may increase insured hazards; and physical changes to property.
- Working with consumers to avoid non-renewal of insurance policies for failing to timely respond to a non-renewal notice.
- "Increasing resources as necessary to accommodate increased claim submissions and increased inquiries from consumers about policy coverage ..."
- Preparing clear and concise descriptions of coverage benefits that may be triggered as the COVID-19 situation continues to evolve. The letter advised insurers and producers to prominently display these on their websites and to send them in response to customer inquiries. These descriptions should be available from insurers, who had to prepare them in response to a March 10 data call from the department.
- "Alerting consumers to the heightened risk of scams and price gouging ... "
- "(R)eminding consumers to contact their insurance providers before purchasing unsolicited insurance policies or changing the terms of current insurance policies;"
- "Ensuring that consumers do not experience a disruption of service if regulated entities close their offices ..."
- "Providing flexibility regarding proof of death, disability, or other condition that triggers benefits ..."
- "Providing consumers with information and timely access to all medically necessary covered health care services ..."
- "Proactively reaching out to customers via app announcements, text, email, or otherwise ..."
- Accommodating borrowers "to the extent reasonable and prudent ..."
Judging from the phone calls and emails Big I New York has received in the last few weeks, it appears that most member agencies are doing some or all of these things already. We advise all members:
- Remember that the letter asks you to take actions that are "reasonable and prudent." The department is not asking you to take unwise risks.
- For communications with customers, take advantage of the resources Big I New York is offering, as well as those of your carriers and sources such as Big I Virtual University and the Insurance Information Institute.
- Keep in mind that customers may not be able to quickly do things they would normally be expected to do, such as produce a receipt for surrendered license plates or obtain a photo inspection of an automobile.
- Communicate as much as possible with both your carriers and your customers. Alert both to problems before they become emergencies.
Most Big I New York staff are working remotely but are still accessible by phone or email if you have questions. Also, you can submit questions on the new Community page
of this website. Several conversations are going on there now.
Keep calm and disinfect.
The New York State Department of Financial Services has reaffirmed its opinion that insurers and producers must obtain a client's consent before providing electronic copies of policies.
Since the enactment of New York's Electronic Signatures and Records Act in 1999, the DFS has consistently interpreted it as requiring insurers and producers to obtain prior consent from clients before sending them any insurance documents in electronic form. Big I New York and others had suggested to the department that they waive the prior consent requirement during the state of emergency declared by the governor in response to the COVID-19 outbreak.
However, a new post on the department's website repeated its traditional stance: "New York’s Electronic Signatures and Records Act ... and the federal Electronic Signatures in Global and National Commerce Act ... permit the insurance industry to use and accept electronic signatures and records if the consumer with which an individual or entity is doing business consents to engage in an electronic transaction. [Emphasis added] ... The Department does not require that the insurance industry obtain consent from a consumer in a particular way. A consumer may consent to engaging in electronic transactions by sending an email to the regulated insurance person or entity affirmatively stating such, for example. Regardless of how consent is obtained, the insurance industry must maintain proof that a consumer has affirmatively consented to engaging in electronic transactions."
Big I New York members have access to a sample consenst agreement that has been reviewed and approved by our attorneys. They can download it from the Electronic Policy Delivery page in the Answer Center at www.biginy.org. Click on "Helpful Tools" and look for the link to "Sample Electronic Consent Form."
By Swiss RE Corporate Solutions
You are all very aware of the events of the last several weeks and the Coronavirus. We are not health experts and there are many others more qualified to give you that advice. We CAN, however, give advice regarding how to reduce the likelihood of an errors and omissions exposure as a result of this event. We have already become aware of some attorneys who are trying to take advantage of this situation for monetary gain against insurance agents. Our advice during this event is no different from what we have said in the past. If your agency has developed good practices, you will be better positioned to avoid problems. Here are the practices of a good insurance agency:
- DON’T MAKE CLAIMS DECISIONS! Let the insurance carriers do that.
- DON’T ADVISE YOUR CUSTOMERS IF CORONAVIRUS related claims are COVERED OR NOT! Let the insurance carriers do that.
