Insurance Advocate March 4, 2013 by C Acunto

INA 3-4-13_INA 3-4-13 2/27/13 2:26 PM Page 1

VOLUME 124, NUMBER 5 / March 4, 2013

A CINN Group, Inc. Publication

Serving: New York, New Jersey, Connecticut, Pennsylvania and Washington D.C. Since 1889

LICONY Leaders List Legislative Goals Pictured: Bridget M. Healy, LICONY 2013 Chairman of the Board of Directors, and EVP & Chief Legal Officer, ING U.S., Inc.

INA 3-4-13_INA 3-4-13 2/27/13 2:26 PM Page 2

INA 3-4-13_INA 3-4-13 2/27/13 4:50 PM Page 3

Contents

March 4, 2013 | volume 124 number 5

[COVER STORY ] 22

LICONY: 45th Anniversary Celebration

[FEATURES] 4

Foreword: Stepping Up Steve Acunto, Publisher

Insight: A True Course Peter H. Bickford

Face to Face: Stay in School, Don’t do Drugs, and Maybe Become an Insurance Agent Michael Loguercio

Guest Opinion: Obamacare: A Beehive of Stings You Weren’t Expecting Elizabeth Lee Vliet, M.D.

In Dispute: Howard vs. Stature Electric, Inc. Katlin Nash

In the News: United States Fidelity & Guaranty Company vs. American Re-Insurance Company Katlin Nash

Albany Notebook Betty Flood and Katlin Nash

In the Associations: Downstate Holds Annual Legislative Forum Ron Brunell

Courtside: Excessive Fee Paid to Subpoenaed Witness Does Not Disquality Him, But Jury Gets to Know About It Lawrence N. Rogak

Classiﬁeds

Looking Back: February, 1988

22 6

30 Like us on Facebook… The Insurance Advocate Magazine INSURANCE ADVOCATE / March 4, 2013 3

INA 3-4-13_INA 3-4-13 2/27/13 2:27 PM Page 4

[ FORE WORD ]

Steve Acunto

Stepping Up.

n this issue of the Insurance Advocate we congratulate Michael Loguercio (pictured) who will lead the PIANY MetroRap Session this year. Mike is a dynamic guy who adds a lot to everything he does, including these pages. We look forward to seeing everyone at the PIANY Rap Session… We have gotten an incredible response to our last issue, that is, to the opinions we carried. We will be organizing and presenting some of these over the next several issues… On another note, we are pleased that the Griffith Insurance Leadership Foundation has added new members to its counsel representing diverse interests including: Darcy Kerr, Vice President of Human Resources, Accident Fund Insurance Company; John Meder, Regional Managing Director, Wells Fargo; and Michael C. Strakhov, CPCU, Vice President, Ohio Branch, CNA Property and Casualty Insurance Group. In addition, the Griffith Foundation’s Leadership Council officers include: Chair-Elect, Janice Abraham, MBA, President and CEO, United Educators Insurance; Secretary, Susan Krieger, CPCU, CLU, ChFC, Vice President of Operations, State Farm Insurance; Treasurer, Dana Rudmose, CPA, Principal, Rudmose & Noller Advisors LLC; and Immediate Past Chairman, Michael Fusselbaugh, CPCU, ARM, ARe, Senior Vice President, Hartford Steam Boiler. The Griffith Foundations’ main focus for 2013 will be to educate the millennial generation about insurance careers and to provide insurance education to public policymakers, they tell us… In addition, we are pleased that the Terrorism Insurance Bill is coming under scrutiny in Washington and the two New York delegation members, Reps. Michael Grimm (R-N.Y.) and Carolyn Maloney (D-N.Y.) brought attention on the important issue of terrorism insurance. Charles Symington, Big “I” Senior Vice President of Government Affairs said, “The current TRIA program has worked well to ensure that this essential coverage is available to policyholders throughout the country. Jump starting the debate on the future of the TRIA program now is especially important with its expiration just around the corner at the end of next year.”... Speaking of the Big “I”, the Annual Legislative Conference, taking place from April 17 through the 19th at the Grand Hyatt Washington Hotel in Washington, D.C, will feature some pretty big hitters in Washington including Congressman Jeb Hensarling (R-Texas) who will be a keynote speaker at the legislative conference breakfast. Hensarling was first elected to the House in 2003 and represents Texas’ 5th Congressional District. Before wielding the gavel of the powerful House Financial Services Committee, Hensarling served in a number of leadership positions in the House, including as Chairman of the House Republican Conference as well as Chairman of the Republican Study Committee. The Big “I” Legislative Conference is the insurance industry’s best-attended, most effective legislative meeting and takes place just prior to the association’s annual Big “I” Day on Capitol Hill.... Enjoy this issue of the Insurance Advocate. [IA] 4 March 4, 2013 / INSURANCE ADVOCATE

VOLUME 124, NUMBER 5 MARCH 4, 2013

EDITOR & PUBLISHER Steve Acunto 914-966-3180, x110 sa@cinn.com CONTRIBUTORS Peter H. Bickford Jamie Deapo Michael Loguercio Sari Gabay-Raﬁy Lawrence N. Rogak N. Stephen Ruchman Jerome Trupin, CPCU PRODUCTION & DESIGN ADVERTISING COORDINATOR Creative Director Gina Marie Balog 914-966-3180, x113 g@cinn.com SUBSCRIPTIONS P.O. Box 9001, Mt. Vernon, NY 10552 914-966-3180, x126 circulation@cinn.com PUBLISHED BY CINN Group, Inc. P.O. Box 9001, Mt. Vernon, NY 10552 (914) 966-3180 | Fax: (914) 966-3264 www.cinn.com | info@cinn.com President and CEO Steve Acunto

CINN G R O U P, I N C .

INSURANCE ADVOCATE® (ISSN 0020-4587) is published bi-monthly, 21 times a year, and once a month in July, August and December by CINN Worldwide, Inc., 131 Alta Avenue, Yonkers, NY 10705. Periodical postage paid at Yonkers, NY and additional mailing ofﬁces. POSTMASTER Send address changes to Insurance Advocate®, PO Box 9001, Mt. Vernon, NY 10552. Allow four weeks for completion of changes. SUBSCRIPTION RATES $59.00 US, Canada $65.00, International $110.00. 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 Worldwide, Inc. and is copyrighted 2013. All rights reserved. No part of this magazine may be reproduced in any form without consent. Trademark registered U.S. Patent and Trademark Ofﬁce.

For high-quality article reprints (minimum of 100), including e-prints, contact Gina Balog at g@cinn.com or call 914-966-3180, x113

INA 3-4-13_INA 3-4-13 2/27/13 2:27 PM Page 5

‘Madness’ only because of the fan’s fervor. The game of basketball... quality basketball, is anything but mad. It is the quintessential team game. 5 players working together in concert for the benefit of the group. Let team Park assist you in achieving your goal. Call us today to help you fast break thru the maze of the New York State Commercial Transportation Industry.

From Competitive Rates to Comparable Commissions. Large Enough to Service You... Small Enough To Care.

