VOLUME 123, NUMBER 4 / February 20, 2012
New York • New Jersey • Connecticut • Pennsylvania • Washington D.C.
A CINN Group, Inc. Publication
Since 1889
LICONY CONVENES: BENJAMIN M. LAWSKY, SUPERINTENDENT, NYS DEPARTMENT OF FINANCIAL SERVICES; MARK PEARSON, CHAIRMAN & CEO, AXA EQUITABLE LIFE INSURANCE COMPANY; CHAIRMAN, NYS ASSEMBLY STANDING COMMITTEE ON INSURANCE, ASSEMBLYMAN JOSEPH D. MORELLE
February 20, 2012
CONTENTS
[ IN T HE ASSOCIATIONS ]
Wrynn Joins Goldberg Segalla, LLP as Partner
B
UFFALO, N.Y.—Goldberg Segalla LLP has announced that James J. Wrynn will join the law firm March 5. He will run the firm’s New York office and will be a senior partner in its Global Insurance Services Practice Group. Mr. Wrynn served as the 40th and last Superintendent of Insurance in New York until it merged with the New York State Department of Banking to form the new Department of Financial Services. He then served as the first Deputy Superintendent of the new department. Prior to serving as Superintendent, he served as the Executive Director of the New York State Insurance Fund. Mr. Wrynn played a key role in developing national and international regulations and policies governing the insurance industry. In 2010 he was elected Chair of the Northeast Zone of the National Association of Insurance Commissioners (NAIC), the organization of the chief insurance regulatory officials of the 50 states, the District of Columbia, and five U.S. territories. He also served as a member of the NAIC’s Executive Committee, as Vice Chair of its International Insurance Relations “G” Committee, as Co-Chair of its Credit Rating Task Force, and as Vice Chair of the task force involved in a review of international developments regarding insurance supervision, banking supervision, and international accounting standards and their potential use in United States insurance regulation as part of a critical self-examination of the United States Insurance Solvency Regulation framework known as the “Solvency Modernization Initiative.” Mr. Wrynn also represented the United States as a member of the International Association of Insurance Supervisors (IAIS), an organization of insurance supervisory authorities from nearly 140 countries that sets international standards for insurance regulators. He participated heavily in international issues such as Solvency II (an economic risk-based solvency regulatory framework to be utilized by all European Union member states); systemic risk (and the development of a methodology for the identification of globally systemically important financial institutions and the measures to be taken once identified); the development of a common framework for the supervision of internationally active insurance groups (known as “COMFRAME”); group supervision; and numerous other issues and initiatives. Mr. Wrynn brings to the firm 25 plus years of experience as an attorney focusing in the areas of life, accident, and health insurance; property and casualty insurance; general liability insurance; insurance coverage disputes; professional malpractice; and product liability. His extensive legal background includes counseling agents, brokers, risk-retention groups, and insurance companies in most lines of insurance and excess insurance, reinsurance, self-insurance, and captive insurance. Mr. Wrynn began his legal career in 1982 and later was a founding partner in the law firm of MacKay Wrynn & Brady, LLP. He received his B.A. in Accounting from St. John’s University College of Business Administration and his J.D. from St. John’s University School of Law.[IA]
[ COVER STO RY ]
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[DE PA RTMENTS] In the Associations ........................................................3, 6 Forward................................................................................. 4 Face to Face, By Michael Loguercio.....................................6 On the Level, By Jamie Deapo ..........................................12 Milestone............................................................................14 On the Level, By N. Stephen Ruchman .............................26 LICONY ...............................................................................28 Looking Back .....................................................................32 Classifieds ...........................................................................31 Courtside, By Lawrence N. Rogak .....................................30
www.insurance-advocate.com INSURANCE ADVOCATE / February 20, 2012 3
[ FORE WORD ]
Steve Acunto
In this issue… We are always surprised where copies of the Insurance Advocate turn up. Typically you will find one on the front table in most insurance offices in New York and New Jersey, having been read and placed there among other industry publications. Such is the case with a recent issue which greeted us pleasantly in the offices of Global Liberty on Long Island, where we were happy to see one of our crossword puzzles filled out completely. We have put this feature on hold as we are reorganizing those pages presently. Some of you have asked us about the crossword puzzle and we are contemplating placing it back in its customary location before long… With respect to turning up in strange places, it may strike our readers as a little bit off the track to have an article about the Executive Life process that appears in this issue. It is not mainstream to most. The article is not intended to be a criticism of anyone currently at the Insurance Department or the Bureau – in fact we have had good things to report on these fronts. It points to the premises of a process that very well may need to be revisited. Perhaps Mr. Bickford’s thoughtful article will show up in the deliberations of those who seek to change the system for the better…In this issue, we present both Jamie Deapo’s and Steve Ruchman’s articles; customarily, these appear one at a time in the magazine, but we thought we would present them both in this issue as they are good reading and we received them, as Yogi says “at the same time simultaneously.” We will resume our tag team approach in the future issues. Both men are dedicated advocates for insurance agents and for all that implies for the proper delivery of insurance. We’ve known Steve and Jamie for many years and have watched them advance their careers and advance the associations with which they are so closely involved. We are as always, delighted to present their viewpoints to our readers… In an article in this issue, we present the Life Insurance Council of New York’s (LICONY) legislative update and some photos from its recent 40th anniversary. The Life Insurance Council of New York demonstrates a sound degree of modesty in celebrating itself but, nonetheless, possesses a stage presence and force that is among the strongest in Albany. Years ago, LICONY celebrated its association annually with an elaborate dinner dance at the Plaza Hotel - black tie and couples only - and risked sending the wrong message to legislators and regulators. On the other hand, in those days the level of communication among lobbying organizations and legislators was quite different and the Insurance Department’s participation in such events was not in the least bit limited, except perhaps by personal predilections. Today, the environment has changed and things need to be kept crisp, objective and arms length. This has percolated all the way down to meetings such as LICONY’s, where modesty and evident boundaries are in good order. We compliment Tom Workman and his staff on their work and call your attention to their legislative concerns which appear in this issue. Enjoy.[IA] 4 February 30, 2012 / INSURANCE ADVOCATE
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VOLUME 123, NUMBER 4 FEBRUARY 20, 2012
EDITOR & PUBLISHER Steve Acunto, 914-966-3180, x110 sa@cinn.com CONTRIBUTING EDITOR Peter Molinaro CONTRIBUTORS Jamie Deapo Michael Loguercio Sari Gabay-Rafiy Lawrence N. Rogak N. Stephen Ruchman Jerry Trupin PRODUCTION & DESIGN ADVERTISING COORDINATOR Creative Director Gina Marie Balog, 914-966-3180, x113 g@cinn.com SUBSCRIPTIONS P.O. Box 9001, Mt. Vernon, NY 10552 914-966-3180, x117 circulation@cinn.com PUBLISHED BY CINN Group, Inc. P.O. Box 9001, Mt. Vernon, NY 10552 (914) 966-3180 Fax: (914) 966-3264 President and CEO Steve Acunto
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[ FACE TO FAC E ]
By Michael Loguercio
Metro RAP Up
W
elcome Back RAP! In a true New York sort of style, and for the second year since its return to Manhattan, insurance professionals from all around the greater New York City area gathered at the Professional Insurance Agents of New York State Inc.’s 2012 Metropolitan Regional Awareness
