Insurance Advocate February 27, 2017 by C Acunto

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Serving: New York, New Jersey, Connecticut, Eastern Pennsylvania and Washington D.C.

Use of Predic ve Analy cs on the Rise

Vol. 128 No. 4 | February 27, 2017

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Stay in the know on Paid Family Leave! After Paid Family Leave (PFL) was announced in 2016, we made a commitment to you: to ensure a successful implementation of PFL for everyone involved — from brokers to policyholders and claimants. With that in mind, we are now launching your go-to-resource for all PFL related information. Check back often! You’ll ﬁnd updated information throughout the year as regulations are issued and more details unfold.

Visit www.newyorkpﬂ.com to keep yourself updated.

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Contents

February 27, 2017 | Volume 128 Number 4 19

In the Associations: IIABNY Denounces Proposal for Increased Fines Against Insurance Producers PIANY Praises Legislation to Protect Coastal Homeowners

16 Use of Predictive Analytics on the Rise

In the News: IVANS Enables Distribution, Automated Servicing via IAs, MGAs and Insurers

Agency Notebook: Impact of PFL on New York’s Small Businesses Richard A. White

Guest Article: HHS Secretary Tom Price and the AAPS Alieta Eck, M.D.

On My Radar: Clear & Unambiguous Language Not Enough Barry Zalma

Looking Back: August, 1991

Courtside: Auto Exclulsion Applies to Trucker Injured While Unloading Trailer Lawrence Rogak

Classiﬁeds

Guest Opinion: Travel Ban is Revealing— But Does Not Threaten American Medicine Jane M. Orient, M.D.

[FEATURES] 4

Foreword: Pretty Huge Steve Acunto, Publisher Exposures and Coverages: Murder, Examination Under Oath & the 5th Amendment; Lead Paint Claims and the Pollution Exclusion; Landlords’ Additional Insured Coverage Primary; Small Businesses Need Fiduciary Liability Insurance; Short Takes Jerome Trupin, CPCU

The Social Notebook: Give Your Agency Facebook a Boost Chris Paradiso

In Focus: Does Your Agency Have Employees or Brand Ambassadors? Chris Paradiso

Face to Face: Are You Awake? Michael Loguercio

[A D F E ATUR E S ] 13

NAIFA-NYS: The Critical Roles of Life Insurance Agents, Financial Advisors, and NAIFA-NYS

INSURANCE ADVOCATE / February 27, 2017 3

info ww

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[ FOREWORD ]

STEVE ACUNTO

Pretty Huge

VOLUME 128 NUMBER 4 FEBRUARY 27, 2017

uOne of the early actions taken by the Trump Administration calls for the Department of Labor (DOL) to halt implementation of the Obama Administration’s ridiculous fiduciary rule and to implement a complete re-review of the rule. Trade associations were quick to hail the halt and credit themselves—properly—for getting this in the crosshairs of the President. The rule tightens conflict of interest rules under the Employee Retirement Income Security Act (ERISA) and requires insurance agents and brokers who give guidance about certain retirement investments to adhere to a fiduciary standard of care. The DOL rule was finalized in April 2016, but operation of the rule was delayed until April 2017 in order to give the industry time to comply. Robert A. Rusbuldt, Big “I” president & CEO, stated “The DOL rule places overly burdensome requirements on Big ‘I’ members who offer retirement advice, leaving many insurance agents and brokers struggling to find a way to effectively serve their clients moving forward. President Trump’s order has come just in time, as implementation of the rule is already resulting in less consumer choice for the middle class.” Another Big “I” voice added: “While the association does not necessarily oppose a best interest standard for insurance agents and brokers, the Obama Administration’s fiduciary rule is simply unworkable for many Big ‘I’ members and harmful to many consumers,” said Charles Symington, Big “I” senior vice president of external and government affairs. “The Big ‘I’ looks forward to working with the Trump Administration and Congress as the DOL reviews the next steps pursuant to the President’s executive order.” In New York the NYSAIFA was fast to hail the executive action as a vital change affecting the livelihood of its members. Trump has been one to keep his promise of reducing regulations...Dodd Frank is next, we hope…. Governor Andrew M. Cuomo has announced that the Department of Financial Services is taking action to “remind life insurance companies of their legal obligations when settling beneficiary 4 February 27, 2017 / INSURANCE ADVOCATE

“The DOL rule places overly burdensome requirements on Big ‘I’ members who offer retirement advice, leaving many insurance agents and brokers struggling to find a way to effectively serve their clients moving forward. President Trump’s order has come just in time, as implementation of the rule is already resulting in less consumer choice for the middle class.”

claims.” The guidance issued by DFS today informs health insurers that they must make prompt payments to beneficiaries within the two-year period after a policyholder dies. Through examinations and targeted investigations, DFS has identified disturbing practices among some insurers, in connection with small face-value life insurance policies marketed to low- and middleincome consumers for funeral, burial and other final expenses. The guidance issued follows a recent DFS enforcement action taken against an insurance company that improperly denied coverage and unilaterally rescinded life insurance policies for hundreds of deceased insured policyholders, leaving beneficiaries without payments due them. Under New York Insurance Law, an insurance company may contest a life insurance claim made during the “two-year contestable period” only if the insurer establishes that there was a material misrepresentation on an application for life insurance to induce the insurer to issue the life insurance policy. Life insurers may not contest claims filed by beneficiaries within the two-year contestability period without actual evidence of misrepresentation, nor CONTINUED ON PAGE 11

EDITOR & PUBLISHER Steve Acunto 914-966-3180, x110 sa@cinn.com CONTRIBUTORS Peter H. Bickford Jamie Deapo Kelly Donahue-Piro Michael Loguercio Christopher Paradiso Lawrence N. Rogak N. Stephen Ruchman Jerome Trupin, CPCU Barry Zalma PRODUCTION & DESIGN ADVERTISING COORDINATOR Director of Operations and Creative Services Gina Marie Balog 914-966-3180, x113 g@cinn.com EDITORIAL ASSISTANT COPYEDITOR & PROOFREADER Maria Vano mariavano9@gmail.com SUBSCRIPTIONS P.O. Box 9001, Mt. Vernon, NY 10552 914-966-3180, x111 circulation@cinn.com PUBLISHED BY CINN Media, Inc. P.O. Box 9001, Mt. Vernon, NY 10552 (914) 966-3180 | Fax: (914) 613-1595 www.cinn.com | info@cinn.com President and CEO Steve Acunto

CINN MEDIA, INC.

INSURANCE ADVOCATE® (ISSN 0020-4587) is published bi-monthly, 20 times a year, and once a month in July, August, September and December by CINN ESR, Inc., 22 Bedford Road, Greenwich, CT 06831. Periodical postage paid at Greenwich, CT and additional mailing ofﬁces. POSTMASTER Send address changes to Insurance Advocate®, P.O. Box 9001, Mt. Vernon, NY 10552. Allow four weeks for completion of changes. SUBSCRIPTION RATES $59.00 US, Canada $65.00, International $135.00. TO ORDER Call 914-966-3180, fax 914-966-3264, write Insurance Advocate® PO Box 9001, Mt. Vernon, NY 10552 or visit www.Insurance-Advocate.com. INSURANCE ADVOCATE® is a registered trademark of CINN ESR, Inc. and is copyrighted 2017. All rights reserved. No part of this magazine may be reproduced in any form without consent. Trademark registered U.S. Patent and Trademark Ofﬁce.

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[ EXPOSURES & COVERAGES ]

JEROM E TRUPIN, CPCU

Murder, Examination Under Oath & the 5th Amendment; Lead Paint Claims and the Pollution Exclusion; Landlords’ Additional Insured Coverage Primary; Small Businesses Need Fiduciary Liability Insurance; Short Takes Murder, Examination Under Oath & the 5th Amendment The headline read “Ohio Homeowner Charged With Murder, Arson Declined EUO” (“EUO” is insurance shorthand for “examination under oath”). The story: Lester Parker, co-owner with his wife of a home in Hamilton Ohio, was accused of torching their house and causing the death of a firefighter who responded to the blaze. Because Parker wouldn’t appear for an EUO, Cincinnati Insurance Company filed a declarative judgment action asserting that it had no duty to provide coverage for his claim. Parker countered that he had constitutional protection against possible selfincrimination. “Taking the Fifth” has become a piece of American folklore. The constitution’s fifth amendment protection against self-incrimination is probably one of the few Bill of Rights amendments that 99 out of 100 people can identify. My guess is that the other two are the first and second amendments. The remaining seven

Don’t think that arguments over EUOs only occur in fly-over country—our courts can be just as tough when claimants don’t appear for an EUO. are in a class with the second stanza of the Star Spangled Banner. However, the constitution’s protection against self-incrimination is not unlimited. The amendment reads, in the pertinent part: “(No person) shall be compelled in any criminal case to be a witness against himself.” The key words are “in any criminal case.” An EUO is not part of the criminal case. It is part of a civil process—an insurance claim. Claimants do not have to participate in an EUO, but courts have regularly ruled that if they choose not to appear, they lose their insurance claims. The Ohio judge in this case agreed. The

i “Ohio Homeowner Charged With Murder, Arson Declined EUO” Claims Journal December 15, 2016 http://www.claimsjournal.com/news/midwest/2016/12/15/275636.htm

6 February 27, 2017 / INSURANCE ADVOCATE

Jerome “Jerry” Trupin, CPCU, is a partner in Trupin Insurance Services located in Sleepy Hollow, NY. He provides property/casualty insurance consulting advice to commercial, nonprofit and governmental entities. He is, in effect, an outsourced risk manager. Jerry has been an expert witness in numerous cases involving insurance policy coverage disputes and has taught many CPCU and IIA courses. Jerry has spoken across the country on insurance topics and is the co-author of over ten insurance texts used in CPCU and IIA programs including Commercial Property Risk Management and Insurance and Commercial Liability Management and Insurance. He regularly contributes articles to CPCU Society publication, the Insurance Advocate®, and others. He can be reached at jtrupin@aol.com. Thanks to Jerry Trupin for this article and to the CPCU Society for letting us reprint it.

insurance company did not have to cover the claim.i Don’t think that arguments over EUOs only occur in fly-over country—our courts can be just as tough when claimants don’t appear for an EUO. Here’s a recent one in our backyard: Integrative Pain Medicine in Brooklyn, NY, provided medical services to a no-fault client and took an assignment of benefits. Allstate disputed the claim and demanded an EUO. The injured party, Reginald Thawney, failed to appear for the EUO. Integrative sued in Civil Court, requesting a second opportunity for Thawney to appear. The Civil Court agreed. Allstate appealed and the appellate court ruled no second chance. Absent an

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[ EXPOSURES & COVERAGES ] acceptable excuse, you only get one chance to appear for an EUO.ii Practice Point: You’ve probably never had a client subjected to an EUO. I haven’t. But then my clients are perfect. I’ve never had one who was at fault in an auto accident—at least according to their versions. EUOs are becoming more common— the fact that claims people refer to them by an acronym is the tip-off. An EUO is a powerful weapon for an insurance company. It’s similar to a deposition before a civil trial, but its scope can be much broader and lying at an EUO is a total defense to the claim. In other civil claims, the party can have the opportunity on the witness stand to explain. If you do have a client who has been requested to appear for an EUO, tell him to run, not walk, to a competent and experienced claims attorney. Parker’s attorney appears to have not been up-to-speed on insurance law. He advised Parker not to appear.