Park Insurance Company • Auto Liability • Physical Damage • General Liability • Split Limits On 100/300 And Single Limits Up To $1M • On-hook Coverage & Premium Finance Options For more Information or an Immediate Price Quote Call

1- 8 8 8 - P A R K P R I C E w w w. p a r k i n s u r a n c e c o . c o m

INA 3-4-13_INA 3-4-13 2/27/13 2:27 PM Page 6

[ INSIGHT ]

By Peter H. Bickford

A Truer Course

n 1995 then NY superintendent of insurance, Ed Muhl, took an extraordinary step: he by-passed the Liquidation Bureau and appointed an independent special agent in charge of the liquidation of an insurance company – United Community Insurance Company (UCIC). The independent agent engaged

the requirements of the law. The superintendent’s role as receiver of insolvent insurers is separate and apart from his/her role as regulator. An excellent description of the temporal role of the superintendent as receiver is found as far back as in a 1915 report to the New York State Constitutional Convention

Nowhere in the law is it anticipated that there should be a permanent “bureau” to control the receivership process, and certainly not one with a full time – mostly unionized – staff half the size of the entire insurance division of the DFS.

Peter H. Bickford

a core group of professionals to assist with the marshalling of assets, review and determination of claims, coordination with the guaranty funds and reinsurers, and the preparation of regular statutory statements. These efforts were openly coordinated with the liquidation court, which held numerous conferences with the special agent and all interested groups. The extraordinary thing about this appointment, however, is not that the superintendent by-passed the liquidation bureau; it is that this action fit squarely within the statutory framework of the law. The NY Insurance Law does not call for or authorize the creation of a “liquidation bureau.” It calls for the superintendent to be the court appointed liquidator or rehabilitator (broadly referred to as the “receiver”) of an insolvent insurer, and empowers the receiver with authority to hire agents to assist in fulfilling this role on a case-bycase basis. Under the law, the liquidation or rehabilitation of each insolvent insurer is a separate proceeding subject to the supervision of the court responsible for that estate. It is a temporary assignment, lasting until the insolvent insurer is rehabilitated and returned to the marketplace, or its liquidation is completed, with all assets being distributed in accordance with 6 March 4, 2013 / INSURANCE ADVOCATE

Commission on the Organization and Functions of the Government of the State of New York: “The practice is to retain such of the employees of each company which comes into liquidation as may be necessary to attend to the details of its affairs, and to dispense with them as rapidly as consistent with the proper conduct of its business.” Nowhere in the law is it anticipated that there should be a permanent “bureau” to control the receivership process, and certainly not one with a full time – mostly unionized – staff half the size of the entire insurance division of the DFS. Some have tried to justify the need for a substantial, permanent bureau to be able to deal with the size and complexity of insolvent insurers today as opposed to 100 years ago. The size and complexity argument, however, actually argues against a permanent bureau. The law as correctly described by the 1915 report authorizes the receiver to hire experts as needed for a particular estate, including from the staff of the insolvent insurer itself. Our industry is supported by a broad array of experts on every aspect of the business of insurance, including run-off, reinsurance,

claims and other expertise necessary for the efficient rehabilitation or winding-up of an insolvent insurer’s business. This body of expertise is far broader, deeper and more flexible than any permanent staff can be to deal with the variety of companies that come into receivership. The existence of a permanent staff also runs counter to the receiver’s ability to hire key personnel from an insolvent company with institutional knowledge invaluable to an efficient receivership process. Another major problem with the argument for a large, permanent bureau is that the statute never anticipated a permanent bureau, and accordingly does not provide for proper organization, reporting and oversight of such an entity. What we have ended up with is a huge, uncontrolled behemoth roaming free and unaccountable at the expense of the estates under its management. Regardless of how large and complex an insolvent estate, the fact remains that each estate is a temporary assignment, and the mission of the receiver is to end that temporary assignment ASAP. This is awfully hard to do with a full-time, unionized staff that feeds off of the assets of the insolvent companies to survive. This gets us back to UCIC: under the independent special agent, the liquidation of UCIC operated efficiently and openly, and produced regular distributions to creditors, the first occurring just three years after liquidation in 1998, followed by distributions in 1999, 2001, 2004 and in 2007 – totaling about 35% of approved claims. As assets were marshaled – primarily reinsurance recoveries – and claims were resolved, staffing was reduced accordingly so that by 2008 salaries and associated benefits were under $200,000, and the number of open claims reduced to a couple of hundred. For years, however, the liquidation bureau sought to bring this maverick estate under its aegis, and in early 2009 the bureau succeeded in getting the special agent to step aside and to bring the estate into the bureau. The affect on the UCIC estate is startling! continued on page 8

INA 3-4-13_INA 3-4-13 2/27/13 2:27 PM Page 7

A bridge to recovery

Statutory or Enriched Disability Benefits insurance helps people suffering a non-occupational illness or injury bridge the gap caused by lost wages. Since Statutory coverage is mandated for most businesses in New York, a number of markets are available. However, brand does make a difference – especially in quality of service and ease of use. New to “DBL,” we believe GUARD competes favorably with other carriers on price and other key categories. Our basic policy can be enhanced by electing one or more of the following options: ! ! !

In-Hospital Rider Enriched Benefits Rider (2X or 3X available) Accidental Death and Dismemberment (AD&D) insurance

We believe the Disability arena is a natural complement to our traditional specialty. Workers’ Comp coverage provides wage replacement benefits for work-related illness and injury, while our new product can do the same for non-work situations. From us, you know your clients will get good value for their premium . . . while you get a chance to expand your income stream! GUARD producers and prospects are invited to contact us to learn more. ®

a Berkshire Hathaway company

www.guard.com/apply Notice required by New York Law: This policy provides disability income insurance only and does not provide basic hospital, basic medical, or major medical insurance as defined by the New York Department of Financial Services. Coverage underwritten by AmGUARD Insurance Company − Form No. DB 99 00 00 07 11.

INA 3-4-13_INA 3-4-13 2/27/13 2:27 PM Page 8

We want to buy your Agency if you want to sell! Looking to retire and pass the torch to a company who cares about your clients? We have a strong track record, excellent markets, a powerful centralized staff, the capital, the expertise, and the blueprints for building well into the future while keeping your clients our TOP priority. Give us a call today and speak to Kevin 848.863.7105 kevinkkins@gmail.com

[ INSIGHT ] continued from page 6

Now that the estate is ensconced in the belly of the beast, it no longer files separate, complete financials and reports of its activities. What information is provided is included in the bureau’s combined, columnular financials. While it is difficult to compare the apples of the special agent’s reports to the lemons of the bureau’s, a few numbers jump out at you from the bureau’s limited reporting. According to the 2009 bureau report — the first year of taking control of UCIC — salaries and related employee benefits charged to the estate were in excess of $1 million—a five-fold increase from the year before under the control of the special agent. Also, rent increased four times from approximately $40,000 to almost $160,000 and professional fees (not including LAE) went from about $70,000 to almost $600,000, while on the other side of the ledger, claim and LAE expenses decreased from $1.6 million to about $130,000. Although these numbers were significantly lower in the 2010 report, they were still multiples of the comparable numbers in the last year under the special agent. Simply put, under the bureau’s control the claim resolution activity has been reduced to a nominal amount, while expenses have soared, and the bureau has paid no dividends since taking control of the estate! As the Executive Life debacle has shown a sharp light on the lack of accountability and consequences for mismanagement by the bureau, UCIC likewise shows the gross inefficiencies in the system as it has evolved over the decades. This evolution has been contrary to the clear statutory concept, and has resulted in the inefficient, unaccountable, wasteful and non-responsive system that plagues us today. It is time to revert to the original concept, which as demonstrated by designation of an independent special agent in the UCIC proceeding, can be far more beneficial to the estate, its policyholders and creditors. [IA]

KK Insurance Neptune, New Jersey www.insurance-advocate.com 8 March 4, 2013 / INSURANCE ADVOCATE

andrew

INA 3-4-13_INA 3-4-13 2/27/13 2:27 PM Page 9

Real Dividends! $144 Million Paid “The Friedlander Group was extremely instrumental in helping us obtain a sizeable new client. Their overall Workers Compensation premium savings and professional risk management services is key to gaining and retaining business in the current workers compensation market..” Andrew H. Marks Senior Executive Vice President Bollinger Insurance