importance of engaging customers and prospects positively and proactively in the digital realm with some real life examples. “This is all about communicating, folks,” Metro RAP Chair F. Michael Conte reminded the Metro RAP crowd about the importance of joining the social-media trend. “You can’t ignore the importance of
“David’s dedication to PIA has been remarkable. He is a well-known among us all as a friend and a leader; and it is my privilege to present him with this award.” - Richard A. Savino, CIC, CPIA, PIANY President
and as a member of the Professional Insurance Wholesalers Association. “David’s dedication to PIA has been remarkable,” said PIANY President Richard A. Savino, CIC, CPIA. “He is a well-known among us all as a friend and a leader; and it is my privilege to present him with this award.” Mr. Isenberg has served on nearly every PIANY committee, including the Education and Conference, Industry Liaison, and Nominations Committees. In 1998, he received the Louis A. Morelli award from PIANY and he was honored as the Council of Insurance Brokers of Greater New York’s Man of the Year, in recognition for all his work in the insurance industry. In 2010, PIA of New York recognized him at its
Michael Loguercio
Program, held Wednesday, Jan. 18, 2012, at the New York Hilton in midtown Manhattan. PIANY’s first event of the year exceeded everyone’s expectations with attendance of some 500 professionals turning out for one of the best events of this winter convention season. Metro RAP featured education courses about the latest ways that the insurance industry communicates with clients and colleagues, including a keynote address from Jill Griffin, Senior Vice President of Strategy and Innovation, Starcom MediaVest Group. Ms. Griffin discussed real-world strategies and solutions for harnessing the power of social media and putting it to work for today’s agencies. Ms. Griffin also reinforced something that you and I have been talking about in this column for a few years now: “That social media is not just the way of the future, but a necessary activity now for any agency to be successful.” Kicking off her presentation with a YouTube video called “Social Media Revolution, (which may be found at: http://www.youtube.com/ watch?v=3SuNx0UrnEo) by Erik Qualman, Ms. Griffin urged the audience to “Get started, if you haven’t already”, and provided some excellent advice on protocol for micro-blogging media such as Facebook, Twitter and Yelp!, stressing the 6 February 20, 2012 / INSURANCE ADVOCATE
participating in the conversation.” (By the way, if you’re not following Mike Conte on Twitter, do so, as his Tweets are not only informative, but sometimes hysterical!) During the luncheon ceremony, PIANY presented the prestigious Distinguished Insurance Service award to one of the industry’s most wellrespected veterans and two scholarships to rising stars. David Isenberg, who recently retired President of D.C. White Agency, a division of the Lancer Insurance Group as the pinnacle of a distinguished career of nearly 50 years, was awarded this coveted honor. The award recognizes an individual who has established a history of service, dedicated leadership and attention to the concerns of our members and their clients. Dave is a past president of PIANY and a director of PIA Management Services, the umbrella corporation that manages the PIA affiliates of Connecticut, New Hampshire, New Jersey and New York. He has served as chairman and director of the Excess Lines Association of New York,
DAVID ISENBERG
joint annual conference in Atlantic City, and he received the General Agent Executive of the Year award at Metro RAP in 2007. Thanking Mr. Savino and PIA for the honor, David encouraged the audience to stay involved with their association, and looked forward to the future. “I’ve been very fortunate to be a part of this industry for 50 years, a great industry,” Dave said. “In no small part has my career been continued on page 8
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[ FAC E TO FAC E ] continued from page 6
affected by the people I’ve worked with at DC White, my broker friends and my wife…. But, the success of my life is reflected by my children, and they show what I’ve achieved more than anything else.” Keeping with Metro RAP tradition, PIANY past President Shelly Kozel presented the Bernard I. Kozel Memorial scholarship, in memory of his father and the Arthur I. Moll Memorial scholarship, in memory of the PIANY and PIA National past president, to two PIANYmember employees: Jacqueline Gerbino, Personal Lines CSR with Kay Dina Insurance Agency in Marlboro N.Y., and Jennifer Nall, Customer Ser vice Representative of Member Brokerage Service in Queens, respectively. Each winner received tuition to two Certified Insurance Service Representative seminars conducted by PIANY. Metro RAP’s fast-paced and famed trade show and exhibition was the dynamic and congenial event that New Yorkers have come to anticipate. Nearly 100 exhibitors met with old friends, displayed their latest innovations, products and markets and made valuable new contacts to help each other’s business. Also at the conference Steve Anderson taught two education seminars: The morning’s presentation, “Maximizing Your Agency’s Internet Presence”, sponsored by ELANY, and approved for two continuing education credits in both New York and New Jersey. Participants joined Steve again in the afternoon for “Managing E&O Exposures in a 24-7 World,” also approved for three credits in both New York and New Jersey. In addition to these opportunities, some participants at Metro RAP took advantage of the monitored exam, which offered to complete a full 12 credits, applicable to all licenses as part of PIA’s popular self-study course, “Advertising, Rebating and Referrals: Staying Compliant When Designing Your Market Plans.” “We’re already making plans to build on the great momentum of this year’s show for next time,” said Metro RAP Committee Chair, Michael Conte. “The committee should be proud of this outstanding event and the showing of our continued on page 10
8 February 20, 2012 / INSURANCE ADVOCATE
METRORAP CHAIR AND MASTER OF CEREMONIES F. MICHAEL CONTE
JILL GRIFFIN, SENIOR VICE PRESIDENT OF STRATEGY AND INNOVATION, STARCOM MEDIAVEST GROUP. GRIFFIN
MICHAEL LOGUERCIO AT HIS EZLYNX BOOTH AT THE PIA OF NY 2012 METRO RAP CONVENTION TRADE SHOW
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[ FAC E TO FAC E ] continued from page 8
New York Metropolitan Insurance Community.” Special Thanks to this year’s MetroRAP Committee: Vice President Alan Plafker, CPIA of Member Brokerage Service LLC; Chairman F. Michael Conte, CPIA of Honig Conte Porrino Insurance Agency Inc.; Vice Chair Michael Demetriou of Demetriou General Agency Inc.; Anthony Aquilino of Regency Agency Inc.; Al Caputo of Buckingham Badler Associates; Joshua Edelman of GMAC Insurance; Eduardo Giraldo, LUTCF of Abetx International Brokers; Michael J. Honig, CIC of Honig Conte Porrino Inc.; Naomi Margolin of ArmadaCare; Renee A. McFadden, CIC; Distinguished Programs Group LLC; Monica Perkowski of Imperial PFS; Eugene Podokshik, CPCU, CRIS of Krauter & Company; Nancy Reiersen of Kingstone Insurance Co.; Paul Russo of Tower Group Companies; Frank Sala of Hicksville, NY; Richard Signorelli of Azby Brokerage Inc. and of course Honorary Member John Gallagher of Utica First Insurance Co. Well, that’s a RAP for today, and next time we’ll be talking about some other conferences and events in some neighboring states to the Big Apple. Ciao for now! [IA] Michael Loguercio is the Regional Sales Manager for Webcetera-EZ Lynx; active Past President of the Young Insurance Professionals of New York State; current ACT/AUGIE, Professional Insurance Agents of New York State, Independent Insurance Agents and Brokers of New York State, and Council of Insurance Brokers of Greater New York committee member; and is a regular Contributor to the Insurance Advocate. In his community, Michael is President of the Longwood Central School District Board of Education on Long Island, NY; and is a member of The Middle Island, NY, Rotary Club and Central Brookhaven Lion’s Club. He may be contacted at 631-345-9359 or michael@webcetera. com.You may also follow him on Twitter @MLoguercioJr; and on Facebook @ Michael Anthony Loguercio Jr. 10 February 20, 2012 / INSURANCE ADVOCATE
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[ ON THE LEVEL ]
By Jamie Deapo
The Time is Now – The Game Changer is Here!