Lead Paint Claims and the Pollution Exclusion The Georgia Supreme Court (that state’s highest court) has ruled that a standard pollution exclusion eliminates coverage for lead paint claims.iii All justices on the court concurred. The wording of the exclusion read: This insurance does not apply to: (f) Pollution (1) “Bodily injury” or “property damage” arising out of the actual, alleged or threatened discharge, dispersal, seepage, migration, release or escape of “pollutants”: (a) At or from any premises, site or location which is or was at any time owned or occupied by, or rented or loaned to, any insured. “Pollutant” is defined in the policy as “any solid, liquid, gaseous or thermal irritant or contaminant, including smoke, vapor, soot,

The NY Court of Appeals case on this issue involved both a primary policy, which specifically excluded lead claims and also contained the standard ISO pollution exclusion, and an umbrella policy, which just contained a standard pollution exclusion. fumes, acids, alkalis, chemicals and waste.” Both the exclusion and the definition follow current ISO wording that is used in most states, including New York. Commenting on this case in Coverage Pointers, a bi-weekly e-newsletter reporting on significant New York insurance cases, Earl Cantwell wrote: “Several parties filed amicus briefs since this was an issue of ‘first impression’ in Georgia. This decision was brief, clear, and unanimous so the issue is settled, at least in Georgia.iv However, the NY Court of Appeals, our highest court, has ruled that such exclusions do not exclude coverage for lead paint poisoning cases.v The NY Court of Appeals case on this issue involved both a primary policy, which specifically excluded lead claims and also contained the standard ISO pollution exclusion, and an umbrella policy, which just contained a standard pollution exclusion. The court decided that the primary policy excluded the lead paint claim, but that the umbrella policy did not. Does the Georgia decision portend a change in New York? I asked a leading insurance company defense attorney, Dan Kahane of Hurwitz and Fine, and his response is: “The short answer is ‘No.’ That’s the long answer as well!” Dan went

on to cite numerous cases. He pointed out that the Court of Appeals decision is based on older pollution exclusion wording, but that the one in Nassau County ruling for coverage was based on current wording. He wrote that the overwhelming trend in recent cases “has been to hold that such clauses do not exclude contaminants such as lead paint poisoning.”vi Nevertheless, I’m a “belt-and-suspenders” guy. When discussing pollution coverage with clients, I refer to the current version of the exclusion as being “silent on lead.”

Small Businesses Need Fiduciary Liability Insurance I’ll bet your clients have 401k or other retirement plans for their employees. And that they don’t realize they’re in plaintiff attorneys’ gun-sights over the administration of their plans. Often the operation of small business plans is outsourced to one of the huge and well-respected mutual fund or investment companies. Clients feel that the companies will handle all the details and that they have no worries. They’re wrong. ERISA (Employee Retirement Income Security Act) defines plan fiduciaries as: “Anyone who...exercises any authority or control over management or disposition of plan assets (emphasis added).”vii It doesn’t matter that they’re not named in the trust agreements as fiduciaries; if they have “authority or control,” they’re fiduciaries. As such, they have a heavy responsibility. A fiduciary must act first for the benefit of the beneficiary. With regard to employee benefit plans, fiduciaries are responsible for, among other things: • Selection and monitoring of the investment options made available to Plan participants; • Selection and monitoring of service CONTINUED ON PAGE 8

ii Integrative Pain Medicine, P.C. v. Allstate Ins. Co., 2016 N.Y. Slip Op. 51525(U) (App. Term, 2d Dep’t Oct. 13, 2016)] iii Georgia Farm Bureau Mutual Insurance Company v. Smith, et al. No. S15G1177 March 21, 2016 iv Earl Cantwell “Lead Paint Claims Not Covered Due To Pollution Exclusion” Coverage Pointers Volume XVIII, No. 16 (No. 472) Friday, January 27, 2017 http://www.hurwitzfine.com/news/coverage-pointers-volume-xviii-no-16 v Westview Associates v. Guaranty National Insurance Company, 95 N.Y.2d 334, 740 N.E.2d 220, 717 N.Y.S.2d 75 (New York Court of Appeals, 2000) vi See, e.g., Lefrak Organization, Inc. v. Chubb Custom Ins. Co., 942 F.Supp. 949 (S.D.N.Y.1996) (pollution exclusion clause does not preclude coverage for lead paint poisoning); Cepeda v. Varveris, 234 A.D.2d 497, 651 N.Y.S.2d 185 (1996) (same); G.A. Ins. Co. v. Naimberg Realty Assoc., 233 A.D.2d 363, 650 N.Y.S.2d 246 (1996) (same); General Accident Ins. Co. v. Idbar Realty Corp., 163 Misc.2d 809, 622 N.Y.S.2d 417 (1994) (same); Generali–U.S. Branch v. Caribe Realty Corp., 160 Misc.2d 1056, 612 N.Y.S.2d 296 (1994) (same); Atlantic Mut. Ins. Co. v. McFadden, 413 Mass. 90, 595 N.E.2d 762 (1992) (same). But see Oates by Oates v. State of New York, 157 Misc.2d 618, 597 N.Y.S.2d 550 (1993) vii IRS Retirement Plan Definitions https://www.irs.gov/retirement-plans/plan-participant-employee/definitions

INSURANCE ADVOCATE / February 27, 2017 7

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[ EXPOSURES & COVERAGES ] CONTINUED FROM PAGE 7

providers to the Plan; • Ensuring that fees charged are reasonable and not excessive; • Prudently determining the fees paid by the Plan. For more than 10 years, attorneys have been arguing on behalf of plan participants that the fees paid to investment firms were excessive. Until recently, the targets of this litigation were the largest firms with hundreds of millions or even billions of dollars in their retirement plans. That’s changing. Smaller firms are now on the radar. A Minnesota auto body firm with fewer than 100 employees and a plan that had less than $9 million dollars in assets is being sued for failing to meet its fiduciary duties.viii The owners and principals of small businesses are fiduciaries. They can be sued personally for failing to meet their duties. These lawsuits are expensive to defend and resolve. Fiduciaries can’t escape by blaming the service providers they hired. For fiduciary responsibility, the buck stops at their desks. It’s not expensive coverage. Your clients should carry it.

As always, loss prevention is the first step in protecting against claims— that’s the province of HR professionals. Insurance is the second step and that’s where we come in. ment discrimination is an exposure clients need to deal with. Point out to clients that employees do not have to file an EEOC complaint to institute an action against their employers, and even if the EEOC declines to take action on a claim, an employee can, and often does, pursue the matter on her or his own. As always, loss prevention is the first step in protecting against claims—that’s the province of HR professionals. Insurance is the second step and that’s where we come in.

Short Takes on Significant Topics

Proposed Designated Premises Endorsement and Hired/Non-Owned Auto Coverage

Top 10 Employment Discrimination Claims in 2016 The EEOC (U.S. Equal Employment Opportunity Commission) has published its list of the top-10 employment discrimination claims in 2016: • Retaliation: 42,018 (45.9% of all charges filed) • Race: 32,309 (35.3%) • Disability: 28,073 (30.7%) • Sex: 26,934 (29.4%) • Age: 20,857 (22.8%) • National Origin: 9,840 (10.8%) • Religion: 3,825 (4.2%) • Color: 3,102 (3.4%) • Equal Pay Act: 1,075 (1.2%) • Genetic Information NonDiscrimination Act: 238 (.3%) (The percentages add up to much more than 100% because most charges allege multiple violations.) This list demonstrates that employ-

Here’s another problem with the ISO revised designated premises: What if the policy includes hired/non-owned (H/NO) auto coverage? That’s a common way of arranging coverage, especially for smaller firms that don’t have any other auto exposure. It’s another reason to be wary of the proposed change. (ISO doesn’t have an H/NO endorsement for its CGL form, but many insurers use their own forms. ISO does have an H/NO endorsement for its BOP program.) I wrote about the proposed endorsement and why I don’t like it in the January 30, 2017 issue of the Insurance Advocate. I didn’t see the H/NO issue.ix In brief, the new designated premises endorsement does not contain the broadening wording “and operations necessary or incidental to those premises.” Coverage away from the premises is limited to activities related to the coverage description in the declara-

tions. Often, the coverage description is not an accurate description of the insured’s business, either due to mistakes when the policy was issued or changes in the nature of the business as time goes by. This doesn’t affect coverage—the insurer can correct classification mistakes on audit. However, when the new endorsement is part of the policy, an insurer can argue that coverage doesn’t apply to accidents away from the premises. For example, suppose a bookstore added a cafe to its operation. Is there coverage when the store caters a coffee hour at a customer’s office? (That’s the problem I originally saw.) The H/NO twist deals with coverage when an employee uses a car to pick up supplies for the cafe. Is there coverage? I don’t know for sure, but I don’t want a client to go to court to find out. My previous advice stands: avoid the new version of the designated premises endorsement.[IA]

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viii Debbie Damberg and Tony Severson, as representatives of a class of similarly situated persons, and on behalf of the LaMettry’s 401K Proﬁt Sharing Plan v LaMettry’s Collision, Inc., Steven P. Daniel, and Joanne M. LaMettry https://www.bloomberglaw.com/public/desktop/document/Damberg_et_al_v_LaMettrys_Collision_Inc_et_al_Docket_No_016cv0133?1485438374 ix Another insurance maven, Bill Wilson, pointed out this problem in his blog: Designated Premises, Operations and Projects Endorsements Feb. 14, 2017 https://insurancecommentary.com/designated-premises-operations-and-projects-endorsements/