Up to 25% Advance Discount and 9.2% N.Y.S. Assessment Retailers

Wholesalers

Restaurants

Hotel/Motels

Oil Dealers

Retail Group of NY, Workers’ Comp. Safety Group #544*

Wholesale Group of NY, Workers’ Comp. Safety Group #551*

United Restaurants of NY, Workers’ Comp. Safety Group #556*

Group of NY, Workers’ Comp. Safety Group #578*

Group of NY, Workers’ Comp. Safety Group #582*

2011-12

25%

2010-11

25%

2010-11

25%

2010 - 11

15%

2010-11

35%

2009-10

25%

2009-10

35%

2009 - 10

20%

2009-10

35%

2008-09

30%

2008-09

40%

2008 - 09

25%

36% average dividend since inception in 1992

34% average dividend since inception in 1993

38% average dividend since inception in 1993

22% average dividend since inception in 2006

2010 - 11

10%

Group formed on 7/1/2010

Fees paid to 560 Brokers Learn more at: www.friedlandergroup.com/demo/

Retail 2003 Bakeries 7998 Hardware Store 8001 Florist Store 8006 Food/Fruit/Deli/Grocery 8008 Clothing/Shoe/Dry Goods 8013 Jewelry Store 8016 Quick Printing 8017 Retail (Not Classified) 8031 Meat/Fish/Poultry Store 8033 Supermarkets 8039 Department Store 8043 Retail (including Food) 8044 Furniture Store 8046 Auto Accessories 8072 Book/Music Store 8105 Leather Store 8382 Self serve gas w/conv. store Residential Care Facilities 8864 Developmental Organizations 8865 Residential Care Facility Hotel/Motel 9052 Hotels NOC 9058 Restaurants in Hotels

Wholesale 4310 Greeting Card Dealer 7390 Beer/Ale Dealer 7999 Hardware Store 8018 Wholesale Store/NOC 8021 Meat, Fish Dealer-Wholesale 8032 Dry Goods, Clothing, Shoe 8047 Drug Store 8048 Fruit & Vegetables 8111 Plumbers Supplies Dealer-Wholesale Restaurant 9061 Clubs 9071 Full Service Restaurants 9072 Fast Food Restaurants– Including Drivers 9074 Bars & Taverns Social and Health Services 8854 Home Health Care – Prof. Employees 9051 Home Health Care – Non Prof. Employees 8857 Counseling – Social Work – Traveling Oil and Gas Dealer 5193 Oil Burner Installation 8350 Fuel Oil & Gas Dealer 8353 Gas Dealers, LPG & Drivers

*Underwritten by the State Insurance Fund

The Workers’ Compensation Leader in NY Call Cosmo Preiato at 800-394-7004 ext. 203 Fax: 914-694-6004 e-mail: cosmop@friedlandergroup.com 2500 Westchester Avenue, Suite 400A Purchase, New York 10577

www.friedlandergroup.com How to Save Big on Workers’ Compensation: With Insights From Leading Industry Experts by Adam Friedlander, now on Amazon www.howtosavebigonworkerscomp.com

Ask about low DBL rates exclusive to safety group members, underwritten by First Rehabilitation Life Insurance Company of America

andrew_h_marks_INS_ADV_v2.indd 1

1/3/13 12:38 PM

INA 3-4-13_INA 3-4-13 2/27/13 4:30 PM Page 10

[ FACE TO FACE ]

By Michael Loguercio

Stay in School, Don’t do Drugs, and Maybe Become an Insurance Agent

few years ago I shared with you in this column about the time I was speaking at a Career Day at one of the elementary schools in our local school district where I am the school board pres-

partnering with high school and college educators to provide a useful insurance curriculum for students.” articulately stated on the InVEST website. Under the guidance and assistance of

Under the guidance and assistance of insurance professionals, InVEST students are afforded the opportunity to be educated in the insurance industry through formal instruction, internships, “shadow days”, and even be offered careers in our industry after graduating from InVEST. Michael Loguercio

ident. I asked the students, “Who wants to be an insurance agent when they grow up?”, and while most of the kids in the class looked at me as if I were an example for not doing drugs, one little boy in the back almost jumped out of his seat, yelling, “I do! I do!” Well, as the story goes as you may remember, this little boy’s dad was an Allstate agent, and being the proud son that he was, he planned to follow in his father’s footsteps and enter into this thing of ours as soon as he possibly could. I have told this story to many a fellow insurance friend, as so many of us did not grow up with aspirations of a career in the insurance industry. As a matter of fact, most of you with whom I have asked the same question that I posed to this young elementary class, have quickly replied (expletives removed as my mother reads this column), “No way!” However, each and every one of us is now extremely content with our careers, and probably would not trade it for any other, although many within this industry still aren’t quite sure that they believe that there are youngsters who as they grow up are yearning to have a career in this industry…or would there be? Let’s take a look… InVEST, a program sponsored and managed by the Independent Insurance Agents and Brokers Association (IIABA), is a “school-to-work insurance program 10 March 4, 2013 / INSURANCE ADVOCATE

insurance professionals, InVEST students are afforded the opportunity to be educated in the insurance industry through formal instruction, internships, “shadow days”, and even be offered careers in our industry after graduating from InVEST. Through the utilization of guest speakers, an InVEST class can obtain knowledge and hear compelling stories of what a career in the insurance field may resemble, and as salespeople we all know the power and value of telling a story to get a point across to a candidate or prospect. Also on the InVEST website is the history of how this organization came into existence, and how it grew into what it is today. The following is an excerpt that from the site that I wish to share with you: “Forty years ago, a visionary insurance agent by the name of Stephen R. Dach recognized the fact that the hunt for talent was one of the most important issues facing independent insurance agents. He believed that the ability to recruit, develop and retain the best people was the key to running the best insurance agencies in the future. And he could not have been more correct. Steve Dach wasn’t just a man who had good ideas—the world is ﬁlled with those kinds of people, few of whom ever make any signiﬁcant con-

tribution to society. Steve was a person who wanted to change the industry he loved for the better, so he created a program to attract and train the next generation of insurance professionals. That program was called Project InVEST—Insurance Vocational Education Student Training. Steve believed that if you could capture a student’s attention at an early age and reveal to them the vast opportunities available in the insurance industry, that student would be intrigued enough to consider a career in insurance. So, in 1970, he approached the Los Angeles Unified School District to see if there was any interest on their part in implementing such a program. Steve knew that many students who would graduate high school in Los Angeles would not go on to college, for a variety of reasons, many of which involved money. The basic idea behind InVEST was to spend an entire school year preparing students to run their own small business, and then help place them in independent insurance agencies as sales or service representatives. Should that student later decide to pursue a college education, the insurance agency could help by providing financial support and a flexible work schedule. The first InVEST program was started at Hollywood High School that year. It was an immediate hit with educators and students alike for its unique interactive and participatory curriculum. So successful was the program that other school districts learned of it and wanted to incorporate it into their vocational or business curriculum. Within three years, InVEST had spread to Northern and Central California. For a person with an entrepreneurial spirit, this was not only an opportunity, it was the ultimate challenge. continued on page 12

INA 3-4-13_INA 3-4-13 2/27/13 2:28 PM Page 11

WE HAVE A DEFENSIVE DRIVING PROGRAM TO HELP YOUR AGENCY GROW!