A
nyone who has read my articles or heard me speak knows I have been advocating for a major shift in the way Independent agents and brokers operate in the marketplace. Competition is coming from everywhere and through an increasing number of sources. Most of the
implement these important enhancements making them a part of their agency operations. They’re insurance agents not internet nerds or techies. Because of their frustration many start to question whether these changes are really that important. What is wrong with how they are doing business now? It’s served us well for all these Consumers want online digital years. Why is marketing backed by local making these professional advice and service. changes so important? Are these ProjectCAP offers consumers this changes really access via 22,000 agencies necessary or just a lot of hype? across the country tied to the Let me proonly national brand for vide you with independent agents and some facts and you make the brokers – Trusted Choice®. Jamie Deapo decision. Between 2007 and 2010 the competition is using digital marketing and percentage of consumers shopping online the internet to grab market share. Currently has gone from 61% to 75%. That means that they’re focused on personal insurance 3 out of every 4 insurance consumers are (especially personal auto) but BOP type using the internet in some capacity to make Main Street commercial business won’t be an insurance buying decision. Between 2005 far behind. and 2009 independent agent market share I’ve talked about how important it is to dropped 1.6% from 35.9% to 34.3%. Not a develop your agency’s value proposition. big number until you realize that every 1% Once developed that newly created value of market share represents $2.8 billion in proposition needs to be known and lived by premium or $300 million in commissions. all your staff as well as communicated on When you look at it that way we are looking your agency website. That website needs to at a loss of $4.2 billion in premium or over be dynamic and constantly evolving which $450 million in commission. Personal auto increases your SEO (search engine optimiza- insurance, the most heavily sold coverage tion). A well written, consumer relevant blog online, constitutes approximately one-third tied to your website is a significant enhance- of the entire property casualty pie. ment. Jumping into social media is another Consumers want online digital marketsignificant enhancement that leads to getting ing backed by local professional advice and back into the game of selling protection only service. ProjectCAP offers consumers this now you are using digital media and the access via 22,000 agencies across the country internet. Facebook, Twitter, LinkedIn and tied to the only national brand for independYou Tube are the new ways of reaching, ent agents and brokers – Trusted Choice®. communicating and developing a relation- ProjectCAP started right here in New York ship with the buying public. as a seed of an idea designed to make indeMost agents not planning retirement pendent agents more competitive in the and interested in being a significant player marketplace. That seed grew into Consumer in the marketplace realize the need for these Agent Portal LLC the entity responsible for changes in the way they do business. Many ProjectCAP. This new entity capitalized by respond that they don’t have the time, 6 visionary independent carriers and IIABA knowledge or money to go out and locate, was created to bring independent agents into investigate, contract, train their staff and digital marketing and ultimately online sales 12 February 20, 2012 / INSURANCE ADVOCATE
via a consumer portal. ProjectCAP is a two part initiative. The first part, agency marketing programs, allows independent agents to sign up for a wide range of digital marketing, training, products and services. Unlike so many “one size fits all” programs that provide a mixture of new and old technology cobbled together, ProjectCAP has designed a range of cutting edge digital marketing packages recognizing the diversity of experience and knowledge among independent agencies. Packages range from programs designed for agencies that can work on a do-it yourself basis to premium packages for agencies that want to take the “done for you” approach. Part two is the launch of the consumer portal in mid-summer. Using the Trusted Choice® brand ProjectCAP will be designed as a national Web portal. The portal will address the insurance consumer’s desire for knowledge, choice and comprehensive service. The portal will offer consumers local marketing by directing them to local agents that meet the criteria they have outlined as important to them. Participating agencies can expect exclusive, real-time access to consumer leads. ProjectCAP promises to be a real “game changer” allowing independent agents to take back market share. Using the agency digital marketing package of their choice agents will be able to develop in their agencies the necessary digital marketing tools, education, content and services to get them properly prepared to operate in today’s marketplace. With that preparation achieved they will be totally prepared to handle the consumers who are directed to them via the consumer portal. Independent agents have waited for some time for the tools and support that would allow them to take back the market. We know we offer consumers the best method for purchasing insurance and now we will be able to capitalize on it as we move into the digital age. Don’t wait, jump on board with ProjectCAP and be a part of the future. But buckle up as it should be a wild and exciting ride ending with independent agents and brokers returning to their rightful place as a major factor in the insurance buying marketplace. [IA]
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[ MILESTONE ]
Armed Forces Insurance Celebrates 125th Anniversary
L
EAVENWORTH, Kansas—Armed Forces Insurance reaches a significant milestone in its history in March: 125 years of service to its members. While the country has changed a great deal since the organization was founded, AFI’s commitment to satisfying the unique
14 February 20, 2012 / INSURANCE ADVOCATE
demands of the military lifestyle has never wavered, according to Kurt Seelbach, President and Chief Executive Officer. “AFI’s long and successful history is a testament to our team’s ability to provide insurance products and personalized customer service that address the specific chal-
lenges military families face,” Seelbach said. AFI’s success in this mission is clearly illustrated by the loyalty of its member base. Of the more than 37,000 policyholders who have retained a membership for at least 25 years, about 15,500 of those have been with AFI for more than 40 years. AFI has provided property and casualty insurance to some of the most notable figures among military leadership. Additionally, the organization heads into its 125th year with an A(Excellent) rating from insurance industry credit rating agency A. M. Best — a rating level it has consistently maintained for decades. AFI’s most recent years have been marked by ongoing sponsorships that support military causes. Today AFI sponsors the “Military Spouse of the Year” award, presented by Military Spouse Magazine; the Bell Helicopter Armed Forces Bowl; the Best Ranger Competition’s Rippetoe Award; and Sky Ball, an event that raises over $1.5 million dollars every year in support of military families. AFI also supports numerous military appreciation events that recognize men and women in uniform for service to their country. “We’ve provided competitive rates, easy access to critical information, and rapid response to policyholders’ needs for 125 years. This is an incredible quasquicentennial anniversary. With a strong focus on risk management and an experienced team of senior insurance executives in place, AFI remains well positioned to continue to deliver personalized service for many years into the future,” said Lieutenant General Garry L. Parks (U.S. Marine Corps, Ret.), Chairman of the Board of Directors. AFI was founded in 1887 by military leaders with a single mission: to protect the property of those who protect the nation. The company provides premium quality, competitively priced property and casualty insurance to military professionals throughout the United States and overseas. AFI understands that its members have unique circumstances and insurance needs, enabling the company to offer a level of personalized service that’s unequaled in the industry. For more information, visit the website at www.afi.org [IA]