8 February 27, 2017 / INSURANCE ADVOCATE

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[ T H E SO C I A L N OT E B O OK ]

C H R I S PA R A D I S O

Give Your Agency Facebook a Boost uWhen we discuss marketing in today’s world, the first thing that hits my mind is our agency’s efforts to successfully market our products and services in the digital world. Marketing has taken a shift, and a large one, because everyone now has access to the web, whether it’s on their desktop computers or their mobile devices. When you consider your customers’ overall journeys, first it starts with their problem. The next step is to look for word of mouth referrals from their family or friends if they are available. After that, they step online to discover solutions to their problems, whether that’s through search engines, social media, or any other digital avenues. We are fighting a constant battle with our competition to be discovered first in the digital world, and there are many factors that all play an individual role in that process. This can include your agency’s website, social media networks, email marketing sendouts, the strength of your website’s SEO (Search Engine Optimization), and more. With the right strategy and the right consistency, you will be able to dominate the online space, but today we wanted to supply you with some of our inhouse social media strategies at our agency, Paradiso Insurance. Yes, social media is a very powerful tool when it comes to being discovered online, nurturing client relationships, and retaining your customers. The key to social media is to be seen by your audience though, otherwise you’re just shouting to an empty room, metaphorically speaking. When we consider how our audience discovers our agencies via social media, there is first the metrics that we hit organically; this is how many people liked, commented, shared, or engaged on our posts without us having to pay for the engagement. But, as you might have assumed, we can also “pay-to-play” for our posts, or reach wider audiences by paying Facebook. There are multiple forms of paid-for content on Facebook, which we will discuss, but it’s critical to understand that you can reach quite the wide audience for a minimal budget. 10 February 27, 2017 / INSURANCE ADVOCATE

We are fighting a constant battle with our competition to be discovered first in the digital world, and there are many factors that all play an individual role in that process. Let’s Start with Boosting The first thing I’d like to discuss is sponsoring your content on Facebook to reach a wider audience, better known as the “boost” feature. There is a boost button at the corner of each post that you put out on Facebook, and when you click it, there are many options to choose from for sponsoring your content. First, you can select the age demographic you’d like to target, as well as the gender you’re targeting. From there, you can select interests, which narrow down who you’re targeting, and assure that your posts will be seen by those who can truly appreciate the nature of your content. Boosting is incredibly important to your online presence in the social world. When it comes to social media, one of our

Christopher Paradiso, CPIA , is President of Paradiso Financial & Insurance Service. He has been acknowledged by several insurance publications as a leader in the industry for his use of digital marketing and social media to help brand his agency and promote other small businesses within his community. Chris has also been recognized for his charity work with The Connecticut Children’s Medical Center. In 2011, Chris introduced “Paradiso Presents LLC,” a social media program aimed at teaching small agencies to not only survive, but compete in today’s complex online marketing world. Chris resides in Stafford Springs, CT with his wife and two children, Mia and Gianni.

ongoing objectives is to always increase our reach, or the overall size of our audience. Boosting allows you to do just that, because Facebook makes the rules, and they are after our money like any good salesperson would be. This isn’t a bad thing

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[ T H E S O C IA L NOTE B OOK ] though, because if you aren’t boosting already, you can assume your competition probably isn’t either. This is a chance for you to get ahead, and hit more numbers on social media than you could in the past. While extending your reach, boosting has a few other advantages as well. When it comes to marketing, everything branches out from your agency’s brand, and the more people that experience your brand (whether it’s through your branded messages, branded visuals, etc.), the stronger it will become. Boosting is a great way to strengthen your brand if you tailor your posts and content to be 100% “in-brand,” then reaching a wide number of people with that content through boosting. When selecting what to boost though, it’s important that you’re welcoming in your posts, or that you also include posts that are more personable. Consider this: if you boosted a bunch of posts on your agency’s Facebook page that are strictly about your products, services, or other insurance related topics, then who would want to follow you in the social world? Things can get pretty repetitive or dull if you aren’t also including personable posts, such as advice for families, inspirational/motivational quotes, or even pictures of your agency and staff that display what it’s like to be a customer at your agency. Overall, boosting is a great way to increase your traction quickly in the social world, and you can experiment by starting off with a smaller budget. Once you have a chance to experience boosting, measure what works, and what doesn’t, and capitalize accordingly. Be sure to always tailor your content to meet your targeted audience, and the results you see will be astounding.

Facebook Ads Now let’s take a look at Facebook ads. There are many more options available beyond just sponsoring your content, better known as the boosts. Facebook gives you many options, including promoting your page to get more likes, reaching people near your business demographically, or increasing your brand awareness. To get started with Facebook Ads, simply log into your Facebook, then look for the arrow down options in the upper righthand corner of your screen (to the right of your notifications). In the drop down list, there will be an option that says “Create Ads,” which will bring you to the advertising

interface to start building your first ad. Facebook is designed to help you build the most optimal ad to accomplish specific tasks or goals. For instance, let’s say that your current objective is to get more of your customers to install your insurance agency’s mobile app to their smartphone. Well, first, you’d log in to the advertising dashboard like we explained above, then start taking a look around at the options you have available. After a quick glance, you’d most likely notice that one of your chances is “Get installs of your app.” Naturally, you’d select this option, and from there Facebook will guide you every step of the way. They’ll ask for a download URL for your app, who your targeted audience is based on demographics (such as gender, location, age, and more), and then guide you through the final steps of building the content of the ad. Most advertising mediums on Facebook work in a similar fashion, in that you simply define your objective, and then Facebook guides you through the majority of the process. There are many options to choose from in the advertising dashboard, so it’s important to explore them all with your marketing team to see what works the best for you and your agency. At the end of the day, the major difference between Boosting and Facebook Ads is that boosting is designed to get many more eyes on your posts and reach a wider audience, while Facebook Ads are designed for a specific purpose or objective. So the million-dollar question is this: should agencies be using Boosts, Facebook Ads, or both? The simple answer is that both hold their own strengths and capabilities, and your agency should find a healthy balance of using both. At our agency at Paradiso Insurance, we find that about 25% of our pay-to-play budget on Facebook goes to Facebook Ads, while the remaining 75% goes to Boosting. Be sure to explore all the possibilities with your marketing team to figure out what works best for you, and always measure how well you performed so you can hit it even harder the next time. I hope you take the time to explore Facebook’s pay-to-play system; that way your agency can build a stronger presence on social media, and develop a wider audience as a whole. At the end of the day, it can help strengthen your brand, ramp up your retention rates, and help your agency’s profits as a whole. [IA]

FOREWORD CONTINUED FROM PAGE 4

may they require beneficiaries to bear the burden of providing proof regarding an alleged misrepresentation simply because the covered policyholder dies within the two-year contestable period. If the insurer proves a material misrepresentation following an insured’s death, the insurer may obtain a rescission of the policy only in a court action or by agreement of all fully informed beneficiaries. The DFS investigation has found that some insurers have asserted a right to contest a life insurance claim based solely on the fact that a covered policyholder’s death occurred within two years of the policy’s date of issue. Some insurers also have asserted a unilateral right to rescind the life insurance policy after the covered policyholder’s death when the insurer is unable to obtain the deceased’s medical records. These insurers have improperly attempted to shift the burden of proof regarding misrepresentation to beneficiaries by requiring them to produce the medical records of the covered policyholder, and have unilaterally rescinded policies where beneficiaries have not provided requested medical documentation. DFS will continue to take action against insurers that are not in compliance with New York Insurance Law through regular examinations and targeted investigations. “A life insurance company cannot require a beneficiary to produce a deceased policyholder’s medical records to pursue an alleged misrepresentation investigation or use illegal and unfair tactics to withhold and deny claim payments when those payments are due and most needed upon the insured’s death,” said Superintendent Maria T. Vullo. “The unlawful practices identified in DFS’s examinations and investigations have deprived New Yorkers of their rights under their life insurance policies, drained the value of their policies, and unfairly denied insurance payments to their beneficiaries. DFS will hold all insurers accountable for making prompt, fair and equitable settlements as required by law.” [IA]

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[ IN FOCUS ]

K E L LY D O N A H U E - P I R O

Does Your Agency Have Employees or Brand Ambassadors? uInsurance is a fantastically fabulous industry. Agents sell a product that everyone must purchase, and there is a defined date to purchase by. For us in the insurance industry, we may feel that what we do is boring, we aren’t valued and all anyone cares about is price. In order to thrive we need to shake off that mindset and embrace a new way of thinking, one where a friendly and convenient relationship means more than saving a few bucks. Think about it—Whole Foods and Trader Joe’s have mass fan appeal; people spend more and drive farther to seek them out. Grapes may be more expensive there but if I am going to spend 45 minutes every week and $150 of my hard-earned money, then I want to enjoy the experience. All too often we find that agencies have employees, not brand ambassadors. Employees treat their position as a J-O-B. Check in, check out, handle transactions and become a victim to the price game. In many instances, the employee may not even have their insurance with the agency. Take a quick assessment. How many of your team members have insurance with you? Next, look at what limits they have. Do they invest in the protection of an umbrella? It’s very difficult to sell something you personally don’t believe in. Take another look; do they shop their insurance every year? Employees alone won’t assist your agency in the modern challenges facing us today. They often care more about the transaction than the experience. If you have employees, then you may have heard these phrases before: • I’m too busy • I don’t want to be included in agency marketing and social media • I’m not answering the phone saying "It’s a great day at…" • Customers only care about price • No one wants to be spammed by us If you have employees, you may be able to add a few more comments to that list. The problem is sometimes employees are a wealth of insurance knowledge. However, 12 February 27, 2017 / INSURANCE ADVOCATE

In order to thrive we need to shake off that mindset and embrace a new way of thinking, one where a friendly and convenient relationship means more than saving a few bucks. they may lack sales expertise or a team mentality. Let’s flip the coin and talk about brand ambassadors. Brand ambassadors are actively talking about your agency to everyone they know. Many times their family and friends are insured with your agency. They enjoy what they do and want to serve their network by being their agent. They know someone is best served by them so they actively seek people to come to your agency even if it’s only within their network. They enjoy participating in growth activities; they may have even asked to wear branded material. There is a sense of pride in what they do and in working for your agency. Everyone knows at least 50 people between friends, family and community. I would venture today with social media we can push that number to 100. All of those people have to purchase insurance. What stops employees from inviting their peers to join your agency? Well, then they have to quote it and what if there is a problem? Or they have a bad experience? It's almost like inviting friends and family to be a part of your agency is a huge hassle. As an agency owner, which do you think is more valuable to you over the long run? A brand ambassador or insurance encyclopedia? I can tell you but I'll let you make that assessment. So how do you attract and find these brand ambassadors? You have to look for people with a spark. The type of people who have passion for whatever they are doing, whether it's work-

