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A magnitude 4.8 earthquake centered west of Manhattan struck the northeastern U.S. this morning. We at Big I New York hope that all of you, your families, friends, and clients are safe and suffered no injuries. However, it is possible that some of your clients suffered property damage. Your phones may ring with calls asking whether homeowners and commercial property insurance covers the damage. Here is what you and they need to know: Standard homeowners and commercial property insurance policies typically do not insure against damage caused by earthquakes or other types of earth movement. The ISO Homeowners 3 – Special Form states that the insurer does not insure for loss caused directly or indirectly by earthquake, landslide, mudslide, or earth sinking, rising, or shifting. We have reviewed the homeowners policies of four carriers that use their own forms; all have similar exclusions. The ISO Commercial Property Causes of Loss – Special Form contains an almost identical exclusion. Personal and commercial auto insurance policies typically cover damage to a vehicle caused by an earthquake if the policyholder purchased Comprehensive Coverage on the vehicle. If your personal or commercial clients purchased earthquake insurance, their policies would include earthquake coverage endorsements. Examples include: - ISO homeowners endorsement HO 04 54 03 22
- Travelers homeowners endorsement HQ-054 CW (02-20)
- ISO commercial property endorsement CP 10 40 02 19
- ISO businessowners policy endorsement BP 10 03 07 13
Deductibles for earthquake coverage are typically a percentage of the limit of insurance on the covered property. For example, the dollar earthquake deductible for a dwelling insured for $400,000 with a 5% deductible is $20,000. The deductibles typically apply separately to buildings and personal property. If the deductible is 5%, and the homeowners policy insures the dwelling for $400,000 and the contents for $200,000, the insurer will apply two deductibles – one of $20,000, the other of $10,000, for a total of $30,000. “Difference In Conditions" commercial property insurance policies typically provide earthquake coverage subject to a large deductible such as $50,000. Some inland marine coverage forms may also provide the coverage as an option. For example, builders risk and installation floater policies often have coverage available by endorsement. The Insurance Information Institute offers these explainers for those who want more information: If you have specific questions, feel free to email us at expert@biginy.org.
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Reacting to Big I New York's successful effort last year to make the automobile photo inspection requirement optional, the New York State Department of Financial Services has proposed a major amendment to the regulation that implements the law. All members of the public can submit comments on the proposal. The department formally published the amendment in the April 3, 2024 issue of New York State Register. It changes Part 67 of Title 11 of the New York Codes, Rules, and Regulations (also known as “Insurance Regulation 79.") The New York Department of State publishes the New York State Register each Wednesday. It is the weekly publication of all regulatory actions state government agencies take and administrative actions the governor takes. Last November, New York Gov. Kathy Hochul signed into law Assembly Bill number 3172-A. This bill was Big I New York's highest legislative priority in 2022 and 2023. It amended New York Insurance Law Section 3411 to permit insurance carriers to waive photo inspections of the automobiles they insure against physical damage. Current law requires the carriers to inspect the vehicles before insuring them against physical damage. The change lifted a significant burden from New York insurance consumers and from the insurance producers who serve them. The change to the law takes effect on May 15, 2024, and will expire on October 1, 2027. Big I New York intends to do everything it can to convince the legislature and governor to make the change permanent. The amendment to Regulation 79 proposed today makes an insurer responsible for conducting an inspection “(u)nless (it) has filed with the superintendent (of financial services) a statement waiving its right to inspections for all automobiles …" It requires an insurer wishing to waive its right to inspect vehicles to submit a revised plan of operation. The plan must specify the vehicles it will and will not inspect. The amendment strikes the word “mandatory" from the regulation's text in several places. However, there are five other significant changes: - The section that formerly permitted an insurer to waive inspections of certain vehicles now states that “(a)n insurer may waive an inspection for any automobile …"
- Insurers will still have the option of requesting copies of lease agreements, window stickers, bills of sale, or transfer of ownership forms, even if it has waived the right to an inspection. The insurer also has the right to withhold payment of a physical damage claim unless and until it receives those materials. It can also non-renew the policy if it has not received them.
- The insurer has the right to require an inspection if the prior insurer's representative did not inspect the vehicle.
- The New York Automobile Insurance Plan (NYAIP) has the option of waiving the inspections.
- The amendment includes new forms for insurers to use if they do not waive the inspections.