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WATER DAMAGE – Precautions and Pointers WATER DAMAGE IS THE second most frequently filed insurance claim, costing the industry more than $5 billion each year. The average water damage claim is over $5500.(Insurance Information Institute) Helping insureds prevent or reduce water damage losses is another value-added service of the professional insurance agent. Whether or not water damage is covered by the insured’s policy depends on policy language and loss details. Losses from floods or water backing up from sewers or drains are not usually covered under a standard policy, but coverage may be purchased. Other considerations include occupancy of the property. For example, water damage caused by freezing pipes may be excluded if the property has been vacant or unoccupied more than 30 days occupied for long periin a row. ods of time, as well as Each year, The most common outdoor faucets and ircause of water damage systems. undetected leaks rigation is from leaking toilets. To mitigate a loss However, other appliwhen a leak does occur, that damage ances may also cause the insured should take furniture, floors problems. Each year, certain steps immediundetected leaks that ately. As in any loss sitand appliances damage furniture, uation, even after the can result in floors and appliances claim is reported to the can result in tens of tens of thousands insurance carrier, it is thousands of dollars in important to take acof dollars claims. To prevent such tion as if there is no inproblems, insureds surance coverage. To in claims. should check all hoses, reduce loss and protect including the ice makthe property from furer, and replace them ther damage, shut off every five to seven years. The caulking the water. Everyone should know the loaround sinks and showers should also cation of the water shutoff valve in the be checked, as well as checking pipes home or business. Shut off the electricfor small leaks. ity and gas, if necessary. Remove the Other prevention measures include water as soon as possible. If the floors or installation of backwater valves, decarpet are wet, use of electrical applisigned to prevent sewer and water ances may not be recommended. The backup, and automatic water shut off label on the shop vac should be checked valves that shut off the water supply if a to be sure it is safe to use to remove waleak is detected. To avoid burst pipes in ter. Fans or space heaters are helpful to the winter, the water supply should be circulate air and dry out the area, which shut off and the pipes drained in areas helps prevent mold. Wet carpet should that are exposed to the cold. This inbe handled by a professional to prevent cludes secondary residences that are not shrinkage. Professionals can also help 16 February 20, 2012 / INSURANCE ADVOCATE
restore wet personal property, books and papers. Even if the water damage is covered, resulting mold may not be. In recent years, the number and dollar amounts of mold claims have skyrocketed. Because of this, many policies now have a mold exclusion. In some cases, limited mold coverage is available. Mold starts growing within 24-48 hours, so it is important to dry the affected area as soon as possible. The presence of mold can mean the property will be harder to sell. In addition to property damage caused by water, another expense is the lost water itself. A leaking pipe or toilet can waste up to 300 gallons of water per day! Understanding sources of water damage and helping your insureds prevent or reduce losses is the mark of the true insurance professional.
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[ COVER ]
By Peter H. Bickford
20 February 20, 2012 / INSURANCE ADVOCATE
[ COVER ]
I
n 1991, Executive Life Insurance Company of New York (ELNY), the stressed but solvent subsidiary of its insolvent parent, Executive Life Insurance Company of California, was placed in rehabilitation in New York to protect it from cash surrenders becoming “a run on the bank.” Twenty-one years later, the rehabilitator has petitioned the court to declare ELNY insolvent and order it liquidated based on ELNY’s liabilities exceeding its assets by more than $1.5 billion. The burden of this deficit will fall largely on individual annuitants, policy owners and the insurance companies that fund the state life insurance guaranty funds. How ELNY got to this position after two decades of receivership charged with the preservation of the company and protection of its policyholders is a cautionary tale of the failure of the receivership process to do either. On its ELNY web page, the New York Liquidation Bureau sets the blame for the failure of ELNY squarely on the economy: The rehabilitation of ELNY has been negatively impacted by sustained periods of adverse economic conditions, including low interest rate environments and unfavorable equity markets. In addition, the stock market collapse of 2008 worsened ELNY’s already fragile financial condition. As a result of these adverse economic conditions, ELNY’s assets are no longer adequate to continue to support the payment of 100% of the benefits ELNY annuity contract owners and other payees and beneficiaries expect to receive into the future.” However, ELNY was de facto insolvent long before the current economic downturn. The economy may have contributed to the pace of expansion and size of the deficit but does not explain or excuse the long, painful story of ELNY’s failed receivership.
The Story of ELNY When ELNY’s parent was placed in receivership in California, the New York Insurance Department determined that an “increase in surrenders had caused a material erosion of ELNY’s assets to the detriment of policyholders with nonsurrenderable policies, primarily structured settlement annuities.” As a result, New York’s Superintendent of Insurance sought and obtained an order of rehabilitation in April 1991, and was appointed as rehabilitator charged with the management of ELNY. A year later, in March 1992, the rehabilitator submitted and the court approved a plan of rehabilitation for ELNY. Under the 1992 plan, ELNY’s traditional whole life, term life and deferred annuity books of business were transferred to Metropolitan Life Insurance Company with substantially all the supporting statutory reserve assets. The book of single premium immediate annuities (SPIAs), primarily issued to meet structured settlement obligations, remained with ELNY together with the remaining assets, mostly of “junk” status. Neither the 1991 rehabilitation order or the 1992 order approving the rehabilitation plan declared ELNY to be insolvent. For the twenty plus years since the approval of the rehabilitation plan, the rehabilitator has continued to pay all annuitants in full. Now, faced with a $1.5 billion shortfall, the rehabilitator is asking for the first time that the court declare ELNY insolvent, order its liquidation and approve a restructuring plan for the ELNY annuities. A court hearing on the rehabilitator’s petition
Under the proposed restructuring plan, the remaining ELNY assets are to be transferred to a new entity owned and controlled by the participating state life insurance guaranty funds, which will contribute funds to the new entity in amounts based on their individual state fund laws. and the restructuring plan is scheduled for March 15th. Under the proposed restructuring plan, the remaining ELNY assets are to be transferred to a new entity owned and controlled by the participating state life insurance guaranty funds, which will contribute funds to the new entity in amounts based on their individual state fund laws. The ELNY contracts will be restructured to a level that can be supported by these assets, and the obligations as restructured will be assumed by the new entity. Because most of the annuities are relatively small and fall within guaranty fund caps, the rehabilitator has estimated that roughly 84% of all annuitants will continue to receive their full periodic annuity payments. That percentage does not tell the full story, however. ELNY’s assets, based on its December 31, 2010 statements, cover only about 36% of its obligations and the rest will come from the various state life insurance guaranty funds. These guaranty funds, however, have statutory caps. The most common cap is $300,000 although the New York cap is $500,000. As applied by the restructuring plan, the cap is the maximum allocated to each contract, so that the guaranty fund contributes the difference between a contract’s pro-rata share of ELNY assets and the applicable fund cap. Because of the life guaranty fund limitations, the benefits under any annuity with a present value in excess of the applicable guaranty fund cap will be cut significantly – many of them by a half or more. The ELNY book of business consists primarily of annuities issued to fund structured settlements where the annuity provides steady income – sometimes the only income -- to an injured or disabled party, and the present value is based on the projected periodic payments over a lifetime. In many cases, therefore, the parties most affected by the cuts in benefits are the ones that can least afford it. There is no general correlation between high present value and economic ability to bear the loss. The restructuring plan includes a few “enhancements”, including a hardship fund supported by certain contributing life insurcontinued on page 22
INSURANCE ADVOCATE / February 20, 2012 21
[ COVER ] continued from page 21
ance companies to address particularly difficult situations. These enhancements may or may not prove to be meaningful, but they will not come close to making many annuitants whole. Given the current financial condition of ELNY, the Restructuring Plan may be the best option within the existing statutory receivership structure, and there is no question that the rehabilitator could not allow ELNY to continue on the path set by his predecessors a decade or two ago. The 1992 ELNY rehabilitation Plan, like the Titanic, was doomed the moment it left port, and the current rehabilitator is the one left to deal with the consequences.