CLASSROOM

INTERNET COURSE

R Become an approved classroom Delivery Agency

R Additional Savings for your Customers with your Exclusive Promotional Discount Code issued within 24 Hours.

R No cost Instructor training. Approvals in (1) week R 100% student referral and 100% residuals

R Free Customized WebPage and link to your Agency, Signs/Banners and Brochures

R Free Signs/Banners, Brochures and Agent Proposals

R All referral fees and commissions are allowed by NYS Insurance Department

Approved Sponsor of the NYS DMV | Point/Insurance Reduction Program

EMPIRE SAFETY COUNCIL

Garden State SAFETY COUNCIL Call William Bonds, President or Brittney Goldstein, Education Director

800-246-3603

www.empiresafetycouncil.com

INA 3-4-13_INA 3-4-13 2/27/13 2:28 PM Page 12

[ FACE TO FACE ] continued from page 10

Students have the opportunity to intern with a local insurance agency to spend some time in the “real world”, and are also taught the basics of insurance company operations such as marketing, underwriting and claims handling. InVEST grew and grew until it could no longer be managed by the Los Angeles or California Independent Agents Associations. The program was then put under the auspices of IIABA, where it remains to this day.” Many insurance organizations, carriers, and service/product providers contribute in many different ways to this program, and as someone who is part of the EZLynx family, I am proud to share this very recent press release with you, as well: EZLynx Donates Insurance Rating Tool to InVEST Financial literacy program offers interactive tool to teach underwriting criteria for personal lines policies. InVEST, the insurance industry’s premier classroom to career education program, is pleased to announce that EZLynx has provided its online rating tool free of charge to the hundreds of InVEST teachers, agent liaisons and students across the country. EZLynx enables students to enter information once into a single interface and receive simulated rates directly from participating carriers for automobile and homeowner policies. “InVEST is grateful to EZLynx for the generous contribution of this incredibly helpful resource to help InVEST students understand the various rating factors in automobile and homeowner risks,” says Heather Minkler, chair of the National InVEST board of directors and CEO of Clark-Mortenson Agency, an independent insurance agency in Keene, N.H. “In-kind contributors, such as EZLynx, are critical to InVEST’s ability to simulate working in the insurance industry.” EZLynx was established in 2003 with the primary goal of addressing some of the challenges facing the inde12 March 4, 2013 / INSURANCE ADVOCATE

EZLynx processes more than three million auto, home and package transactions every month covering more than 150 insurance companies in 48 states.

pendent agents in the property-casualty industry at that time. EZLynx's ﬂagship product, EZLynx Rating Engine, enables insurance agents to generate accurate real-time rate quotes from multiple insurance companies' sites with a single data entry point. EZLynx processes more than three million auto, home and package transactions every month covering more than 150 insurance companies in 48 states. “We are excited to be involved in the effort to further the cause of independent agents,” says Jaideep Jayaram, EZLynx vice president of sales and marketing. “Our goal aligns with that of InVEST, which is to ensure that the next generation of insurance professionals are exposed to the latest technologies and are prepared to join an increasingly competitive industry. EZLynx Rating Engine will provide InVEST students exposure to the foundation of our management system and digital marketing ecosystem.” Today, InVEST works with almost 400 educators in 44 states. More than 13,000 students will participate in InVEST programs this school year, 2012-2013, learning basics of insurance and exploring careers within the industry. The program continues to grow in popularity among teachers and school systems. In the last year alone, InVEST has grown by 47% and now includes 380 high schools and colleges across the country. As a 501(c)(3) educational trust, InVEST beneﬁts from the support of numerous insurance organizations, hundreds of agencies, brokers and vol-

unteers. The program provides the insurance industry with motivated, talented and intelligent professionals through a support structure of state associations, board members, national staff, teachers and the many industry professionals who work in the field as classroom liaisons. Founded in 1970 and based in Alexandria, Va., InVEST promotes insurance education in order to attract individuals to pursue a career in the insurance industry. Each year, the program prepares thousands of students for insurance-related careers with a hands-on curriculum taught in high schools, adult education centers and colleges. The high school curriculum is a business-education program that utilizes a hands-on approach which simulates an insurance agency and company operations to prepare students for various business careers and create more knowledgeable insurance consumers. At the college level, InVEST is an information-intensive curriculum of risk management and financial services. These courses provide students with a working knowledge of the basics needed to pursue careers in the insurance industry. For more information, go to www.investprogram.org. Founded in 1896, the Big “I” is the nation’s oldest and largest national association of independent insurance agents and brokers, representing a network of approximately a quarter of a million agents, brokers and their employees nationally. Its members are businesses that offer customers a choice of policies from a variety of insurance companies. Independent agents and brokers offer all lines of insurance—property, casualty, life, health, employee benefit plans and retirement products. Web address: www.independentagent.com. For additional information on InVEST please call Diane Mattis 800-221-7917 or email her: diane.mattis@iiaba.net Speaking of some wonderful organizations that are involved in our industry, The Council Of Insurance Brokers of Greater continued on page 14

INA 3-4-13_INA 3-4-13 2/27/13 2:28 PM Page 13

LIFE

LIVE FULLY COVERED AUTOMOBILE & HOMEOWNERS’ Interboro AutoOne Insurance offers personal automobile and homeowners' insurance in New York State. We are dedicated to ensuring financial protection for our policyholders by providing quality products and exceptional service through strong relationships with our brokers.

Commitment is the key to your relationship with us.

155 Mineola Blvd. • Mineola, NY 11501 w: interboroinsurance.com t: 516.248.1100 f: 516.248.0211

The Company You Can Trust... Since 1914

INA 3-4-13_INA 3-4-13 2/27/13 2:28 PM Page 14

[ FACE TO FACE ] continued from page 12

New York (CIB) recently held its annual event, at the very elegant El Caribe Country Club in Brooklyn, NY. Another spectacular job by Committee Chair Al Caputo of Buckingham, Badler Associates, along with his fellow committee members Anthony Aqulinoof Regency Agency Inc., Ron Brunell of B&B Coverage LLC; Anthony Calaﬁore of Apex Brokerage; Michael Conte of Honig Conte Porrino Agency; Michael Cracco of Completely Covered; Michael Demetriou of Demetriou General Agency Inc.; Donna Doyle of Narragansett Bay Insurance Co.; Michael Honig of Honig Conte Porrino; Jay Levy of Morstan General Agency; Michael Pellicone of Barry Risk Management; Maureen Reinhold of Buckingham Badler Associates; Peter N. Resnick of Interboro Autoone Insurance Co.; and Elmer Rivera of Jimcor Agencies. Congratulations to Narragansett Bay Insurance Company as the CIB 2012 Company of The year; Erica Echavarria of Jimcor Agencies and Joseph Gallegos of Morstan General Agency. Inc. for being awarded the 2012 Theodore P. and Peter T. Demetriou Scholarship; and to incoming CIB President Joseph R. Bosnack, Jr.; along with his cabinet of Shelly Kozel, Vice President; Richard Signorelli, Vice President; Michael J. Honig, CIC, Treasurer; and Naomi Margolin, Secretary. Congratulations to all as it is certainly well deserved, and we wish you the very best…thank you for all you do for our industry! Presently I am writing this while seated on a US Airways flight to Dallas, where I will be attending the ACT/AUGIE conference. As a proud member of this insurance and technology committee for quite a few years, I look forward to bringing you a summary of some of the accomplishments of our meetings, where insurance executives from carriers, agencies, and technology providers gather to discover new and innovative methods to streamline our industry by making it more effective and efficient to those whom we serve. This should be an exciting week of meetings and I look forward to sharing it with you next time right here in living color, so don’t touch that dial, and Ciao for now! [IA] 14 March 4, 2013 / INSURANCE ADVOCATE