Kelly Donahue-Piro, founder and president of Agency Performance Partners, is a no-nonsense effectiveness expert who has helped hundreds of insurance agencies identify and capitalize on sustainable improvement opportunities. Her specialties include agency culture assessment and change; management and supervisory coaching and benchmarking; customer retention strategy development; digital marketing strategy, planning and implementation; and sales planning, management and skillbuilding. In 2014, she created Agency Performance Partners with a mission to “partner with insurance entrepreneurs who dream to take their business to the next level and beyond, by relentlessly pursuing excellence in worldclass service and sales strategies.” The centerpiece of the organization’s transformational work is its Agency Performance AssessmentTM, a comprehensive survey tool Kelly created to zero in on organization-wide improvement opportunities and provide the foundation for a customized agency action plan. Mrs. Donahue-Piro is an engaging speaker who is available to conduct in-person and online agency success presentations that complement her firm’s one-on-one on-site and virtual consulting practice. Connect with her on social platforms, via email at kelly@agencyperformancepartners, or by phone at 401-415-6205.

ing at Starbucks or bagging groceries. Don’t be afraid to set the standard in your business. If there are people who don’t want to participate in marketing activities, make sure all new hires do and that’s a contingency to hire. Find your standards and stick with them. Remember, it’s your business and you get to pick who represents it.[IA]

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The Critical Roles of

By Lawrence Holzberg, LUTCF, President, NAIFA-NYS

Life Insurance Agents, Financial Advisors, and NAIFA-NYS

IMAGINE FOR A MOMENT that you’re 21. It’s your first state and federal rules, and a third of our members have had to day of work at a professional job, and you’re standing before a hire staff to do so. mirror in a new outfit—perhaps you scraped together the money to buy it—and are trying to envision what the next few hours What We Stand For will bring, maybe the next weeks and months. You have little NAIFA-NYS is no spectator to regulatory change. We’ve taken a awareness of retirement savings…you can barely see past your leading role in the last two years—since the start of the association’s student loans and Friday night’s get tore-awakening—to promote commonsense gether with friends. insurance oversight in the halls of the legFast forward, and you’re 15 years older islature and offices of insurance regulators. with a spouse, a family, and a home. NAIFA-NYS has helped to establish a What people of all ages more You’ve discovered that mortgages are sestreamlined disclosure process when rious long-term and expensive obligaa consumer wants to replace one life inand incomes deserve tions, and so are children. You try to set surance policy or annuity with another is better access aside money for college savings, with re(Regulation 60), and has fought for cybertirement nowhere in sight, but you don’t security rules that don’t overburden agents to the range of good have the time, or the confidence, to sort and advisors. through the financial options. We’re working to ensure that amendinsurance and financial A few more decades, and you’re nearly ments to Regulation 74 sales illustration products that ready to retire. The college and the kids’ requirements reflect how our members do weddings are paid off but the stock marbusiness—and exclude language that already exist. ket is down and the funds you thought could drive consumers away from annuity you’d have, you don’t. Social Security is products that might benefit them. too little, health insurance too expensive. We’ve brought forward our own legisAnd then your spouse gets sick. lation, including a rebating bill to return These people are why I’m in the life insurance business. They NYS law to its original intent, so agents and insurers could offer don’t wind up in newspapers or make the Fortune 500, but their consumers a service—like meeting with a wellness counselor— needs are just as important and they deserve the early interven- without regulatory okay. Another NAIFA-NYS bill would give tion and sustained long-term relationship that I—or a fellow life members of a professional association, such as NAIFA-NYS, six insurance agent or financial advisor—can provide. They need CE credits. their insurance and financial options to keep pace with all the And, we’ve responded to the troubling prospect of a governthings that will happen throughout their family’s life. ment-run retirement plan. These are also the people that National Association of InsurIt’s true that this country faces a retirement crisis—but the anance and Financial Advisors–NYS (NAIFA-NYS) fights for— swer is not a new and costly government program. What people of because the association’s advocacy, and it is successful advocacy, all ages and incomes deserve is better access to the range of good works to ensure that knowledgeable, ethical agents and financial insurance and financial products that already exist. So, before NYS advisors have the tools they need to promote economic and re- could move forward creating a government-run system, a NAIFAtirement security for all New York residents. In the nearly 100 NYS bill would require officials to evaluate other options. years that the association has existed, it has played an integral role in the life insurance marketplace. High Standards The members of NAIFA-NYS abide by tough state rules and Who We Are hold themselves to high ethical standards. No DOL fiduciary Our members guide their clients through the complexities of rule is needed to protect the middle-income Americans that asset management, growth of net worth, employee benefits, re- NAIFA-NYS members serve. So while we strongly support the tirement planning, college funding, business succession, and Administration’s move to delay the DOL rule—thanks in part legacy planning. Members serve mostly middle-class Americans, to the work of NAIFA-NYS, NAIFA, and others keeping the roughly half with yearly household incomes under $100,000. An issue alive in the media and among legislators—rescinding the overwhelming percentage of our members either own or work rule is what’s needed. in a small business. Agents and advisors like myself and other NAIFA-NYS memThey spend about 500 hours and nearly $10,000 per year on bers already feel a personal responsibility to the people we advise. compliance, continuing education (CE), and securities exami- Our suggestions can change the course of someone’s life and famnations. They spend about half a day per week just abiding by ily. That alone is powerful incentive to do the right thing. INSURANCE ADVOCATE / February 27, 2017 13

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[ FAC E TO FAC E ]

MICHAEL LO GUERCIO

Are You Awake? uSo many times, we hear about disasters on the road in the form of motor vehicle accidents. Now although they may truly be “an accident,” they may also have been avoided if someone was paying just a little more attention! Sleepy driving, or “Driving While Drowsy,” has become a tremendous problem in our society. Although everyone is extremely aware of this problem, people continue to run the risk and drive drowsy, which is a combination of driving and sleepiness or fatigue. While typically this occurs when a driver has not had enough sleep, there may be additional circumstances that may also cause this effect, such as: untreated sleep disorders, medications, drinking alcohol, or shift work. One of the problems in recognizing the symptoms in oneself before it becomes too late, is that no one knows precisely when tiredness will overcome their body. Think about it: do you ever really know the exact time that you fell asleep on any given night? Probably not. We all are very aware that falling asleep at the wheel is clearly dangerous, but not everyone is cognizant of the fact that just being sleepy greatly affects your ability to drive safely even if you don't fall asleep. Research has determined that more than 70 million Americans suffer from some sort of sleep disorder, and many are not even aware that they do. What they also don’t realize, is that Driving While Drowsy: • Will clearly cause a driver to be less able to pay attention to the road • Greatly reduces the reaction time if you suddenly have to brake or use corrective steering • Will affect one’s ability to make a clear decisive and immediate decision Furthermore: • Approximately 1-in-25 drivers 18 years or older have admitted to falling asleep while driving • The National Highway Traffic Safety Administration estimates that drowsy driving was responsible for: - 72,000 crashes; 44,000 injuries; and 800 deaths in 2013. 14 February 27, 2017 / INSURANCE ADVOCATE

Sleepy driving, or “Driving While Drowsy,” has become a tremendous problem in our society. Although everyone is extremely aware of this problem, people continue to run the risk and drive drowsy, which is a combination of driving and sleepiness or fatigue. However, these figures may be grossly underestimated, and it is believed that possibly up to 6,000 fatal crashes each year may be caused by drowsy drivers, as many times it is difficult to determine if the fatality was a drowsy driver. In addition, driving while drowsy has also been known to be the cause of: • 21% of all crashes • 6% of all crashes in which a vehicle was towed from the scene • 7% of crashes in which a person received treatment for injuries sustained in the crash • 13% of crashes in which a person was hospitalized • Drowsy driving plays a role in an average of 328,000 crashes annually. Who is more likely to drive drowsy: • Drivers who simply do not get enough sleep • Commercial drivers such as those operating tow trucks, tractor trailers, and buses • Shift workers (work the night shift or long shifts) • Drivers with untreated sleep disorders such as sleep apnea • Drivers who use certain medications that cause drowsiness • Drivers who snore • Drivers who slept less than six hours the previous night CONTINUED ON PAGE 18

Michael Loguercio has been active in the insurance industry since 1978 as a licensed property and casualty & life and health insurance broker, and an insurance technology professional. He is Director on the Professional Insurance Agents of New York State (PIA) Board of Directors; is an active Past President of the Young Insurance Professionals of New York State; and past ACT/AUGIE; Independent Insurance Agents and Brokers of New York State, and Council of Insurance Brokers of Greater New York committee member. NY-YIP/PIA has honored Michael with a “Distinguished Service” award in 2001; “Insurance Professional of The Year” award in 2009; “Lifetime Achievement” award in 2012; and “Special Service” awards in 2013, 2014, 2015 and 2016. In his community, Michael is currently an elected Councilman for Brookhaven Town; Past President of the Longwood Central School District Board of Education on Long Island; former Director on the board of REFIT NY (Reform Educational Financing Inequities) and is a member of the Ridge, NY, Volunteer Fire and EMS Department; The Central Brookhaven Lion’s Club; and Middle Island, NY, Rotary Club. He also served two terms on his Church’s vestry, and in 2013 he was awarded the SCOPE “Community Service” award for his dedication to the public. Michael is a regular Contributor to the Insurance Advocate since 2008, and may be contacted at MichaelL@at lanticagency.com

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INSURANCE INDUSTRY CHARITABLE FOUNDATION HELPING COMMUNITIES. ENRICHING LIVES. TOGETHER.

IICF combines the collective strengths of the insurance industry to help communities and enrich lives through grants, volunteer service, and leadership.

Join your industry colleagues and make an impact. Get involved today! Midwest Division 0DU\ &XPPLQV Phone: ( ) 99 - PFXPPLQV@iicf.com

Northeast Division Betsy Myatt Phone: 917-544-0895 emyatt@iicf.com

Texas-Southeast Division Sarah Conway Phone: 214-228-2910 sconway@iicf.com

Western Division Melissa-Anne Duncan Phone: (714) 870-1084 maduncan@iicf.com

Insurance Industry Charitable Foundation 1999 Avenue of the Stars, Ste. 1100 Los Angeles, CA 90067 P: (424) 253-1107 contact@iicf.com www.iicf.org FEIN: 20-1240972

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Use of Predictive Analytics on the Rise By Jessica Dolezal, Sr. Data Scientist, Prevedere

While insurance executives may have initially been turned off by the challenges presented by big data, it’s time to take another look at the opportunities available.