Failure of the Receivership Process How was it doomed? The original rehabilitation plan stripped out all the traditional life and annuity business and transferred it to Met Life with the supporting, statutory reserve assets. These contract holders received an equivalent policy from Met Life and suffered no material financial consequences. Unlike the typical property/casualty insolvency, where contracts are terminated, assets marshaled, and claims assessed and paid as of a pre-determined cut-off date, transferring policy obligations to another carrier or carriers has been the historic method of addressing financially stressed life insurance companies. The single premium individual annuities (SPIAs) did not fit this mold, however, and for whatever reason the most volatile, long-tailed book of ELNY business was left in ELNY together with its weakest assets. The assessment of the portfolio in the 1992 rehabilitation plan was remarkably prescient stating that: The cash flows produced by ELNY’s bond investments and Common Stock dividends are projected to be sufficient to cover current SPIA payouts for at least ten (10) years. That is precisely what happened. The cash flow from ELNY’s remaining assets was sufficient to meet the SPIA payments for
Unlike the typical property/ casualty insolvency, where contracts are terminated, assets marshaled, and claims assessed and paid as of a pre-determined cut-off date, transferring policy obligations to another carrier or carriers has been the historic method of addressing financially stressed life insurance companies. 22 February 20, 2012 / INSURANCE ADVOCATE
almost ten years as predicted. As shown by the annual reports of the Liquidation Bureau (unaudited for years prior to 2006) obtained over the years through Freedom of Information Law requests, ELNY’s cash flow went negative in 2002, ten years after the Plan of Rehabilitation and six years before the economic downturn of 2008: Year
Assets ($Millions)
Liabilities ($Millions)
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
$1,648 $1,657 $1,678 $1,794 $1,857 $1,926 $1,770 $1,646 $1,465 $1,528 $1,495 $1,429 $1,379 $1,345 $1,042 $984 $906
$1,632 $1,624 $1,633 $1,697 $1,710 $1,724 $1,613 $1,605 $1,575 $1,643 $1,642 $1,621 *$2,645 $2,539 $2,438 $2,516 $2,474
Surplus/ Percent of (Deficit) Coverage $16 $33 $45 $97 $147 $202 $157 $41 ($110) ($115) ($147) ($192) *($1,266) ($1,194) ($1,396) ($1,532) ($1,568)
100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 93.0% 93.0% 91.0% 88.2% 52.1% 53.0% 42.7% 39.1% 36.6%
* Note: $1.02 Billion added to reserves based on a revision to the life and annuity valuation basis as of 12/31/06. To fully understand how ELNY could have been allowed to continue to pay full benefits while insolvent for a decade and with no action taken to address the inevitable, one must consider the receivership process in New York. Counter intuitively, when a company is placed in rehabilitation in New York the company ceases to be regulated. The superintendent of insurance (now the superintendent of financial services), as rehabilitator, stands in the shoes of the company and is charged with its management. The superintendent delegates this management role to the Liquidation Bureau, a separate entity that acts solely as the superintendent’s agent in his non-regulatory role as rehabilitator. The rigorous statutory requirements for filings, reports or certifications imposed on other licensed companies are no longer imposed on estates in rehabilitation; there are no periodic regulatory reviews, examinations or communications; there is no regulatory oversight of the operations, assets or finances; and there is no mechanism for regulatory oversight of financial condition or compliance with the insurance law or regulations. The Bureau often argues that it is subject to statutory oversight by each receivership court. However, receivership courts in New York are courts of general jurisdiction and not dedicated receivership courts like Federal bankruptcy courts. Also, courts generally only consider matters that are brought before them, and certainly do not consider themselves to be regulators. Even if they were so inclined, however, because there are no statutory requirements for filing any financial or actuarial statements or other periodic continued on page 24
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[ COVER ] continued from page 22
reports with the court, they would not have the tools necessary to do so. That ELNY was insolvent for years and becoming progressively and irreparably beyond recovery was quite evident from a study of the Liquidation Bureau’s own albeit limited published records. From the time it was placed into rehabilitation in 1991 until after 2006 no audit of ELNY was required or had been conducted. As shown on the chart above, the 2006 audit resulted in a 63% increase in reserves and a 650% increase in the stated deficit. This reserve adjustment was not a sudden awakening, however. Even before the audit the Liquidation Bureau acknowledged that the reserve standard used in the annual statements “substantially understates reserves when compared to reserves that would be required to satisfy regulatory requirements for a going concern insurance carrier.” Given that ELNY was not insolvent at the time it was placed into rehabilitation, the question remains why proper accounting and reserve levels were not required or maintained.