- If a carrier takes the position that losses arising from the Coronavirus are not, or may not be covered, do not engage in advocacy asserting that "We thought it was covered..." That will simply be used by your client to prove that you knew the client wanted coverage for perils like the Coronavirus, but you failed to procure coverage.
- Report all claims and potential claims to EACH AND EVERY CARRIER that could potentially have a policy that could apply. This includes CGL, Personal lines, Umbrella, Excess, Workers Compensation, Specialty and any other policy in place for your customers.
- USE THE RESOURCES PROVIDED TO YOU BY THE IIABA. Follow this link to the Coronavirus webpage. It is a valuable resource for you, your staff and your agency that provides many sources of information.
- Be empathetic, but don’t tell anyone that something is covered or not. You can continue to tell them you feel sympathy for all affected by the Coronavirus, but customers MUST report a claim to their insurance carrier to determine if there is any coverage for the event.
- Remember, if you executed an agency agreement with one or more insurance companies, you MUST report all claims or potential claims as required by that agreement, even if your customer tells you not to do so.
- Maintain vigilant contact with your insurance carriers to determine what action THEY want you to take.
- DOCUMENT DOCUMENT DOCUMENT!!! This continues to be the foundation of sound E&O risk management. DOCUMENT EACH AND EVERY TELEPHONE CONVERSATION, EMAIL, TEXT, TWEET, OR ANY OTHER TYPE OF COMMUNICATION WITH YOUR CUSTOMERS!
- Assume that any telephone conversation with your customers or carrier claims representatives ARE BEING RECORDED. While some states prohibit recording of telephone conversations without advising that they are doing so, IT DOESN’T STOP SOME PEOPLE FROM DOING SO.
- If you use social media for your business, make sure it is up to date! Do not make any promises that something may or may not be covered by insurance companies and policies.
- DO NOT GIVE ANY STATEMENTS, RECORDED OR OTHERWISE, WITHOUT FIRST CONTACTING YOUR E&O PROVIDER. The Swiss Re Corporate Solutions/Westport Insurance Company/First Specialty Insurance Company claims staff are available if you have any questions about any communications you receive.
- If you have a conversation with your customer that leads you to believe they may be fishing to make a claim against you, DO NOT HESITATE to contact our claims department.
- DON’T MAKE CLAIMS DECISIONS! DON’T ADVISE YOUR CUSTOMERS IF SOMETHING IS COVERED OR NOT! Let the insurance carriers do that. We know this was stated before, but it must be ingrained in your mind.
- If the Coronavirus ends up being declared a "catastrophe" by the ISO Property Claims Service, you may be eligible under your Westport policy for "Cat Extra Expense" benefits:
"CATASTROPHE EXTRA EXPENSE. We will pay up to $25,000 per catastrophe subject to a per POLICY PERIOD aggregate limit of $50,000 for the actual extra expenses incurred by you as a result of a catastrophe during the POLICY PERIOD beginning on the date of a catastrophe and for thirty (30) days thereafter. The extra expense incurred must be incurred by you only to assist in the insurance claims processing needs of your customer(s) who have been affected by the catastrophe. The catastrophe must be a declared catastrophe by the Property Claims Services. A $500 deductible for each catastrophe shall apply. Limits provided by this paragraph are part of and not in addition to the limits provided by this POLICY."
We hope that this will help you as this event progresses. If you should have any questions, please let us know.
This article is intended to be used for general informational purposes only and is not to be relied upon or used for any particular purpose. Swiss Re shall not be held responsible in any way for, and specifically disclaims any liability arising out of or in any way connected to, reliance on or use of any of the information contained or referenced in this article. The information contained or referenced in this article is not intended to constitute and should not be considered legal, accounting or professional advice, nor shall it serve as a substitute for the recipient obtaining such advice. The views expressed in this article do not necessarily represent the views of the Swiss Re Group ("Swiss Re") and/or its subsidiaries and/or management and/or shareholders.
Copyright 2020 Swiss Re