16 February 27, 2017 / INSURANCE ADVOCATE

uDespite the promise of big data to provide insurance companies with revolutionary insights that will drive business forward, the benefits of such data have proven elusive. In fact, less than 20% of insurers had leveraged or were planning to leverage big data as of 2015. But there is good news—new technologies that employ predictive analytics and cloud computing to make sense of big data are putting greater insights into the hands of insurers, allowing them to make smarter decisions and improve profits. Insurers now have the power to analyze the entire world’s economic data and discover hidden leading economic indicators that impact future performance of the industry—all within minutes. Doing so often yields surprises about the true driving factors of performance, most notably how predictions for the industry and individual product sales can be projected just as they are for consumer-packaged goods. In looking at the insurance industry specifically, the following three economic indicators play key roles in the performance of insurance companies: • Consumer sentiment: Released monthly, consumer sentiment measures how buyers view their current financial situation, the economy in the short- and long-term growth prospects. While this metric will affect different product lines differently, buyer views on their own economic health and that of the econo-

my can tell insurers a lot about future demand. For example, demand for annuities may spike when consumer sentiment is in decline as a measure of protection, while demand for auto insurance decreases as people wait to buy new cars and trim their policies to minimize costs. • Housing permits: Certainly a driver of future demand for homeowners’ insurance, economic data regarding housing permits are also a measurement indicating how people are feeling about the economy overall. As housing permits increase, insurers can expect improvements across multiple product lines, as homeowner’s insurance purchases are often

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linked with personal article policies, as well as life insurance. Housing permit data is available by geography, allowing insurers to anticipate demand on a granular, local level. • Population health: Understanding health trends in a population, segmented by age group or geography, can give signals to whether, when, and which products will be purchased. For example, if the aging p o p u l a t i o n’s health largely

varies between markets or certain regions, this affects the propensity to buy safeguard products like life insurance and risk assurance policies differently within each market. In addition to these three driving factors, other indicators are key to the performance of the insurance industry. Insurance products behave similarly to that of retail environments. While this correlation may be obvious with large purchases—when auto sales increase, so does the need for auto insurance—the relationship actually holds for retail sales at all levels. Income level is also a driving influence, with higher incomes equating to higher insurance sales.

What Can Insurance Companies Expect in 2017

≥…new technologies that employ predictive analytics and cloud computing to make sense of big data are putting greater insights into the hands of insurers, allowing them to make smarter decisions and improve profits.

Based on all of these factors, current indicators are pointing to a weak first quarter of 2017, with demand for insurance products accelerating beginning in the second quarter. However, the outlook and driving factors can be different for each business, product, and locale. Using predictive analytics and cloud computing technology, insurers can hone in on the micro-economic factors affecting their individual business, product lines and geographic locations. Armed with this information, they can more accurately forecast demand by product, leading to smarter decisions—particularly in the marketing department. For example, advertising dollars can be allocated by region, product and target audience, and leveraged at the time when consumers are most likely to buy—increasing effectiveness and improving return on investment. When Nationwide incorporated predictive analytics into its marketing planning, the company increased demand by 15% per year while reducing the budget and increasing the productivity of its marketing team. “Before we made the investment in marketing analytics, we were already spending hundreds of millions of dollars on promotional activities. We had to decide, how much goes to television? How much goes to digital? How much goes to sports marketing or sponsorships? We had to decide how many ad spots to run per year and whether to have a spokesperson or not,” former Nationwide CMO Matthew

“Before we made the investment in marketing analytics, we were already spending hundreds of millions of dollars on promotional activities. We had to decide, how much goes to television? How much goes to digital? How much goes to sports marketing or sponsorships? We had to decide how many ad spots to run per year and whether to have a spokesperson or not.” - Matthew Jauchius Former Nationwide CMO

Jauchius told McKinsey & Company. “Many times, these decisions were more art than science, based on instinct and experience. Marketing analytics allows us to make every single decision I just mentioned better with data.” While insurance executives may have initially been turned off by the challenges presented by big data, it’s time to take another look at the opportunities available. This information is now more easily accessible, more easily analyzed and more easily matched to business performance, helping insurers make smarter decisions and improve profits.[IA] INSURANCE ADVOCATE / February 27, 2017 17

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[ FAC E TO FAC E ] CONTINUED FROM PAGE 14

What are some warning signs of drowsy driving? • Someone who may yawn or blink frequently. • Lose track of the past few miles driven • Miss your exit • Drifting from your lane into another • Driving over a rumble strip on the side of the road • Having trouble keeping your eyes open and focused • Inability to keep your head up • Daydreaming • Rubbing your eyes • Feeling irritable or restless If you find yourself or another driver exhibiting this behavior while driving, the most important thing to do is to PULL OVER IMMEDIATELY. If possible, change drivers, or rest for an extended period of time. Other ways to help avoid Driving While Drowsy is to: • Have at least six hours of sleep the night before - Preferably seven hours - If a teenager, at least eight hours • Driving at times that you are normally awake - Try to maintain a regular sleep schedule and develop good sleeping habits • Frequent stops and breaks • Not planning to drive after you have worked all day • Drink beverages containing caffeine - Caffeine takes approximately 30 minutes to enter the bloodstream, so a half-hour nap while waiting for it to take effect works well

18 February 27, 2017 / INSURANCE ADVOCATE

Bottom line is, please do not drive unless you are totally awake, and not impaired by any outside force or substance. As they say in that old-time commercial: “The life you save may be your own.” • Travel with a passenger who is wide awake • Paying attention to your biological clock - That tells you when you are tired, most alert, and hungry • Avoid driving between midnight and 6:00 AM, and 1:00 and 5:00 PM • Avoid drinking any alcohol • Avoid taking medications that may make you drowsy - Always read the label on all medications before ingesting • If you find yourself sleepy during the day, or constantly snoring, consult a physician …and of course, please do not think you are fooling yourself if you hear yourself saying any of these FALSE statements: • As long as I have caffeine, I can drive drowsy • I know when I am about to fall asleep • I am always a safe driver even when I am tired • I am young so I need less sleep Bottom line is, please do not drive unless you are totally awake, and not impaired by any outside force or substance. As they say in that old-time commercial: “The life you save may be your own.”

Well, Spring is not too far off, and the insurance conventions are beginning to get into full swing! PIA of New York began the year with its annual Metro RAP Conference at The Roosevelt Hotel in Manhattan— hundreds of insurance professionals attended a day of networking, education, and visiting with the many vendors during the trade show. The morning education session was a panel discussion, where panelists presented their thoughts pertaining to social media, and its effect (both pro and con) on this thing of ours. In the afternoon, Cathy Trischan, a regular in the insurance education arena, offered ideas pertaining to communication and technology, and how it has created new challenges in errors and omissions. Thank you to Metro RAP Chair Renee McFadden and the entire Metro RAP committee for once again providing a wonderful program in New York! On April 26th, PIA of NY will once again host its annual Long Island RAP, at Crest Hollow Country Club, in Woodbury NY. I am again honored to be working with an amazing group of individuals as I chair the committee for this event. Our guest speaker will be NY Islander great Clark Gillies who, combined with some exciting education courses and a sold-out trade show, will surely help make this show another tremendous success…hope to see you there! Well until next time, be safe and “Ciao for Now!”[IA]

www.insurance-advocate.com

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[ IN TH E A S S OC IATI ONS ]

IIABNY Denounces Proposal for Increased Fines Against Insurance Producers 1000 percent increase is ‘substantial and unwarranted’ uDEWITT, N.Y.—A measure in Gov. Andrew Cuomo’s New York State budget proposal could put small insurance agencies out of business according to the Independent Insurance Agents & Brokers of New York (IIABNY) which criticized the proposal as “unwarranted.” The governor’s proposed 2017-2018 budget includes provisions that would dramatically hike penalties against insurance producers (agents and brokers) who violate the state’s insurance law. Current law enacted in 2011 permits the New York State Department of Financial Services (DFS) to fine violators up to $1,000 per offense. Prior to that, the maximum fine was $500. The governor’s budget would allow DFS to assess fines up to the greater of: • $10,000 per offense • Double the aggregate damages attributable to the violation • Double the aggregate economic gain

“Insurance agents and brokers spend every day helping households and businesses protect themselves against unexpected losses.…”

the individual made from the violation “This is a substantial and unwarranted increase in penalties,” said IIABNY Chair of the Board John H. (Jack) Smith, Jr., CPCU, ARM, CIC. “An agency that forgets to renew one of its four licenses may face a $10,000 fine for each policy it sells while the license is lapsed. A typical IIABNY member agency has seven employees and less than $1 million in annual revenues. Fines of this size could

PIANY Praises Legislation to Protect Coastal Homeowners Professional Insurance Agents applaud Sen. LaValle for introducing bill uGLENMONT, N.Y.—The Professional Insurance Agents of New York State commends Sen. Kenneth P. LaValle, R-1, for introducing a bill (S.2062) in the Senate last week to standardize the windstorm triggers for homeowners’ hurricane deductibles throughout the state. PIANY has long sought to address this concern, which would rightfully enrage the state’s coastal property owners, who would be blindsided should a severe weather event occur. “We applaud Senator LaValle for introducing this important legislation and we

“Many homeowners don’t know what out-of-pocket costs they would incur in the case of a storm, or how their policies compare to their neighbors.” urge the Senate to take quick action to ensure that New York’s homeowners understand and have fair and similar cov-

put a small agency out of business because of an oversight, negating the governor’s stated goal of making New York State pro-job creation. Acts like this tend to reduce jobs, not increase them, and that is not good for any New Yorker.” The governor’s proposal would also give DFS the ability to sue the violator directly to recover the amount of the penalty. Currently, only the New York State attorney general may take such action. “For many years,” Smith noted, “the DFS published advisory legal opinions from its Office of the General Counsel. These opinions, publicly available on the DFS website, provided valuable guidance for insurance producers trying to comply with New York insurance laws. However, the department no longer offers that guidance; it has not posted a single opinion on its public site since 2011. “Insurance agents and brokers spend every day helping households and businesses protect themselves against unexpected losses. Time they spend trying to parse the meanings of complex laws is time they cannot spend caring for their clients. If the department is unwilling to publish guidance for them, it is unfair and unreasonable for the governor and the legislature to hike penalties 1,000 percent. We urge the legislature to strip this proposal from the state budget.” [IA]

erages when it comes to hurricanes,” said PIANY President John C. Parsons II, CIC, CPIA, AAI. “The state’s insurance-buying public shouldn’t have to go through another hurricane season with uncertainty.” Hurricane season begins in June, but coverage needs to be in place 30 days prior to an incident. PIANY has long called for standardization of triggers for deductibles in homeowners insurance policies, as insureds often do not know what incidents or damage prompt coverage to take effect and such triggers differ from policy to policy. “Many homeowners don’t know what out-of-pocket costs they would incur in the case of a storm, or how their policies compare to their neighbors,” said Parsons. “Despite a requirement that policies include specific information about hurricane deductibles up-front on the declaration pages, for the most part insureds are unaware if windstorm deductibles apply to a loss until after it occurs.” [IA]