Michael Loguercio is the Regional Sales Manager for EZLynx; and has been active in the insurance industry since 1978 as an insurance technology professional and a licensed insurance broker. He is an active Past President of the Young Insurance Professionals of New York State, current ACT/AUGIE, Professional Insurance Agents of New York State, Independent Insurance Agents and Brokers of New York State, and Council of Insurance Brokers of Greater New York committee member. In 2010 Michael was honored with the NY-YIP/PIA Insurance Professional of the Year award; and in 2012 with a NYYIP/PIA Lifetime Achievement award. Michael is also Chair of the 2013 Professional Insurance Agents Regional

Awareness Program on Long Island. In his community, Michael is President of the Longwood Central School District Board of Education on Long Island, NY; is a Director on the board of REFIT NY (Reform Educational Financing Inequities) and is a member of The Middle Island, NY, Rotary Club and Central Brookhaven Lion’s Club. In 2013 he was awarded the SCOPE Community Service Award for his dedication to his community. Michael is a regular Contributor to the Insurance Advocate since 2008, and may be contacted at 631-345-9359 or michael.loguercio@ezlynx.com.You may also follow him on Twitter @MLoguercioJr; and on Facebook @ Michael Anthony Loguercio Jr.

Loguercio to Chair PIANY’s 2013 Long Island RAP Committee

EW YORK, N.Y.—The Professional Insurance Agents of New York State Inc. today announced that Michael Loguercio, Jr., an industry veteran and long-time Long Island resident, will chair its oldest-running Regional Awareness Program, Long Island RAP, to be held on April 25, 2013 at Leonard’s of Great Neck. Loguercio, regional sales manager for EZLynx www.ezlynx.com, a nationwide provider of technology to the insurance industry, is a licensed property/casualty and life/health New York state insurance broker. His continued support of PIANY and its members over two decades includes more than five years on the association’s Membership, Benefits and Services Committee, as well as continuous service as a leader of the NY-Young Insurance Professionals, an affiliate of PIANY. He served three terms as NY-YIP president, which honored him with the NY-YIP Insurance Professional of the Year award in 2010 and with a Lifetime Achievement award this year. Active throughout the industry, Loguercio sits on several other trade association committees and he is the author of the bi-weekly column for the Insurance Advocate magazine. “Mike is a veteran and leader in the industry,” said Diane Fowler, PIANY exec-

utive director. “We are pleased to have him undertake the responsibility as Long Island RAP committee chair, as his commitment to professional independent agents and brokers and volunteerism will serve the event, our members and the many distinguished sponsors and exhibitors who make it a success.” PIANY’s Long Island RAP is one of the industry’s biggest and longest-running events, featuring a dynamic trade show with nearly 100 exhibitors; continuing education; distinguished awards and networking opportunities. Last year, nearly 500 industry professionals took part in the event. “I am excited to work with the entire Long Island RAP committee to build on this event’s great tradition of camaraderie and professionalism,” said Loguercio. “As someone who has been both an exhibitor and participant of trade shows for many years, I know Long Island RAP has a prestigious reputation to uphold and expectations for greatness. I look forward to seeing many old friends and new faces there on April 25.” To register, sponsor or exhibit at Long Island RAP, contact PIA at (800) 424-4244. PIANY is a trade association representing professional, independent insurance agencies, brokerages and their employees throughout the state. [IA]

INA 3-4-13_INA 3-4-13 2/27/13 2:28 PM Page 15

New Coastal Homeowners Market - Downstate N.Y. -

Program Homeowners Guidelines Program Features • Fast, simple to use and quotes accurately with built-in guidelines; • Stores all your clients quotes for future access;

• H03 1-4 Family Owner Occupied Dwellings; • Coverage (A) maximum dwelling value $850,000; • Coverage (C) maximum contents/ unscheduled personal property 50% of (A);

• Built-in paperless Submit to Bind function;

• Coverage (B) other structures 10% of coverage (A);

• Auto fills your Quote, Acord 80, Total Cost Forms and the Binder;

• Maximum liability $500,000; medical payment $5,000;

• Built-in Distance to Water Detector;

• Coastal Eligibility 2000 feet, exceptions provided;

• Auto fills ETI Premium Finance’s Contract for a Ten Pay Option.

Call or email Dulcie

800.403.3738

dulcies@chenangobrokers.com

• Rates with up to 3 prior losses in the past 3 years; subject to underwriting approval; • Deductibles 500/1000/2500; • Pre-existing damage excluded.

Chenango Brokers, LLC www.chenangobrokers.com

INA 3-4-13_INA 3-4-13 2/27/13 2:28 PM Page 16

[ GUEST OPINION ]

By Elizabeth Lee Vliet, M.D.

Obamacare: A Beehive of Stings You Weren’t Expecting

any promises were made to different groups to sell the new healthcare law to a skeptical public. Having watched the medical insurance games–government and private–for my whole career, I thought these promises were too good to be true. What is coming to light now is like “The Big Con” that Robert Redford’s character skillfully pulled off in the classic

Large national restaurant chains are cutting employees’ hours because they cannot afford to pay the high health insurance premiums for “fulltime” employees. How can the middle class make ends meet on part-time work? Liberal groups that overwhelmingly supported Obamacare are also getting stung. Of course, these announcements came after the election, in which these

"One by one, the political promises fall like dominoes. The very groups that strongly supported government control of healthcare are now some of the ones getting stung badly. The effects are like a swarm of killer bees suddenly descending on the unsuspecting, stinging everyone in sight." Elizabeth Lee Vliet, M.D.

movie The Sting. Only the Pelosi-ReidObama trio forced through an even bigger “Sting” on the entire country, especially the very constituencies they promised their healthcare law would help. One by one, the political promises fall like dominoes. The very groups that strongly supported government control of healthcare are now some of the ones getting stung badly. The effects are like a swarm of killer bees suddenly descending on the unsuspecting, stinging everyone in sight. Our personal New Year’s sting was a 22.5% jump in my husband’s Medicare supplemental premium for the 2013 renewal. Reason: Obamacare regulations and mandates. Then I received the notices for our employees’ health insurance premiums: more premium increases – even though we have a high deductible, catastrophic illness type plan to help keep costs affordable. Next, the IRS projected premiums of $20,000 per year for a family of four. Affordable? For whom? This sting is a $3,000 to $5,000 increase instead of the promised $2,500 savings per year—a miscalculation of $5,500 to $7,500 for a family of four. 16 March 4, 2013 / INSURANCE ADVOCATE

constituent groups supported Obama in droves: • College students: Before Obamacare, young healthy college students paid average health insurance premiums that only cost $100-600 per year. Obamacare mandates mean that premiums are rising to $1,700 to $2,000 per year. In New Jersey, where health insurance is mandatory for college students, this is indeed a huge sting! • College faculty: At many universities, faculty hours are being cut back to less than 29 hours a week to avoid the costly Obamacare premiums. • Union members: the sting of Obamacare has come in many forms, so Big Labor is now seeking waivers for union members. • Smokers: Many who fell for Obama’s promise of “free” or lower cost medical care are learning that their premiums will be 50% higher than nonsmokers –up to $4,250 dollars per year in excess costs for smokers age 55 and older. • Employers: Paying for all the Obamacare mandates in employerprovided health insurance adds $1.79