Members of the public who wish to submit comments to the department may email them to Joana.Lucashuk@dfs.ny.gov. We encourage all interested Big I New York members to do so. The department will accept comments until the end of the day June 3, 2024.
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| The continuation of the hard market is evident as both standard and E&S carriers face underwriting challenges contributing to a narrowing of business appetites and thus increasing shopping for retail agents and brokers. Effective submissions get you noticed and help achieve results that improve the insurance solutions you provide. RT Binding wants to help you help your clients with the below advice on what makes an excellent submission!
General Submission Information - Tell the story (below is a guide for information that may be helpful to provide during the submission process. More complex risks will likely require more information than straightforward risks.)
- Confirm admitted markets are not in play
- What is needed to sell the account?
- Provide the target premium with the understanding that premiums are generally rising in the current marketplace
- Are you the incumbent agent or are you trying to win the business?
- Is there competition? If so, describe
- Have you engaged other wholesale brokers?
- If so, provide the markets already approached
- Provide details on current carrier, renewal premium and terms
- If non-renewed, provide the following:
- Reason for non-renewal
- Confirm legal notice was sent in accordance with state requirements and provide a copy if possible
- If this is their first insurance policy
- What date did they begin operations, and why are they looking for coverage now?
- If for a new purchase, provide the projected closing date
- Include fully completed applications providing insured name, mailing address, and physical address to avoid follow up questions
- Acord 125/126/140/131 and supplemental applications are preferred
- Business owners (BOP) Acords and Acord supplementals are less applicable and likely to slow down the process
- Provide any loss runs available
- Explain details of losses and mitigation to avoid similar future losses
- Explain any coverage gaps
- For lessors risk: provide operations of each tenant
- For habitational risks, insurers request the following: any subsidized, student, or elderly units? How many of each?
General Liability Specific:- Do all lessors risk tenants have insurance with $1 / $2M limits naming our insured as additional insured? (AI)
- If this insured is located in a region that gets snow and ice, is there a snow removal contract in place with a subcontractor? Do they name the insured as AI? Do they provide hold harmless wording in their contract with the insured?
- If there is NY exposure, policies will generally exclude action over/labor law. Please advise up front if this coverage is required so that the risk can be referred to brokerage; action over/labor law coverage is not offered by binding authority carriers
Property Specific:- If the building is over 50 years old, is the building on the historic registry or in a historic district?
- In order to offer special / replacement cost (RCV), most carriers require buildings over 30 years old to have had substantial updates to the roof, electric, heating, and plumbing. Please provide the year for each or the markets will most likely only offer basic form and actual cash value (ACV).
- Have you verified the RCV / ACV limit is adequate utilizing a building cost estimator in the past year? Many carriers have placed minimums per square foot with the increases in building costs in the past few years
- Most carriers exclude theft without an active central station burglar alarm. Theft will be excluded if alarms are not verified on the application
- E&S carriers do not offer business income on an actual loss sustained basis. Please provide a limit and coinsurance or monthly limitation
- Not every carrier offers no-coinsurance / agreed value. If you are requesting this, please provide the building valuation report or appraisal for consideration
- It’s not a deal breaker in all cases, but below listed electrical panels or wiring systems need to be listed if they exist. If post binding inspections reveal any of them, mid-term cancellation is likely
- Federal Pacific
- Stab - Lok
- Zinsco - GTE Sylvania
- Square D on recall list
- Knob and Tube wiring
- Aluminum wiring (full replacement with copper wiring, Copalum Method, and AlumniConn connector may be acceptable)
- Fuses
- Any panel or wiring identified as having an ongoing or past recall for fire hazard
Excess Liability Specific:- Please provide:
- All underlying policies/quotes/binders showing limits, premiums, classes and exposures
- Hard copy 3-5 year loss runs for all underlying lines
- Explanation and remediation of any losses
- Details surrounding open losses if any
- MVR and driver list for excess over auto
- Supplemental application (request from your RT underwriter if you do not already have one)
Read the article on RT's website RT Binding Authority is a part of the RT Specialty division of RSG Specialty, LLC, a Delaware limited liability company based in Illinois. RSG Specialty, LLC, is a subsidiary of Ryan Specialty, LLC. RT Binding Authority provides wholesale insurance brokerage and other services to agents and brokers. RT Binding Authority does not solicit insurance from the public. Some products may only be available in certain states, and some products may only be available from surplus lines insurers. In California: RSG Specialty Insurance Services, LLC (License #0G97516). ©2024 Ryan Specialty, LLC |