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[ IN THE NEWS ]

IVANS Enables Distribution, Automated Servicing via IAs, MGAs and Insurers uIVANS, a division of Applied Systems, has announced new, innovative capabilities to expand digital distribution and servicing of insurance products throughout the insurance lifecycle. Leveraging its network of more than 30,000 agencies and 380 MGAs and insurers, IVANS’s latest enhancements enable agencies, MGAs and insurers to identify new business opportunities and markets, as well as data-driven market insights, to drive profitable growth. IVANS provides insurers an industryfirst search engine to identify new business opportunities with agencies. Insurers can create a list of target agencies based on a broad search by industry code, line of business or location to drive more effective discussions with their agency partners and prospects. Additionally, IVANS allows insurers to directly communicate current appetite to agencies, expanding marketing capabilities to direct more in-appetite submissions. IVANS enables insurers to: • Expand agency distribution footprint: initiates the agency appointment process by providing a list of nonappointed agencies for insurers with whom to begin conducting business. • Build new business with current agencies: informs insurers searching for target segments where potential growth opportunities exist within their agency base to expand their current relationships. • Identify future agency risks and growth areas: initiates conversation between insurers and agencies interested in new lines of business to begin establishing future relationships. • Automate appetite communication: enables insurers to communicate appetite when agents and MGAs begin searching for a market to submit their new and renewal commercial insurance business. 20 February 27, 2017 / INSURANCE ADVOCATE

“IVANS is delivering first-to-market innovations that enable key stakeholders to leverage the largest digital distribution network of independent agencies.”

• Gain data-driven market insights: measures projected premium renewal rate change against industry averages, providing insurers insights into the most profitable lines of business and competitive rates. IVANS also increases agency visibility and access to markets for new and renewal business submission. Agents also gain data-driven market insights to review the latest premium renewal rate change trends across the most-placed main commercial lines of business. By providing a simple, automated solution to connect to markets and review industry insights, IVANS enables agencies to: • Gain access to new markets: enables agents to identify the right markets for each new and renewal business to ensure the insured has the best coverage for their risk while retaining that business. Agents gain visibility into market appetite for commercial risks across 1,000 markets, 2,000 classes, 15 lines of business, and all 50 states. • Leverage data-driven insights: gain access to data-driven market insights to review the latest premium renewal rate change trends, enabling agents to advise clients on expected renewal rates, while ensuring insurers are pro-

viding the best coverage for the premium rate. • Search for markets within existing workﬂows: reduces time consuming, imprecise steps to find markets by providing streamlined search capabilities integrated into existing daily workflows. “IVANS is delivering first-to-market innovations that enable key stakeholders to leverage the largest digital distribution network of independent agencies,” said Thad Bauer, vice president and general manager, IVANS Insurance Solutions. “For more than thirty years, IVANS has been the industry standard for connectivity, enabling agency-MGA-insurer interactions and automated information exchange. IVANS is transforming the insurance industry by leveraging this established network of more than 30,000 insurance agencies and 380 MGAs and insurers to market, distribute, and service insurance products through a single exchange in more innovative ways than ever experienced before in the industry.”[IA]

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RICHARD A. WHITE

Impact of PFL on New York’s Small Businesses uNew regulations often inspire focus on the small business community—and for good reason. It’s estimated that as much as one-half of the nation’s private sector labor force is employed by small businesses— those that employ less than 500 people and earn less than $7.5 million in annual revenue.1 As the backbone of many of New York’s communities, small business employers may be most impacted by new legislation like Paid Family Leave (PFL). In general, they also stand to be affected more than their larger counterparts, especially when it comes to interpreting and complying with new laws and regulations. We’ve already heard some common questions and concerns specific to the potential impact PFL may have on small businesses: Will Day-to-Day Operations Change for Small Businesses? The short answer to this question is that they shouldn’t—at least not dramatically. PFL benefit amounts have been planned with a gradual rollout and yearplus lead time. This means there should be enough time to prepare, but it also means businesses will have to plan for changes to rates and benefits every year during the four-year rollout plan. Here are some things you should expect: • No direct PFL expense for businesses, as employee contributions will cover the premium cost. • Time to make adjustments with the extended rollout timeframe. • Employers will need to plan for replacement help in anticipation of an employee’s leave, or potentially take on that workload themselves. Are There Any Benefits Small Employers Can Expect? According to “A Better Balance,” a legal team advocating for paid time off and flexibility for American workers, PFL may stand to make small businesses more competitive with larger entities by leveling the benefits playing field.2 It’s anticipated that with PFL, small businesses may be as (or

more) attractive to prospective employees, making competing for and recruiting talent much easier. In addition, small businesses may begin to see: • Reduced employee turnover, • Improved employee morale and loyalty, • Increased productivity. A study recently conducted in California regarding its Paid Family Leave policy, which has been in effect for more than 10 years, showed that nearly 90 percent of employers reported that the PFL program has a positive effect or no noticeable effect on productivity.3 Ninety-nine percent of California businesses reported the same for employee morale. What Additional Costs Could Small Employers Shoulder? We know that smaller businesses with fewer employees are especially wary about PFL requirements, and with good reason. It’s a big concern to think about shouldering the workload of an employee for eight or 12 weeks, so we’ll do our best to make sure we’re available as a resource to help business owners navigate the new benefits landscape. As we wait to hear more about how PFL will be administered, it’s hard to say exactly what added costs small businesses may incur. However, we do know that it could: • Increase the amount employers pay overall for disability insurance. As

[ AGENCY NOTEBOOK ] more details are provided, we’ll update our site with the latest information, and have representatives standing by to answer questions and provide guidance. • Lead to misalignment with, or confusion around, how PFL will interact with the Family Medical Leave Act (FMLA). In effect, businesses will have

two sets of guidelines to deal with: one on the state level and one on the federal level, and they’re not always in perfect alignment. Especially in the beginning, everyone will be figuring out these changes together, so we’ll provide all the resources we can to support small businesses as changes are implemented. • Impact how employers deal with employee replacement costs when employees are away on leave. Losing even one pivotal employee for a prolonged period of time can present a tremendous burden for small business owners. Since part of the idea behind PFL is to help small businesses, we’ll be on the lookout for additional offerings and resources to help manage the significant staffing issues this could pose for small business owners. For more information and to stay in touch as details with the law are finalized, please go to www.newyorkpfl.com.[IA] 1 https://www.dol.gov/wb/resources/ workplace_flex_issue_brief.pdf 2 http://www.abetterbalance.org/ourcampaigns/paid-sick-time/ 3 http://www.abetterbalance.org/resources/paidfamily-leave-in-other-states/ Richard A. White is the CEO of ShelterPoint Life Insurance Company. The opinions expressed in this article are his own.

INSURANCE ADVOCATE / February 27, 2017 21

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[ G UEST A R T I C L E ]

A L I E TA E C K , M . D .

HHS Secretary Tom Price and the AAPS uDr. Tom Price, our new Secretary of Health and Human Services, has been accused of belonging to a “conservative, fringe medical group” that “holds positions that are at wide variance with the basics of federal health policy.” Thus says Amy Goldstein of the Washington Post. For example, Dr. Price was heard to say that “anything that gets in the way of the patient…their families and physicians making decisions about what kind of health care they desire—we ought not go down that road.” But wait—if federal policy keeps patients from making free choices about their medical care, should we not change that policy? The Association of American Physicians and Surgeons was founded in 1943 to champion and preserve the private patient-physician relationship. Is it now “unorthodox” to believe that the interests and well-being of the patient ought to be paramount? AAPS successfully sued Hillary Clinton for having illegal closed-door meetings in her attempt to develop the precursor of what became the Affordable Care Act. If it is “right-wing,” “fringe,” and “less than mainstream” to believe that government officials should tell the truth and obey open-meetings laws, AAPS members will say, “guilty as charged.” AAPS doctors want patients to be able to get the care they need. It is the government that coerces, restricts, requires more and more documentation, insists on cumbersome coding systems, and erects a maddening bureaucracy that gets in the way of good care. How many times have patients quipped that the doctors pay more attention to their computers than to the patient? This is only to meet government demands. Dr. Tom Price opposes the Affordable Care Act (ACA or “ObamaCare”), not because he wants to see patients shut out of the very best medical care possible, but because this law is actually a very expensive impediment to care. An insurance card does not guarantee access to medical care, as many are learning. The majority 22 February 27, 2017 / INSURANCE ADVOCATE

Defenders of ObamaCare apparently believe in a benevolent higher level of government that is concerned about every patient getting needed medical treatment. In fact, government simply cannot “care.” of the “newly insured” got Medicaid, a program that is rife with fraud and full of frustrated patients who are unable to get the psychiatric care, pain control, and elective surgery that the plans promise. Defenders of ObamaCare apparently believe in a benevolent higher level of government that is concerned about every patient getting needed medical treatment. In fact, government simply cannot “care.” It is individual Americans who care. Americans are a kind and compassionate people. But our nation was founded by patriots who valued freedom. And that freedom brought us the prosperity and innovation that allows us to offer the best care in the history of the world. Repealing ObamaCare will permit the development of voluntary (“free-market”) approaches that work. For example, Health Savings Accounts will eliminate the middleman for routine medical care. Direct payment for routine medical care by check, cash, or credit card—the way we pay for everything else—is far more economical and efficient. Insurance should only be for unforeseen catastrophic medical events. The role of government should be to monitor that insurance companies represent products honestly, are financially solvent, and abide by their contracts. No one would voluntarily buy a policy that could be cancelled when a subscriber became ill. Dr. Price recognizes that the federalstate Medicaid system, which consumes