Lack of Accountability Without any regulatory interference, and with little if any incentive to take remedial action so long as the cash flow permitted continuing payment on all annuities, the ELNY estate was allowed to move slowly toward the inevitable day of reckoning recognized by the 1992 rehabilitation plan. When economic circumstances worsened, and the reserve deficiencies became too significant to ignore, the pace quickened to the point where the inevitable could no longer be postponed. If ELNY had not been in rehabilitation, and had been required to continue to file statutory financial statements, including annual independent accounting and actuarial certifications, it is highly unlikely that the regulators would have allowed it to get to the point where the estate is today. It is also inconceivable that the company’s management and its agents would be allowed to propose and carry out a plan to correct its financial woes once it was materially impaired. If its dire condition had for some reason eluded the regulators, the company’s officers and directors, its independent auditors, actuaries and other agents, could all potentially -- and probably would -- have been held accountable for their actions or inactions contributing to its failure. With ELNY in rehabilitation, however, the parties charged with the management of the company for the past two decades are the proponents and overseers of the restructuring plan. And they are seeking court immunity for doing so! The proposed order being sought by the superintendent includes the following provision: “Judicial immunity is extended to the Superintendent in his capacity as Receiver and his successors in office, the New York Liquidation Bureau, and their respective attorneys, agents, and employees, and such immunity is extended to them for any cause of action of any nature against them, individually or jointly, for any action or omission by any one or more of them when active in good faith, in accordance with this order, or in the performance of their duties pursuant to Insurance law Article 74; . . .” 24 February 20, 2012 / INSURANCE ADVOCATE
There is no statutory immunity for the superintendent or his agents in his separate, non-regulatory role as receiver, and if any of us had inherited the ELNY estate in its current situation we would certainly want the same protection being sought by the rehabilitator. However, aside from being exceptionally broad – going well beyond immunity for the liquidation and restructuring plan – the perceived need for this protection further underscores the lack of accountability under the current receivership process in New York.
A Word About The Upside Down Guaranty Fund Coverage With ELNY’s assets covering only about one-third of its liabilities, the participation of the various state life insurance guaranty funds is crucial to the success of the restructuring plan. The funds are designed to be a safety net for claims against insolvent life insurers, but the level of coverage is capped to limit the financial strain on the solvent companies that provide the funding. The basic principle is that claims of the “little guy” are to be covered to the fullest extent possible, and if large claimants are left only partially covered because of the caps, at least they are better able to absorb the financial loss of limited coverage. Unfortunately, as shown earlier in this article, the opposite is the case with many ELNY annuitants. They are not the big fish that can fend for themselves, and they are not the ones in the best position to absorb financial loss or pursue other remedies. The irony of the guaranty fund coverage for ELNY’s remaining book of annuity business is that it protects the investor annuitant over the annuitants with the greatest need. In other words, the logic behind guaranty fund caps is upside down in the ELNY scenario. The Liquidation Bureau has suggested that the beneficiaries whose benefits are being cut significantly may have recourse against the owners of the policies or others that may still be liable under the original settlements. But even if true, why should the annuitants be the ones to have the burden of pursuing litigation or other means to recover their loses for a second time? And why is there no recourse against the parties that caused the insolvency?
Conclusion The proposed restructuring plan to be considered by the court on March 15th may or may not be the best plan available to maximize benefits to annuitants, and to stem the precipitous deterioration of ELNY’s assets under its current circumstances. The court’s focus will and should be on determining whether the plan is in the best interests of ELNY’s policyholders and annuitants considering the condition of ELNY today. However, the ELNY story should not end with its liquidation, whether through implementation of the proposed restructuring plan or some other plan. Regulators, legislators, guaranty funds, and interested industry and consumer groups should thoroughly examine how ELNY got to this point – from its ill-conceived rehabilitation plan in 1992 to the steady, predictable but unchecked erosion of assets leading to ELNY’s current condition. The current receivership system’s lack of accountability failed to protect ELNY’s most vulnerable claimants. That cannot be allowed to happen again![IA]
[ ON THE LEVEL ]
By N. Stephen Ruchman
An Ongoing Nightmare
W
ant to hear something really scary? I’ve got a horror story to share—like all good horror stories, you’ve probably heard it before, as it gets repeated over and over again. You might even screech when you hear what I have to say… Ready? Certificates of insurance! There. I told you it was scary. I know, I’ve talked about this issue before, but
PIA has been working on this issue on a national and state level. On the national front, the association has supported model legislation proposed by the National Conference of Insurance Legislators to clarify what certificates of insurance are and to make it illegal to issue or request a certificate that indicates terms are in place that do not actually exist in a policy. PIA of New York also took a legislative
Some of the insureds actually come to their agents after they’ve signed contracts agreeing to supply certificates, adding additional insureds and assuming liabilities for which they can’t be insured.
N. Stephen Ruchman
spring is coming and the nightmare of certificates of insurance is going to continue to dog agents as the construction industry ramps up, while policymakers and regulators in Albany seem to have their feet stuck in cement on the issue. I have no doubt that member agents will again tell their association personal horror stories during the Professional Insurance Agents of New York Advisory Council meetings this spring: Insureds who come to them asking for mutated certificates that include inappropriate and often illegal changes so they can work for municipalities and other third parties that require them to produce such documents. Some of the insureds actually come to their agents after they’ve signed contracts agreeing to supply certificates, adding additional insureds and assuming liabilities for which they can’t be insured. These problems have festered for decades. I’ve read that one in 25 E&O claims involves certificates and 36 percent of these claims involve additional insured status (or lack thereof). These statistics should send shivers up any agent’s spine. 26 February 20, 2012 / INSURANCE ADVOCATE
approach and worked with Assemblyman Joseph Morelle and Sen. James Seward, who jointly introduced a bill establishing standards and penalties on the issuance of certificates of insurance last spring. The association worked with the lawmakers to craft language that defines certificates of insurance; prohibits certain practices, establishes certificate standards; and gave teeth to the New York State Department of Finance so it could enforce the new provisions. PIANY also met with the Department of Financial Services this January on the issue. They shared their members’ horror stories and urged regulators to take a stronger approach to restrict the improper and illegal use of certificates that third parties often demand. I don’t care who addresses this problem—it it’s the Department, lets do it through a regulation with some biting fines or through the legislature, but something has to be done to address these improper activities that are occurring. Somebody, please make a decision to take care of this! Beyond its legislative and regulatory approach, PIANY meanwhile has devel-
oped Webinars and multiple QuickSource documents to provide guidance for agents while seeking legislative relief. PIA is also working with ACORD to persuade carriers to improve their underwriting decisions and responses to third-party interests by updating and standardizing forms specifically developed to address additional insureds, additional interests, notice of termination and standard operating procedures for issuing certificates. But, these tools don’t fix the problem; they just help agents address the symptoms. Recently, an agent friend of mine told me one of his CSRs had to issue 56 certificates on one account. Really, why are we issuing certificates in such an inefficient manner anyway? The amount of work we do to maintain the level of customer service we need and want, while educating third parties, including municipalities and corporate risk managers who should know better is mind boggling. I’ve been giving this some thought and there’s a potential solution that might address the hours and hours of time agencies currently spend dealing with client requests for certificates, educating their clients and dealing with carriers and third parties on requested changes: Digital certificates. Think of it like this—Why would you write an old-fashioned paper check when you could save time, money and effort with simple electronic transfer of funds that protects your personal information and prevents any third party from even having access to it? Even Steve Ruchman recently got into the digital age—I bought the iPad2 (if you haven’t bought one, you are missing out on a lot!) and now, I do my banking through the Internet without writing those clumsy checks—I can transfer money or do other banking functions with ease. While it sounds simple, this would take some time and investment by the industry, and it would require a combination of the solutions I’ve mentioned already, including standardization among carriers and state policies. There are examples where electronic verification of documents has been suc-
[ ON T H E LEVEL ] Neither lawmakers nor regulators in New York have gone far enough to address this problem and we aren’t nearly close enough to achieving a simple process that bridges states and information with regard to certificates.