| Insurers writing auto insurance coverage in New York must refund premiums to insureds who have rejected Supplemental Spousal Liability Insurance coverage, the New York State Department of Financial Services (DFS) said Monday. The announcement came in a circular letter the department published late on December 18 addressed to carriers, producers, the New York Automobile Insurance Plan, and others. The letter, signed by Deputy Superintendent of Insurance Avani Shah, stated:
"It has come to the Department’s attention that some insurers are not specifying a premium for SSL insurance or permitting a named insured to decline the insurance with an appropriate premium reduction. As discussed further below, an insurer must specify the premium for SSL insurance and provide an appropriate premium reduction when a named insured declines the SSL insurance. …
The law and regulation require that the SSL insurance notification include the insurer’s premium for the insurance. Therefore, an insurer must include the premium for the SSL insurance in the SSL insurance notification. An insurer may not inform a named insured that there is no charge for the SSL insurance or otherwise specify “$0.00” on the notification. The premium for SSL insurance should be based on the bodily injury limits if there are split limits under the policy or the total liability limits if there is a combined single limit under the policy. An insurer may not charge a flat dollar amount for SSL insurance for all policies regardless of each policy’s liability coverage limits. In addition, if a named insured declines the SSL insurance, then the insurer must provide the named insured with a premium reduction, even if the insurer considers the premium reduction to be nominal. …
SSL insurance is an optional coverage. If a named insured elects, in writing, and in such form as the Superintendent determines, to decline and refuse SSL insurance, the policy may not include SSL insurance and an insurer may not prohibit a named insured from declining the coverage. …
The Department expects insurers to comply with the amendments to Insurance Law § 3420(g) and 11 NYCRR 60-1 and with the guidance set forth in this Circular Letter."
This will mark a change in procedure for some carriers, so will likely not see immediate changes. However, once carriers receive approval for new rate filings from DFS, you can expect to see refunds being credited to insureds who reject the coverage.
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| The New York State Workers Compensation Board announced that the state assessment rate on insurance premiums will decline to 9.2% next year. The new rate marks a drop from the 2023 rate of 9.8%.
State law requires the board each year to set an assessment rate by November 1. The assessment, which applies to Workers Compensation insurance standard premiums (or premium equivalents for self-insured employers) funds the board's operations.
The new assessment takes effect on January 1, 2024.
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| On Saturday, September 30, Congress passed and President Biden signed a bill to fund the government through November 17, 2023. The measure also extends the authorization for the National Flood Insurance Program (NFIP) through that date. Consequently, as of today you still have the ability to request new and renewal policies and coverage amendments for your clients who need NFIP policies.
The NFIP, along with large portions of the rest of the federal government, was on track to expire at midnight on Saturday. The program's legal authority to operate is tied to the end of the federal government's fiscal year, which is September 30. While it appeared late last week that a government shutdown was likely, Congress passed an emergency bill hours before the deadline. The president quickly signed it into law.
The action extends the NFIP's authority for almost seven weeks while congressional leaders negotiate a final budget for the 2024 fiscal year. We will provide updates to this situation as they occur.
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Your business clients who carry group health insurance coverage must start making a new filing to the federal government this year, and many of them may not know it. Agents and brokers are not required to do anything, but some of you may want to inform your clients. The filing is known as a Gag Clause Prohibition Compliance Attestation (GCPCA.) Health plan sponsors and issuers are required to submit it annually by December 31, with the first one required by the end of this year. When submitting the completed form, a plan sponsor or issuer is verifying that they have complied with a federal law that prohibits contracts that restrict certain information. The law was part of an omnibus federal budget bill enacted in late 2020. Plan sponsors and issuers are prohibited from entering into certain restrictive agreements with: - Health care providers
- Provider networks or associations
- Third-party administrators (TPAs)
- Other service providers offering access to provider networks.
The prohibited agreements are those that directly or indirectly restrict a plan or issuer from: - Making provider-specific cost or quality of care information available
- Electronically accessing de-identified claims and encounter information or data for plan participants, beneficiaries, or enrollees upon request and consistent with the privacy regulations
- Sharing this information with “business associates" (a person or entity that performs certain functions or activities that involve the use or disclosure of protected health information on behalf of, or provides services to, a health plan, health plan clearinghouse, or certain health care providers) consistent with privacy regulations.