to the hourly rate to hire an employee. That’s why many are not hiring. • Seniors: After the election, seniors are learning that all the promises of “no cutbacks” in their medical care were false. The Senior Sting is especially ugly. One 80-year-old patient told me his heart medicine was no longer covered, “because I am too old now.” Preventive services and cancer screenings for the older patients, such as prostate and breast cancer checks, are being cut to pay for “free” birth control pills. As of 2012, hospitals are paid more to provide fewer surgeries. Popular and lower cost Medicare Advantage plans are being cut back or eliminated. Then there is the Medicaid sting: States that are expanding Medicaid plan to cut payments to doctors and hospitals to about 56% of what private insurance companies pay. This means more patients lined up for fewer doctors and hospitals. And let’s not forget the privacy sting. Your electronic health record will be used to decide what treatments you will be allowed. The IRS will be collecting expanded personal information about your income, habits and family to decide what to sting you on penalties. In short—old or young, black or white, liberal or conservative—once Obamacare was forced on patients across the country (except Congress and the President)– everyone has gotten The Sting….in the Biggest Con of all. [IA] Elizabeth Lee Vliet, M.D. is a preventive and climacteric medicine specialist with medical practices in Tucson AZ and Dallas TX that take an integrated approach to evaluation and treatment of women and men with complex medical and hormonal problems. Dr. Vliet is also President of International Health Strategies, Ltd., whose mission is twofold: liberty and privacy in treatment options and preservation of the Oath of Hippocrates focus on the individual patient. Dr. Vliet is the 2007 recipient of the continued on page 18

Senator John Sherman Author, Sherman Antitrust Act

a political king over and sale of life.”

Sen. John Sherman 21 Cong. Rec. 2456 (1890)

“If we would not submit to an emperor we should not submit to an autocrat of trade, with the power to prevent competition...”

“If we will not endure a king as power we should not endure a the production, transportation, of any of the necessaries

Competition_vs_Monopoly_vInsurance_Advocate.indd 1

Call 800-354-7207 or visit www.Demotech.com

urgood Marshall U.S. V. Topco Assoc., 405 U.S. 596 (1972)

e freedom guaranteed each and every business, no matter how small, is the freedom to compete – to assert with vigor, imagination, devotion, and ingenuity whatever economic muscle it can muster.”

2/6/2013 2:25:10 PM

Leveling the Playing Field for Regional and Specialty Insurers since 1985

No Competition, Know Monopoly

Know Competition, No Monopoly

Demotech, Inc. is working hard to assist every finnancially stable insurer offer its products through each producer it has appointed.

Justice Harlan Stone U.S. v. Trenton Potteries Co., 273 U.S. 392 (1927)

“The public interest is best protected from the evils of monopoly… by the maintenance of competition.”

e Supreme Court of the United States agrees with the provisions of the Sherman Antitrust Act

Sen. John Sherman 21 Cong. Rec. 2456 (1890)

“No private corporation shall be created e corporate rights granted to one are open to all.”

The Sherman Antitrust Act remains a landmark federal statute on competition It was enacted for the protection of competition in the marketplace

INA 3-4-13_INA 3-4-13 2/27/13 2:28 PM Page 17

INA 3-4-13_INA 3-4-13 2/27/13 2:28 PM Page 18

[ GUEST OPINION ]

[ IN D ISP U T E ]

continued from page 16

Howard v. Stature Electric, Inc.

Voice of Women award from the Arizona Foundation for Women for her pioneering advocacy for the overlooked hormone connections in women’s health. Dr. Vliet received her M.D. degree and internship in Internal Medicine at Eastern Virginia Medical School, then completed specialty training at Johns Hopkins Hospital. Dr. Vliet is a Director of the Association of American Physicians and Surgeons. Dr. Vliet has appeared on FOX NEWS, Cavuto, Stuart Varney Show, Fox and Friends and syndicated radio shows across the country addressing the economic and medical impact of the new healthcare bill. Dr. Vliet's books include: It’s My Ovaries, Stupid!; Screaming To Be Heard: Hormonal Connections Women Suspect-- And Doctors STILL Ignore; Women, Weight and Hormones; The Savvy Woman's Guide to PCOS, The Savvy Woman’s Guide to Testosterone. Dr. Vliet’s medical and educational website is www.HerPlace.com. For more on healthcare, go to www.TakeBackMedicine.com or http://www.aapsonline.org DISCLAIMER: Dr. Vliet speaks as an independent physician. Dr. Vliet has no financial ties to any health care system, pharmaceutical company, or health insurance plan. Her allegiance and advocacy is to and for patients. See Dr. Vliet on The Sean Hannity Show (discussing "Freedom Gives Most Access to High Quality Medical Care. Socialism Fails") http://www. youtube.com/watch?v=M9xYYyf_10I

Serving New York, New Jersey, Pennsylvania and Connecticut Since 1889 www.insurance-advocate.com 18 March 4, 2013 / INSURANCE ADVOCATE

By Katlin Nash

LBANY, N.Y.—The New York Court of Appeals, the highest court of the State of New York, heard oral arguments in the case of Howard v. Stature Electric, Inc. on February 5, 2013. Oral arguments were heard by Chief Judge Lippman, Judge Pigott Jr., Judge Read, Judge Graffeo, and Judge Smith. David W. Howard injured his back in March 2003 while working for his employer, Stature Electric, Inc. in Watertown. A Workers’ Compensation Law Judge (WCLJ) awarded Howard lost wage benefits and authorized surgery to be covered by Stature’s workers compensation carrier, the State Insurance Fund (SIF). In November 2005, Howard was arrested on insurance fraud and other charges for allegedly misrepresenting his work status, based on evidence from SIF investigators purportedly showing that he held other jobs while receiving benefits. Howard ultimately entered an Alford plea to insurance fraud in the fourth degree in exchange for a sentence to a conditional discharge. His attorney, Christine Scofield stated on the record that he “is pleading guilty because of the risks involved in going to trial; and without an admission of wrongdoing.” The factual allegations underlying the crime were not mentioned during the plea colloquy. At a later workers’ compensation hearing, SIF argued Howard was ineligible for benefits because his insurance fraud conviction established a violation of Workers’ Compensation Law section 114-a, which disqualifies a claimant who “knowingly makes false statements or representations as to material fact” to obtain benefits. The WCLJ ruled Howard was entitled to a hearing because “the plea agreement did not involve a hearing on the merits.” However, the Workers’ Compensation Board held on appeal that his criminal conviction precluded him from contesting whether he violated section 114-a-under the doctrine of collateral estoppel. The Appellate Division, Third Department reversed and remitted the case for a hearing. The court explained “an Alford plea, by its very nature, is accepted

The Appellate Division, Third Department concluded the question of whether claimant committed the charged conduct, though decisive in determining whether he violated section 114-a, was not determined by criminal action. on the explicit basis that the person making the plea does not admit having committed the charged acts,” the court said. When Howard entered the Alford plea, “he made no factual admissions, his counsel specified that he was pleading guilty “without admission of wrongdoing,” and the transcript of the plea proceedings includes no discussion of the factual basis for the charge. The Appellate Division, Third Department concluded the question of whether claimant committed the charged conduct, though decisive in determining whether he violated section 114-a, was not determined by criminal action. Thus, the requirement of identicality was not met, and collateral estoppel does not apply.” After an evidentiary hearing, a WCLJ found SIF failed to prove Howard violated section 114-a by misrepresenting his work status and awarded benefits. The Workers’ Compensation Board affirmed. SIF argues collateral estoppel bars Howard from asserting that he did not violate Workers’ Compensation Law section 114-a because his insurance fraud conviction and his alleged violation of section 114-a are based on the same acts. “It is well settled that an Alford plea binds as strongly as an admission of the facts constituting the crime and is the equivalent of a conviction,” says SIF. “As such, the conviction vitiates the need for an administrative hearing in an administrative forum. Accordingly, the Third Department erred when it reversed the Board’s finding that Howard violated section 114-a based upon his criminal conviction.” [IA]