cessful already—states could, perhaps, even use technology and procedures that are currently in place. Consider the Department of Motor Vehicle procedure for issuing auto ID to simplifying recordkeeping, verifications and standardization. I can’t think of an organization that is as practiced at restricting access to information as the DMV—I’m sure restricting information to third parties so they can access only that to which they are entitled would be something that could be done. Of course, this is just a dream right now. Neither lawmakers nor regulators in New York have gone far enough to address this problem and we aren’t nearly close enough to achieving a simple process that bridges states and information with regard to certificates. Until one of these things happens, we are stuck in a certificate nightmare. [IA]
N. Stephen Ruchman, CPIA, is a retired partner of B&B Coverage LLC. A past president of the Professional Insurance Agents of New York State Inc., he is an active supporter of PIANY, and has sat on, or chaired, nearly every committee including the Executive Committee and the Long Island Advisory Council and PIANY’s Political Action Committee. A graduate of Michigan State University, with a major in insurance, Ruch-
man is past president of the Peninsula Counseling Center and a member and past president of the Rockville Centre Chamber of Commerce board of directors. He is division chair for the Insurance Division of the United Jewish Appeal and has served on the business advisory of The First National Bank of Long Island. He can be reached via email at SRuchman@aol.com.
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[ LICONY ]
LICONY Legislative Issues The Life Insurance Council’s 44th Anniversary Celebration in New York featured presentation of its legislative concerns, entitled “2012 LICONY Affirmative Legislative Program.” Here are the measures they have focused upon a Albany.
A. Legislation to Enact Interstate Insurance Product Regulation Compact (Article 88) A.4432A (Titus)/S.3057 (Seward) This bill would provide for a new Article 88 of the insurance law to establish that New York would be eligible to become a member of the Interstate Insurance Product Regulation Compact, which was created by the National Association of Insurance Commissioners (NAIC). To date, 40 jurisdictions have joined the compact and the Compact Commission is now operational and available to be utilized by life insurers in states that have joined. B. Proposal to Amend §3234 Re: Group Disability Pre-Existing Condition Provisions A.4098 (Morelle)/S.2557 (Seward) This bill would add a new subsection §3234(b) of the insurance law to require that insurers must offer to employers a pre-existing condition provision on group disability income policies that would exclude coverage for employees who manifest a pre-existing condition during the first twelve months after the coverage is issued. This new provision is an alternative to the current pre-existing condition provision in §3234(a)(2) that, pursuant to a Court of Appeals decision, requires that an employee who manifests a pre-existing condition within the first twelve months after issuance may only have the coverage for such condition excluded during those first twelve months. C. Increase the Aggregate Cap for Liabilities of Life Insurers under the Life Insurance Company Guaranty Corporation Act This proposal would amend §7709 of the insurance law to increase the aggregate cap for life insurer obligations under the Life Insurance Company Guaranty Corporation from the current $500 million to $1 billion, with an annual cost of living adjustment fea28 February 20, 2012 / INSURANCE ADVOCATE
ture commencing on February 1, 2013. D. Removal of Impediments to Promulgation of NAIC Life Insurance & Annuities Replacements Regulation S.5024 (Seward) This bill amends §§2123 and 4226 of the insurance law to remove the requirement for a cost comparison of a replacing policy or contract to the policy or contract proposed for replacement and provides that New York’s replacement regulation should be consistent with the NAIC Life Insurance & Annuities Replacements Model Regulation. E. Amendment to NYIL §3203 to Permit Equity Indexed Life Insurance Policies to Credit Additional Amounts No Less Frequently Than Every Five Years A.7708 (Morelle)/S.4039 (Seward) This proposal seeks to amend §3203(a)(14) of the insurance law to permit equity indexed life insurance policies to credit additional amounts no less frequently than every five years. Current law requires that all policies crediting additional amounts must credit such additional amounts not less frequently than annually. This annual crediting requirement places severe limitations on product design for indexed universal life insurance and limits the products available to New York consumers. F. Clarification for Authority to Issue Contingent Annuity Contracts S.3365 (Seward)/A.6748 (Morelle) This legislation would amend §§4223 and 4240 to clarify that the issuance of contingent annuity contracts is authorized in New York. The bill would also amend §6901 of the insurance law to provide that such contracts are not considered to be a type of financial guaranty insurance. These types of contracts, which act as a wrapper to a mutual fund, are permissible in most other states but the New York Insurance Department has interpreted the current law to
[ LICONY ] not permit the issuance of this type of product in New York. This bill would clarify the law to permit the product’s issuance. G. Adjustments to Foreign Investment Limitations for Domestic Life Insurers This proposal would amend Article 14 of the insurance law to increase the aggregate investment limit in investment-grade jurisdictions by domestic life insurers, as well as increase the investment-grade jurisdiction sub-limit which ensures proper diversification. This proposal would also establish a new, separate sublimit for unhedged foreign currency denominated assets and increase the limits (aggregate and per jurisdiction) on below investment grade jurisdictions. Current law combines the foreign currency category under the limit applied to below-investment grade jurisdictions. The proposal will also add several new definitions to the Article, to reflect changes in the derivative marketplace relating to certain provisions of the federal Dodd/Frank Act.