Dr. Alieta Eck graduated from the Rutgers College of Pharmacy and the St. Louis University School of Medicine in St. Louis, MO. She studied Internal Medicine at Robert Wood Johnson University Hospital in New Brunswick, NJ and has been in private practice with her husband, Dr. John Eck, MD in Piscataway, NJ since 1988, affordablehealthinc.org. She has been involved in health care reform since residency and is convinced that the government is a poor provider of medical care.

one-third of the average state budget, is top heavy in bureaucracy and skimpy in care. His solution would be to block-grant the federal dollars back to the states. Free of federal strings, states could develop better ways to provide care, and could not profit from “gaming the system” to draw down more federal dollars. The replacement of ObamaCare needs to be freedom—not a one-size-fits-all set of rules, mandates, and penalties. Patients must be free to choose, rather than being locked into a restrictive network. Most care should be paid for without an “insurance” (third-party) middleman—with dollars controlled by the patient instead of being sucked into the coffers of third parties in the form of outrageous premiums for mandated “comprehensive coverage.” Insurance should be reserved for the eight percent of medical events that exceed an affordable threshold. Care for the poor is constitutionally a state and local, not federal responsibility. The federal government needs to get out of the way if we are to have personal, affordable, compassionate care. Who could possibly be opposed to that?[IA]

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[ O N M Y R A DA R ]

BA R RY Z A L M A

Clear & Unambiguous Language Not Enough Latent Ambiguity Trumps Policy Wording uAlthough the law allows an insurer to enter into any contract terms it desires that is agreeable to the insured, seriously injured people and a court’s desire to help the injured person raise a public policy guise to rewrite the language of the policy even after the court found the language to be clear and unambiguous. In Illinois Emcasco Ins. Co. v. Tufano, Appellate Court of Illinois, — N.E.3d —, 2016 IL App (1st) 151196 (9/8/16), the Appellate Court was asked to ignore the language of the policy and provide more coverage for an insured based upon public policy and ignore the language of the policy.

FACTS Defendant Erin Tufano (Tufano) was a passenger in a car that collided with another car. As a result, she suffered significant, permanent injuries that she valued in the millions of dollars. She sued both drivers. One driver had a $100,000 insurance policy that was tendered in full to Tufano. The other driver had a $300,000 insurance policy that likewise was tendered (resulting in a payment of $295,000). Tufano also had underinsured-motorist coverage of her own in the amount of $500,000 with plaintiff Illinois Emcasco Insurance Company (Emcasco). In this declaratory-judgment action, Emcasco says that it is only required to cover the difference between what Tufano received from the two drivers collectively ($395,000) and what she contracted for with Emcasco ($500,000), so that Emcasco only owes her $105,000 in underinsurance coverage. Emcasco moved for judgment on the pleadings, and Tufano moved for summary judgment. The circuit court agreed with Emcasco and entered judgment in its favor. Two vehicles were involved in a collision in McHenry Township. One vehicle was being driven by Margaret Zienkiewicz and the other by Nicole M. Mann. Erin Tufano, a passenger in the vehicle being 24 February 27, 2017 / INSURANCE ADVOCATE

“Except in the event of a ‘settlement agreement,’ the limit of liability for this coverage shall be reduced by all sums paid because of the ‘bodily injury’ by or on behalf of persons or organizations who may be legally responsible.” driven by Zienkiewicz, sustained serious injuries including an intracranial subarachnoid hemorrhage, lacerations of internal organs, cognitive deficits and numerous fractures. Her claimed damages from the collision are in the millions of dollars. Tufano’s underinsured-motorist coverage with Emcasco provided that: “Except in the event of a ‘settlement agreement,’ the limit of liability for this coverage shall be reduced by all sums paid because of the ‘bodily injury’ by or on behalf of persons or organizations who may be legally responsible.” Emcasco filed a complaint for declaratory judgment. Tufano moved for summary judgment, claiming that the policy provisions on which Emcasco relied violated the public policy of placing an insured in the same position she would have been in had the two drivers been insured to the extent of her underinsured-motorist coverage, $500,000. The trial court granted judgment on the pleadings in favor of Emcasco and denied Tufano’s motion for summary judgment.

ANALYSIS Illinois appellate courts apply the clear and unambiguous provisions in an insurance policy as written unless such application violates public policy. Insurance policy provisions are considered ambiguous

Barry Zalma, Esq., CFE, has practiced law in California for more than 42 years as an insurance coverage and claims handling lawyer. He now limits his practice to service as an insurance consultant and expert witness specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes. He founded Zalma Insurance Consultants in 2001 and serves as its only consultant. Look to National Underwriter Company for the new Zalma Insurance Claims Library, at www.nationalunderwriter.com/ZalmaLibrary. The new books are Insurance Law, Mold Claims Coverage Guide, Construction Defects Coverage Guide and Insurance Claims: A Comprehensive Guide. The American Bar Association, Tort & Insurance Practice Section has published Mr. Zalma’s book “The Insurance Fraud Deskbook” available at http:// shop.americanbar.org/eBus/Store/Pro ductDetails.aspx?productId=214624, or 800-285-2221 which is presently available. Legal Disclaimer: The author and publisher disclaim any liability, loss, or risk incurred as a consequence, directly or indirectly, of the use and application of any of the contents of this blog. The information provided is not a substitute for the advice of a competent insurance, legal, or other professional. The Information provided at this site should not be relied on as legal advice. Legal advice cannot be given without full consideration of all relevant information relating to an individual situation.

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[ ON MY RADAR ] if they are subject to more than one reasonable construction. Even if the language in an insurance policy is clear and intelligible and suggests but a single meaning, a “latent ambiguity” may arise where some extrinsic fact or extraneous evidence creates a necessity for interpretation or a choice between two or more possible meanings. The court noted that Emcasco’s position is supported by the plain language of the insurance policy. As previously detailed, the policy contains a set-off provision that says Emcasco’s $500,000 underinsured-motorist coverage “shall be reduced by all sums paid because of the ‘bodily injury’ by or on behalf of persons or organizations who may be legally responsible.” (Emphasis added.) On its face, that language could not be any clearer; it allows Emcasco to add up all of the money received by Tufano from all tortfeasors and deduct that sum from any underinsurance coverage Emcasco owes her. Thus, were we to follow the plain language of the policy, Emcasco would be correct that it could offset all of the $395,000 Tufano received from the two drivers and thus would owe Tufano only $105,000. The court must also consider whether application of the policy language violates the public policy behind the underinsuredmotorist statute. Generally speaking, three separate principles emerge from the court’s review of case law: (1) underinsured-motorist coverage should place the insured in the same position he or she would have occupied if the tortfeasor had carried insurance in the same amount as the insured; (2) underinsured-motorist coverage exists to fill the gap between the amount received from the tortfeasor’s insurance and the amount of the insured’s underinsuredmotorist policy limit; and (3) underinsured-motorist coverage is not intended to allow the insured to recover amounts from the insurer over and above the insured’s underinsured-motorist policy limit. In a scenario involving a single claimant and a single tortfeasor, there is no reason why these principles should conflict. But the situation becomes more complicated when, as here, there are multiple tortfeasors. For example, in the present case, to satisfy the second principle—to merely “fill the gap” between what Tufano received from the two drivers and the limit of her underinsured-motorist policy—

In light of this public policy and the existence of multiple at-fault drivers, the set-off provision was latently ambiguous, and the ambiguity must be construed, as always in an insurance policy, in favor of the insured. Emcasco would only owe the difference between $500,000 and the $395,000 she collectively received from the two drivers, or $105,000. But that would not satisfy the first principle, to place Tufano in the same position as if both at-fault drivers had $500,000 in insurance coverage, which would entitle Tufano to $1 million overall ($395,000 from the drivers, with Emcasco making up the remainder of $605,000). In light of this public policy and the existence of multiple at-fault drivers, the set-off provision was latently ambiguous, and the ambiguity must be construed, as always in an insurance policy, in favor of the insured.

to fill the gap between the second driver’s insurance ($295,000) and her policy limit, thus adding $400,000 and $205,000 for a total of $605,000. Tufano has already received $395,000 from the two drivers. It is within the realm of possibility that this amount has already covered all the damages she actually suffered in this case. If so, the question of underinsured-motorist coverage is academic. She is obviously not entitled to a double recovery. The question of Emcasco’s liability to Tufano is thus dependent, first and foremost, on a determination that she suffered damages greater than the $395,000 she already received from the two drivers. If on remand to the trial court her damages exceed $395,000, she is entitled to underinsured-motorist coverage to the extent necessary to make her whole, but capped at an additional payment of $500,000 from Emcasco and crediting the amount that Emcasco has already paid her. On the question of damages, the trial court shall conduct a hearing as described herein to determine the overall extent of damages suffered by Tufano in the car accident. The court must award damages in favor of Tufano and against Emcasco only to the extent necessary to avoid a double recovery, capped at a total payment by Emcasco of $500,000, and with credit for amounts already paid by Emcasco.