INA 3-4-13_INA 3-4-13 2/27/13 2:29 PM Page 19

REGISTRATION IS NOW OPEN…

Quarterly CPE Conference -

6 CPE CREDITS!

The Society of Insurance Financial Management invites you to join us for our Quarterly CPE Educational Conference

Thursday, March 21, 2013

at PricewaterhouseCoopers LLP 300 Madison Avenue (Corner of 42nd Street & Madison Avenue) New York, NY 10017

…GO TO WWW.SIFM.ORG FOR DETAILS uCO-SPONSORS

DELOITTE ERNST

TOUCHE LLP

YOUNG LLP

GRANT THORNTON LLP

uPROGRAM

KPMG LLP PRICEWATERHOUSECOOPERS LLP WEISERMAZARS LLP

2:25–3:15 PM

11:30–12:30 PM LUNCH / REGISTRATION 12:30–1:20 PM Developing & Attracting Talent: Higher Education Offering Risk Management and Insurance Programs John Swanick - MODERATOR

DIRECTOR, PRICEWATERHOUSECOOPERS LLP

Warren Manners HEAD OF ADVANCED FINANCIAL MODELING, PRICEWATERHOUSECOOPERS LLP

Abigail Babson INVESTMENT DIRECTOR, WELLINGTON MANAGEMENT COMPANY, LLP

PARTNER, GRANT THORNTON LLP

Michael Angelina

3:15–4:05 PM

EXECUTIVE DIRECTOR, SAINT JOSEPH’S UNIVERSITY – ACADEMY OF RISK MANAGEMENT

Joe DiAngelo, Ed.D. DEAN, ST. JOSEPH’S UNIVERSITY, ERIVAN K. HAUB SCHOOL OF BUSINESS

Brandon Sweitzer

4:05–4:20 PM 4:20–5:10 PM

Greg Hendrick 1:20–2:10 PM

5:10–6:00 PM

Tax Legislative Update Sarah Sheldon Refreshment Break

Refreshment Break FASB / IFRS Update – Current Proposals Jennifer Weiner SENIOR PRACTICE FELLOW, FINANCIAL ACCOUNTING STANDARDS BOARD (FASB)

TAX ATTORNEY, METLIFE

2:10–2:25 PM

Mergers & Acquisitions – Alternative Capital Aaron Scherer SENIOR MANAGER, ERNST & YOUNG LLP

DEAN, ST. JOHN’S SCHOOL OF RISK MANAGEMENT

CEO INSURANCE, XL GROUP

Impact Of Extended Low Interest Rate Environment on Insurers Kevin Madigan - MODERATOR

Risk Modeling Update: Impacting Financial Results, Ratings and Loss Ratios John Spencer DIRECTOR, ULTIMATE RISK SOLUTIONS

6:00–7:00 PM

Cocktail Reception

Call Bridget Paradis at the Administrative Office for additional information - 914.966.3180, x126 PLEASE TELL YOUR COLLEAGUES AND FRIENDS Certificates of attendance will be distributed electronically by March 28, 2013. If you prefer a hard copy, please advise our staff and we will have one mailed to you. The Society administers CPE credits for its meetings and is registered with the New York State Educational Department (License No. 000455) and the National Association of State Boards of Accountancy (Sponsor ID#103140) as a sponsor for continuing professional education. The Society of Insurance Financial Management is registered with the National Association of State Board of Accountancy as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of accountancy have final authority on the acceptance of individual courses for CPE Credit. Complaints regarding registered sponsors may be addressed to The National Registry of CPE Sponsors, 150 Fourth Avenue North, Suite 700, Nashville, TN 37219-2417. Website: www.nasba.org

INA 3-4-13_INA 3-4-13 2/27/13 2:29 PM Page 20

[ IN TH E NEWS ]

By Katlin Nash

United States Fidelity & Guaranty Company vs. American Re-Insurance Company

LBANY, N.Y.— The New York State Court of Appeals in the case of United States Fidelity & Guaranty Company v. American ReInsurance Company found “the order of the Appellate Division should be modified, without costs, to grant USF&G’s motion for summary judgment in part and to deny it in part in accordance with this opinion, and so modified affirmed, and the certified question should not be answered on the ground that it is unnecessary.” The dispute over reinsurance coverage stems from general liability policies that United States Fidelity & Guaranty Company and St. Paul Fire and Marine Insurance Company (collectively USF&G) issued to Western Asbestos Company, a distributor of asbestos products, from 1948 to 1959. Western Asbestos dissolved in 1967 and Western MacArthur Company (MacArthur) took over its business. When individuals began suing MacArthur for injuries caused by exposure to Western Asbestos products, USF&G refused to defend or indemnify MacArthur and MacArthur sued the insurer in 1993. USF&G settled the suit in 2002 by agreeing to pay more than $975 million in satisfaction of all asbestos claims. The settlement required MacArthur to file for bankruptcy. Beginning in 1945, USF&G had entered into a series of reinsurance treaties with American Re-Insurance Company (American Re) and the Excess Casualty Reinsurance Association (ECRA), a pool of four reinsurers. The treaties are excessof-loss contracts that require the reinsurers to reimburse a portion of each loss above the amount of loss retained by USF&G. The treaty of 1956 to 1962, the focus of this case, required USF&G to retain the first $100,000 of covered loss. The retention amount increased to $500,000and to $1 million in later treaties. In 1981, the parties agreed to retroactively increase the retention amount to $3 million, but they eventually disagreed about whether that amendment was meant to reach back to the 1956-62 treaty. After settling MacArthur, USF&G sub20 March 4, 2013 / INSURANCE ADVOCATE

The Court of Appeals reversed concluding with the dissenting Justice of the Appellate Division “that there is an issue of fact as to whether USF&G, in allocating the settlement amount, reasonably attributed nothing to the so called “bad faith” claims made against it. mitted reinsurance claims to American Re and ECRA that were based on the $100,000 retention amount in the 1956-62 treaty. USF&G also allocated all of reinsurance claims to 1959, as it had allocated all of its losses on the asbestos claims to its 1959 policy with Western Asbestos. American Re and ECRA refused to pay the reinsurance claims, contending that, regardless of the terms of the settlement amount was payment for MacArthur’s bad faith claims against USF&G for refusing to defend and indemnify it, which is not covered under the reinsurance treaty. They also argued the retention amount in the 1956-62 treaty had been increased to $3 million. Litigation ensued and the Supreme Court granted summary judgment for USF&G. The Court subsequently entered a judgment against the reinsurers for $420, 425, 536.15. The Appellate Division, First Department affirmed in a 4-1 decision, saying “we find that the motion court correctly determined that the follow-the-fortunes doctrine required defendants to accept the reinsurance presentation made by USF&G herein. Accordingly, all of the defendants’ efforts to second guess USF&G’s decisions concerning allocation of the loss…are precluded from this court’s review.” If it were to reach the merits, it said, “MacArthur’s prior bad faith claim

has no bearing on the reinsurers’ obligations because the settlement agreement that resolved the coverage action does not allocate any of the settlement funds to compensating MacArthur for USF&G’s alleged bad faith.” The Appellate Division also ruled the agreement to increase the retention amount to $3 million did not apply to the 1956-62 reinsurance treaty. The dissenter argued, “the motion court erred when it concluded that the defendants had not presented evidence to raise a triable issue of fact as to whether a portion of the settlement was attributable to…MacArthur’s bad faith claim against USF&G…There is ample evidence, including the findings made by the bankruptcy court, and the record in the underlying coverage action brought by…MacArthur against USF&G, to support defendant’s position that part of the settlement represented bad faith damages.” The Court of Appeals reversed concluding with the dissenting Justice of the Appellate Division “that there is an issue of fact as to whether USF&G, in allocating the settlement amount, reasonably attributed nothing to the so called “bad faith” claims made against it. We also find a factual issue as to whether certain claims were given unreasonable values for settlement purposes. However, we hold that the courts below correctly rejected the reinsurers’ other defenses.” [IA]