H. Exception to Life Insurer Anti-Rebating Provisions for Items of Minimal Value This proposal would amend §4224 of the insurance law to create an exception to the antirebating section applied to life insurers for items, including but not limited to merchandise or periodical subscriptions, with a value not exceeding $25. This proposal also includes an annual cost of living inflation adjustment provision, applied to the exception provision, which will commence on November 1, 2013. I. Authorization for Funeral Directors Who Are Insurance Producers to Sell Pre-Need Life Insurance A.8025 (Morelle)/S.5543 (Flanagan) This legislation amends §3208 of the insurance law and §3450 of the public health law to authorize funeral directors to be paid commissions to sell pre-need life insurance, so long as they are licensed insurance producers under Article 21 of the insurance law. continued on page 34
GROUP PHOTO: L TO R: MARK PEARSON, CHAIRMAN & CEO, AXA EQUITABLE LIFE INSURANCE COMPANY; ASSEMBLYMAN JOSEPH D. MORELLE; SENATOR JAMES L. SEWARD; NYS DEPARTMENT OF FINANCIAL SERVICES SUPERINTENDENT, BENJAMIN M. LAWSKY; LICONY PRESIDENT & CEO, THOMAS E. WORKMAN; LICONY BOARD CHAIRMAN, RICHARD S. DZIADZIO. INSURANCE ADVOCATE / February 20, 2012 29
[ COURTSI DE ]
By Lawrence N. Rogak
So Long as Petition to Stay ARB is Brought Timely, It Can Be Amended Later Matter of Government Employees Ins. Co. V Albino
I
n a proceeding pursuant to CPLR article 75 to permanently stay arbitration of an uninsured motorist claim, Juan R. Albino appeals from a judgment of the Supreme Court, Queens County (Rios, J.), dated May 12, 2011, which, after a framedissue hearing, granted the amended petition. ORDERED that the judgment is affirmed, with costs. The appellant sought uninsured motorist benefits under a policy of insurance issued by the petitioner for physical injuries he alleged were sustained in a hitand-run accident. The petitioner commenced this proceeding to permanently stay the arbitration. Contrary to the appellant's contention, the Supreme Court providently exercised its discretion in, in effect, granting the peti-
30 February 20, 2012 / INSURANCE ADVOCATE
tioner leave to amend the petition to include, inter alia, a claim that no hit-andrun accident had occurred. While CPLR 7503(c) provides that a party served with a demand for arbitration must seek a stay within 20 days thereafter or be precluded from doing so, it does not prohibit amendment of a timely petition (see Matter of Allcity Ins. Co. [Russo], 199 AD2d 88). Here, the petitioner sought a stay of arbitration within 20 days of being served with a demand for arbitration, and the proposed amendment did not result in any prejudice or surprise to the appellant (see CPLR 3025[b]; Matter of Allcity Ins. Co. [Russo], 199 AD2d at 88). Where, as here, a case is determined after a hearing held before a justice, this Court's power to review the evidence is as broad as that of the hearing court, taking
into account in a close case the fact that the hearing judge had the advantage of seeing the witnesses (see Northern Westchester Professional Park Assoc. v Town of Bedford, 60 NY2d 492, 499; Matter of Allstate Ins. Co. v Tae Hong Ji, 81 AD3d 940). We decline to disturb the Supreme Court's determination, made after a framed-issue hearing, that there was no physical contact between the appellant's vehicle and an alleged hit-andrun vehicle (see Matter of Allstate Ins. Co. v Tae Hong Ji, 81 AD3d at 940; Matter of Government Employees Ins. Co. v Steinmetz, 51 AD3d 1022). The petitioner's remaining contention is without merit. [IA] 2012 NY Slip Op 00517 Decided on January 24, 2012 Appellate Division, Second Department
[ COURTS I D E ]
Jury is Entitled to Believe One Expert Over Another Liounis V New York City Tr. Auth.
I
n an action to recover damages for personal injuries, the defendant Moussa Zlita appeals from a judgment of the Supreme Court, Kings County (Schneier, J.), dated August 2, 2010, which, upon the denial of his motion pursuant to CPLR 4401, in effect, made at the close of the plaintiff 's case, for judgment as a matter of law on the ground that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d), upon the denial of his renewed motion pursuant to CPLR 4401, made at the close of all the evidence, for judgment as a matter of law on the same ground, upon a jury verdict finding him 100% at fault in the happening of the accident, upon a jury verdict on the issue of damages awarding the plaintiff the principal sum of $175,000, and upon the denial of his motion pursuant to CPLR 4404(a) to set aside the jury verdict and for judgment as a matter of law or to set aside the jury verdict as contrary to the weight of the evidence, is in favor of the plaintiff and against him in the total sum of $187,288.75. ORDERED that the judgment is affirmed, with costs. "To be entitled to judgment as a matter of law pursuant to CPLR 4401, a defendant has the burden of showing that there is no rational process by which the jury could find in favor of the plaintiff and against the moving defendant'" (Delaney v Delaney, 83 AD3d 647, 648, quoting Velez v Goldenberg, 29 AD3d 780, 781). " In considering the motion for judgment as a matter of law, the trial court must afford the party opposing the motion every inference which may properly be drawn from the facts presented, and the facts must be considered in a light most favorable to the nonmovant'" (Delaney v Delaney, 83 AD3d at 648, quoting Szczerbiak v Pilat, 90 NY2d 553, 556). Contrary to the defendant Moussa Zlita's contention, viewing the facts in the light most favorable to the plaintiff, there was a rational process by which the jury could find that the plaintiff sustained a serious injury within the meaning of Insurance Law § 5102(d).
"A jury verdict should not be set aside as against the weight of the evidence unless the verdict could not have been reached on any fair interpretation of the evidence" Zlita's challenge to the Supreme Court's denial of that branch of his motion pursuant to CPLR 4404(a) which was to set aside the jury verdict and for judgment as a matter of law is also without merit, as there was a valid line of reasoning and permissible inferences which could lead rational people to the conclusion reached by the jury on the basis of the evidence presented at trial (see Cohen v Hallmark Cards, 45 NY2d 493, 499). "A jury verdict should not be set aside as against the weight of the evidence unless the verdict could not have been reached on any fair interpretation of the evidence" (Rosenfeld v Baker, 78 AD3d 810, 811; see Lolik v Big V Supermarkets, 86 NY2d 744). "Where, as here, conflicting expert testimony is presented, the jury is entitled to accept one expert's opinion, and reject that of another expert'" (Morales v Interfaith Med. Ctr., 71 AD3d 648, 650, quoting Ross v Mandeville, 45 AD3d 755, 757). "When a verdict can be reconciled with a reasonable view of the evidence, the successful party is entitled to the presumption that the jury adopted that view" (Handwerker v Dominick L. Cervi, Inc., 57 AD3d 615, 616; see Tapia v Dattco, Inc., 32 AD3d 842, 842). Here, a fair interpretation of the evidence supports the jury's conclusion that, based on the evidence before it, the plaintiff sustained a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject motor vehicle accident.[IA]
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2012 NY Slip Op 00934 Decided on February 7, 2012 Appellate Division, Second Department INSURANCE ADVOCATE / February 20, 2012 31
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FOR ADVERTISING OR SUBSCRIPTION INFORMATION Call 914-966-3180 • insurance-advocate@cinn.com New York and New Jersey’s Leading Insurance Magazine Since 1889. www.insurance-advocate.com 32 February 20, 2012 / INSURANCE ADVOCATE
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[ LICONY ] continued from page 29
J. Increase and Phase-out of NYS Long Term Care Insurance Tax Credit A.3789 (Morelle)/S.2559 (Seward) This bill would “front-load” the long term care insurance tax credit in New York so that it is 75% of premiums for year one, 50% in year two and 25% in year three. The credit would be eliminated in year four. K. Legislation to Enact the NAIC Redomestication Model Law A.8899 (Quart)/S.3366 (Seward) This proposal would amend section 7120 of the insurance law to authorize the transfer from this state of the corporate domicile of a
domestic insurance company. This proposal is patterned after the NAIC Redomestication Model Law and the conditions under which such transfer may occur are consistent with that Model. L. Refinements to Life Policy War/Travel Exclusion Disclosure Requirements This proposal would amend §3201(c)(4) of the insurance law to provide that the requisite disclosure of information related to war or travel exclusions in a life insurance contract may be put forth in an equally prominent manner to the red ink and twelve point type that is required in the statute.
L TO R: 2012 LICONY BOARD OF DIRECTORS CHAIRMAN, RICHARD S. DZIADZIO PRESENTING A SELF-PORTRAIT TO IMMEDIATE PAST CHAIRMAN, THOMAS E. RATTMANN
34 February 20, 2012 / INSURANCE ADVOCATE
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