CONCLUSION Where multiple tortfeasors are involved in an accident in which an underinsured-motorist policyholder is injured, the policyholder must be placed in the same position as if each tortfeasor carried the same amount of insurance as the policyholder. One tortfeasor’s payment cannot be used to offset the underinsurance gap of another tortfeasor; each instance of underinsurance must be viewed distinctly. But the amount of coverage the policyholder can receive from the underinsuredmotorist carrier is capped by the overall limit of the underinsured-motorist policy, because the insurer should not be required to pay a policyholder more than it promised, or more than the amount for which the policyholder paid in premiums. The appellate court’s holding that Tufano should be entitled to $605,000— though capped at the $500,000 policy limit—is really just another way of saying that she should be entitled to fill the gap between the first driver’s insurance ($100,000) and her policy limit, and then

ZALMA OPINION By finding a clear and unambiguous policy term to contain a “latent” ambiguity, it provided a $400,000 windfall and allowed her to recover more than allowed by the clear language of the policy by finding a latent defect, even though the court found the policy language “on its face, that language could not be any clearer” and yet changed the meaning to provide more to the claimant than she was entitled to receive.[IA]

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[ LOOKING BACK ]

I N S U R A N C E A D V O C AT E - 2 5 Y E A R S A G O

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I N S U R A N C E A D V O C AT E - 2 5 Y E A R S A G O

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[ COURTSIDE ]

L AW R E N C E R O G A K

Auto Exclusion Applies to Trucker Injured While Unloading Trailer Country-Wide Ins. Co. v Excelsior Ins. Co. Edited by Lawrence N. Rogak A truck driver was injured while unloading a trailer, when the trailer's lift gate collapsed. The truck's owner had a "Trucker's Policy" from Country-Wide and a general liability policy from Excelsior which had an auto exclusion. CountryWide defended the truck's owner, settled the lawsuit, and then brought this DJ action against Excelsior. The Appellate Division held that the general liability policy, which contained an exclusion for injuries arising out of the use of an auto, including loading and unloading, precluded coverage by Excelsior.–LNR

Order, Supreme Court, New York County (Cynthia S. Kern, J.), entered on or about September 10, 2015, which denied plaintiff 's motion for summary judgment declaring that defendants are primary insurers of the parties' mutual insured and are responsible for reimbursing plaintiff in connection with the underlying litigation against the mutual insured, and granted defendants' motion for summary judgment declaring that they are not obligated to defend or indemnify the insured in the underlying action or to reimburse plaintiff in connection therewith, and sua sponte dismissed the complaint, unanimously modified, on the law, to reinstate the com-

Lawrence N. ("Larry") Rogak has been practicing insurance law since 1981. He has defended over 23,000 lawsuits and arbitrations and has represented over 75 different insurance companies and self-insured corporations. Lawrence N. Rogak LLC is listed in Best's Recommended Insurance Attorneys, a distinction that requires written recommendations from at least 12 insurance carriers. A 1981 graduate of Brooklyn Law School, Mr. Rogak has published more books and articles on insurance law than any other New York attorney in the field.

plaint, and to declare that defendants have no duty to reimburse plaintiff in the underlying litigation, and otherwise affirmed,

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[ COURTSIDE ] without costs. The Clerk is directed to enter judgment accordingly. Plaintiff, Country-Wide Insurance Company, issued a "Truckers Policy" to Truck-Rite Distributions Systems Corp. (Truck-Rite) with a $1,000,000 per-accident coverage limit. Defendant Excelsior Insurance Company issued a commercial general liability policy to Truck-Rite that contained several exclusions. Pursuant to the "Aircraft, Auto or Watercraft" provision, the Excelsior policy excluded coverage for bodily injury "arising out of " the use, including loading and unloading, of autos operated by or rented or loaned to TruckRite. "Auto" was defined in the policy as "a land motor vehicle, trailer or semitrailer designed for travel on public roads." An employee of Truck-Rite, while unloading a trailer owned by R & L Carriers, Inc. (R & L) and leased to TruckRite, was injured while unloading material from inside a shipping trailer onto an attached lift gate. The lift gate failed, causing the employee to fall. The employee commenced an action to recover for personal injuries against R & L, which in turn commenced a third-party action against Truck-Rite for, inter alia, contractual and common-law indemnification. The underlying action and third-party action ultimately settled, with Truck-Rite paying $785,000 toward the settlement. Plaintiff herein, which provided Truck-Rite with a defense and paid the settlement amount on its behalf, now seeks reimbursement from defendants. "Policy exclusions are subject to strict construction and must be read narrowly, and any ambiguities in the insurance policy are to be construed against the insurer. However, unambiguous provisions of insurance contracts will be given their plain and ordinary meaning" (Scottsdale Indem. Co. v Beckerman, 120 AD3d 1215 [2d Dept 2014], lv denied 24 NY3d 912 [2014]). "In the context of a policy exclusion, the phrase arising out of is unambiguous, and is interpreted broadly to mean originating from, incident to, or having connection with" (quoting Maroney v New York Cent. Mut. Fire Ins. Co., 5 NY3d 467 [2005]). To determine the applicability of an "arising out of " exclusion, the Court of Appeals had adopted a "but for" test (see Mount Vernon Fire Ins. Co. v Creative Hous., 88 NY2d 347 [1996]). This test is defined as follows:

[ CLASSIFIEDS ] www.insurance-advocate.com THINKING ABOUT RETIREMENT, SLOWING DOWN, OR SELLING YOUR AGENCY? Established family owned NYC brokerage looking to acquire retail agencies up to $500k in commission. Call 347-514-6936 or email: Rino@sumcov.com "If the plaintiff in an underlying action or proceeding alleges the existence of facts clearly falling within such an exclusion, and none of the causes of action that he or she asserts could exist but for the existence of the excluded activity or state of affairs, the insurer is under no obligation to defend the action" (Scottsdale Indem. Co., 120 AD3d at 1219, citing Mount Vernon Fire Ins. Co. v Creative Hous., 88 NY2d at 350-52; U.S. Underwriters Ins. Co. v Val-Blue Corp., 85 NY2d 821, 823 [1995]). Here, the underlying plaintiff 's accident occurred while he was unloading material from a shipping trailer, an activity clearly encompassed by the exclusion. The fact that his injury was allegedly caused by the defective nature of the trailer lift does not remove the injury from the policy exclusion. "The focus of the inquiry is not on the precise cause of the accident but the general nature of the operation in the course of which the injury was sustained" (Regal Constr. Corp. v National Union Fire Ins. Co. of Pittsburgh, Pa., 15 NY3d 34 [2010], quoting Worth Constr. Co., Inc. v Admiral Ins. Co., 10 NY3d 411, [2008]). "The phrase arising out of...requires only that there be some causal relationship between the injury and the risk for which coverage is provided" (Dzielski v Essex Ins. Co., 90 AD3d 1493, 1495 [4th Dept 2011] [dissenting op] [internal quotation marks omitted], revd on dissenting op 19 NY3d 871 [2012]). Such a causal relationship between the injury and exclusion clearly exists here and requires dismissal of the complaint.[IA] 2017 NY Slip Op 00718 Decided on February 2, 2017 Appellate Division, First Department

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[ G UEST O PI N I ON ]

J A N E M . O R I E N T, M . D .

Travel Ban is Revealing— But Does Not Threaten American Medicine uA 90-day ban on travel from seven countries has sparked tremendous outpourings of “worry” or outright opposition by some 33 medical organizations. “The community is reeling over the order, fearing that it will have devastating repercussions for research and advances in science and medicine,” states an article in Modern Healthcare. Certainly the order is disrupting the lives of individual physicians who have won coveted positions in American medical institutions and were not already in the U.S. when the order was issued. Also their employers have a gap in the work schedule to fill. War tears people’s lives apart, however innocent they may be. And countries that sponsor terrorism have effectively declared war on the U.S. But is American medicine so fragile that it can’t survive a 90-day delay in the arrival of physicians, most of them trainees, from Iran, Iraq, Libya, Syria, Yemen, Somalia, and Sudan? After all, every year more than a thousand seniors in U.S. medical schools do not land a position in a post-graduate training program through the annual computerized “match” of graduates with internships. After another chance through the Supplemental Offer and Acceptance Program, or SOAP, hundreds of seniors are still without a job. This means that they cannot get a license to practice in the U.S., however desperate rural communities or inner-city hospitals are to find a physician, and their four years of rigorous, costly post-college education are wasted. Yet James Madara, CEO of the American Medical Association (AMA), is worried about vacant residency slots, according to a Feb. 3 article in MedScape by Robert Lowes. Entry to medical school is highly competitive, so presumably all the students are well-qualified. Can it be that graduates from Sudan are better trained? Does the U.S. have so few young people capable of and interested in a medical career that we have to depend on a brain drain from countries that are themselves desperately short of physicians? 30 February 27, 2017 / INSURANCE ADVOCATE

For all the emphasis on “cultural competence” in American medical schools, and onerous regulations regarding interpreters for non-English speakers, what about familiarity with American culture and ability to communicate effectively with American English speakers? Some foreignborn graduates are doubtless excellent, but many American patients do complain about a communication gap. So why do some big institutions seem to prefer foreigners? Could it be that they want cheap, and above all compliant labor? Physicians here on an employment-related visa dare not object to hospital policy. Whatever the reasons for them, here are some facts about the American medical work force: One-fourth of practicing physicians in this country are international medical graduates (IMGs), who are more likely to work in underserved areas, especially in primary care, according to Madara. According to the Accreditation Council for Graduate Medical Education (ACGME), 10,000 IMGs licensed in the United States graduated from medical schools in the seven countries affected by the ban. Immigrants account for 28% of U.S. physicians and surgeons, 40% of medical scientists in manufacturing research and development, and 15% of registered nurses, according to the Institute for Immigration Research at George Mason University. More than 60,000 of the 14 million workers in health-related fields were from the seven countries affected by the ban. Is medicine, like agriculture, now filled with “jobs that Americans won’t do”? Actually, we have more than enough Americans who love medical work. But some of the best doctors are being driven out by endless bureaucratic requirements, including costly “Maintenance of Certification™” programs that line the pockets of self-accredited “experts” but contribute nothing to patient care. They are being replaced (substituted for) by “mid-levels” with far less training. Then there are thousands of independent physicians having to retire or become employees because they can’t afford the regu-

Jane M. Orient, M.D. obtained her undergraduate degrees in chemistry and mathematics from the University of Arizona in Tucson, and her M.D. from Columbia University College of Physicians and Surgeons in 1974. She completed an internal medicine residency at Parkland Memorial Hospital and University of Arizona Affiliated Hospitals and then became an Instructor at the University of Arizona College of Medicine and a staff physician at the Tucson Veterans Administration Hospital. She has been in solo private practice since 1981 and has served as Executive Director of the Association of American Physicians and Surgeons (AAPS) since 1989. She is currently president of Doctors for Disaster Preparedness. Since 1988, she has been chairman of the Public Health Committee of the Pima County (Arizona) Medical Society. She is the author of YOUR Doctor Is Not In: Healthy Skepticism about National Healthcare, and the second through fourth editions of Sapira’s Art and Science of Bedside Diagnosis, published by Lippincott, Williams & Wilkins. She is the editor of AAPS News, the Doctors for Disaster Preparedness Newsletter, and Civil Defense Perspectives, and is the managing editor of the Journal of American Physicians and Surgeons.

latory requirements—soon to be greatly worsened by MACRA, the new Medicare payment system. Physician “burnout” is becoming so bad that we lose up to 400 physicians—the equivalent of a large medical school class—to suicide every year. The U.S. should be a beacon to attract the best and brightest, and it should welcome those who want to become Americans. Unfortunately, the lives of Americans, as well as the opportunities of aspiring foreign-born doctors, are threatened by those who desire to kill Americans and destroy our culture. These must be screened out. Meanwhile, the reaction of organized medical groups to the travel ban is spotlighting serious problems in American medicine.[IA]

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