Information is available on the website for the U.S. Centers for Medicare & Medicaid Services, including: Those of you who decide to inform your clients of this new requirement may want to do so soon so your clients have plenty of time to submit it before the Dec. 31 deadline.
Thank you to Big I New York member Connie Case at the Reagan Companies in Marcellus, New York for bringing this to our attention.
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| It’s late September, bringing with it familiar signs of autumn …
- Cooler weather …
- Leaves changing colors …
- American football on TV five days a week …
- Pumpkin spice everything from lattes to lasagna, … and
- The National Flood Insurance Program is about to lapse. Starting Sunday, you probably will be unable to write, renew or endorse flood insurance policies through the NFIP or any private insurers who issue NFIP policies.
Yes, you silly people who believe that insurance markets should be stable, the NFIP’s authority to issue and renew flood insurance policies will expire at midnight on September 30 unless Congress passes a bill and the president signs it before then. Unfortunately, the program’s authorization is tied to the end of the federal government’s fiscal year. While the U.S. Senate has passed a bill that would temporarily extend the current level of federal spending (including NFIP authorization) while a budget for fiscal year 2024 is worked out, the House of Representatives appears to be nowhere close to passing one.
Many government operations, including the NFIP, will shut down Sunday morning if both chambers do not pass a bill for the president to sign.
The NFIP has long been a minor (for some people) casualty in the fights over federal spending that seem to break out in Washington every few months. If history repeats itself, Congress will pass a temporary budget extension, then another one a few months from now, and maybe another one a few months after that before a spending plan for next year is finally signed into law. This has been the story for the last many years.
For you, this means:
- Any clients who need flood insurance for a real estate closing next week will be unable to obtain it from the NFIP.
- Any clients who need to increase their insurance limits under an existing NFIP policy will be unable to do so.
If you have access to a provider of private flood insurance, you may need to look to them as an alternative, at least in the short term. These policies are typically written on an excess and surplus lines basis, meaning that their forms and premiums are not subject to regulation by the New York State Department of Financial Services. Policyholders also do not receive protection from the New York Property Casualty Security Fund. However, many excess and surplus lines insurance carriers are in very solid financial condition, their products may provide better coverage than does an NFIP policy, and the premiums may be affordable for your clients.
If you do not have access to a private flood program, it will be impossible for you to write, renew, or service flood insurance for your clients until Congress passes an extension and sends it to the president.
We recommend that you communicate this news to any of your clients who rely on you for flood insurance.
Hopefully, this stalemate will not last long. At the very least, it can be hoped that Congress will pass a temporary spending bill that will run until November or December as they have in years past. If they do, I anticipate writing this blog post again when that bill is due to expire. Stand by for autumn reruns.
“History doesn’t repeat itself, but it often rhymes.” – Samuel Clemens, a/k/a Mark Twain
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Let's get out there and tell the world!!Tell The World?? Ok, how about at least the next generation how awesome the Insurance Industry is.... Over the next ten years, thousands of jobs will be available for the teens and young adults of today. We need to do a better job educating them about the wonderful career that we all know and love; too many kids (and adults too) only know about insurance by what they see on TV... the boring desk job selling insurance. In reality, there are SO MANY career paths in the insurance industry! We need to step up and show them about the other aspects of the industry; sales, support, IT, marketing, accounting, claims, analytics, nursing, engineering, forensics, etc. When you choose a career in insurance, so many doors open up. How do we start to tell the world? Visit your local school, community college or BOCES. We have a lot of material for you to use; videos, powerpoints, handouts, sample letters, you name it! It could be a 20 minute guest speaker presentation, participation in a career day, a Q&A session, or telling a story about what you like about being in insurance. Easy peasy! Take these steps to get started... - Check out Our Invest Page
- Identify a school near you: do you know a teacher, guidance counselor, administrative staff? Reach out to see if they have any upcoming career fairs or opportunities to speak. Ask if you can stop in to hang a flyer on their bulletin board.
- Contact me to discuss the best approach. I'd love to help you get the word out!
And if you're already out spreading the word about the amazing industry we're a part of, we'd love your feedback HERE. Tell us how we can help!
Jim Lombardo 315.432.4226
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