Serving New York, New Jersey, Pennsylvania and Connecticut Since 1889 www.insurance-advocate.com

INA 3-4-13_INA 3-4-13 2/27/13 2:29 PM Page 21

INA 3-4-13_INA 3-4-13 2/27/13 2:29 PM Page 22

[ COVER ]

By Peter H. Bickford

LICONY

Celebrates 45th Anniversary O

LICONY 22 March 4, 2013 / INSURANCE ADVOCATE

n February 7, 2013, almost one hundred fifty life insurance executives, regulators and legislators gathered at the Mutual of America Headquarters in New York City to celebrate the 45th Anniversary of the Life Insurance Council of New York (LICONY). Welcoming and substantive legislative and regulatory remarks were provided at the event by New York State Department of Financial Services Superintendent Benjamin M. Lawsky, Senate Insurance Committee Chairman James L . Seward, and Senate Insurance Committee Ranking Member Neil D. Breslin. LICONY Chairman Bridget M. Healy of ING U.S. Inc., made a presentation to Jack Friou of Aflac New York for his outstanding service as Chairman last year. The annual Anniversary Celebration Reception is the culmination of a day of activities that includes a meeting of the LICONY Board of Directors, a luncheon presentation that this year was delivered by the independent voting member of the Financial Stability Oversight Council (FSOC) S. Roy Woodall, Jr., and, a dialogue session in which Superintendent Lawsky addressed the LICONY membership with respect to several active regulatory matters of interest.

INA 3-4-13_INA 3-4-13 2/27/13 2:29 PM Page 23

L-R: MARTIN STEADMAN, PUBLIC RELATIONS CONSULTANT, LICONY; THOMAS E. WORKMAN AND HIS WIFE, PAMELA WORKMAN; SENATOR JAMES L. SEWARD; JAMES K. M C CUTCHEON, MUTUAL OF AMERICA

L-R: JAMES P. CORCORAN, ESQ., FORMER SUPERINTENDENT, NYSID; S. ROY WOODALL, JR., INDEPENDENT MEMBER, FSOC; JANE WOODALL

SUPERINTENDENT BENJAMIN LAWSKY, NEW YORK STATE DEPARTMENT OF FINANCIAL SERVICES

L-R: THOMAS E. WORKMAN, PRESIDENT & CEO, LICONY; SENATOR JAMES L. SEWARD; JACK FRIOU, IMMEDIATE PAST CHAIRMAN OF LICONY INSURANCE ADVOCATE / March 4, 2013 23

INA 3-4-13_INA 3-4-13 2/27/13 2:29 PM Page 24

[ ALBANY NOTEBOOK ] Tax Credits for Clear Air Vehicles Legislation to exempt new electric vehicles, clean fuel vehicles and vehicles that meet the clean vehicle standards from the fees for the first year of registration is being sponsored by Senator Martin Malave Dilan (D-Kings). The bill would be to broaden the types of vehicle technologies that would qualify for tax credits. Car manufacturers are trying to satisfy the Federal Government by producing vehicles that can meet the new emission standards. The next step is in gaining the public’s awareness that the cleaner vehicles are on the market and there are positive benefits of owning one. One way of gaining the public’s interest in buying clean-fuel vehicles is by adding incentives or their purchase.

Fishing Licenses Sold in Onondaga County Since, 1938, the Onondaga County Department of Parks and Recreation has owned and operated a fish hatchery known as Carpenter’s Brook. Onondaga County is the only county in New York State to stock trout in place of the DEC efforts. In 2009, the hatchery stocked about 70,000 trout into Onondaga County’s lakes, ponds, and more than 100 streams providing some of the best fishing areas in the State. The Onondaga County would be allowed to keep twenty percent of the annual revenue from the sale of fishing licenses sold to residents within the county limits and would allow offset and be in lieu of any expenses incurred by the States DEC should the hatchery close and State DEC then have to take over the stocking of the ponds and streams currently stocked by the hatchery. Annual sales of fishing licenses in Onondaga amount to approximately 34,000 licenses, representing nearly $1 million in revenue to the State.

Health Care Professionals at Ironman Health care professionals licensed to practice in other jurisdictions would be allowed to practice in New York in connection with an event sanctioned by the World Triathlon Corporation the Ironman triathlon to be held on July, 28, 2013 in Lake Placid, New York. 24 March 4, 2013 / INSURANCE ADVOCATE

By Betty Flood and Katlin Nash

The triathlon in Lake Placid is one day 2.4 mile swim and 112 mile bike ride which concludes with a 26.2 mile marathon. This legislation would allow licensed health care professionals from other states who volunteer and are sanctioned by the World Triathlon Corporation to perform services for the athletes. Especially important at Ironman events is the massage tent that is available to the athletes following the race where muscle cramps and minor aches and pains can be attended to. Without this immediate attention, many of these competitors would require further intensive medical intervention. The average time an athlete spends in this area is approximately seven minutes, which is not a formal massage treatment. To service the 1,500 athletes, licensed volunteers from other states are necessary. This bill was introduced by Senator Elizabeth Little (R-C-I-Clinton).

It is important to note that this legislation does not impose any new noise standard on any snowmobile, but rather only provides an alternative and analogues noise measuring technique. of this chapter. The test takes approximately 10 minutes between set up and conclusion. Testing takes under a minute. It is important to note that this legislation does not impose any new noise standard on any snowmobile, but rather only provides an alternative and analogues noise measuring technique.

Police Work Dogs Snowmobile Noise The bill’s purpose is to establish an alternative standard and practical noise field test for snowmobiles. The legislation was introduced by Senator Griffo (R-C-IOneida). The vast majority of New York’s 10,500 mile snowmobile trail system is located on private land voluntarily offered by the owner for use as a snowmobile trail. New York State law provides that no new snowmobile may be offered for sale in the state unless it emits less than 73 db when measured by the “A” scale at 50 ft. New sleds encompassing four stroke or direct injections technology frequently emit far less than the state standard. However, the responsible work of the manufacturers can easily be negated by a non-complying after-market exhaust. Current law provides in part that “no snowmobile shall be modified by any person in any manner that shall amplify or otherwise increase total noise emission to a level greater than that emitted by the snowmobile as originally constructed, regardless of manufacture.” The J2567 test is a stationary test that has been developed in consultation with the manufacturers and is used in several other states including Michigan, Wisconsin, and Colorado. This J2567 test can be administered by any police or peace officer authorized to enforce the provisions

The police department would be allowed to seek a waiver of confinement if a police work dog happens to bite an individual while in the course of their official duty. If a police work dog bites an individual in the course of their official duty the police department may apply for a waiver of confinement from the local department of health. In order to obtain a waiver the department must provide an updated rabies vaccination record. “Police dogs, which are a vital part of the police department, should not be detained for 10 days if the dog happens to bite an individual in the course of their official duty,” said Senator David Carlucci (D-WF-Orange).

“Imette’s Law” “Imette’s Law,” was inspired by the murder of Imette St. Guillen, a graduate student who was killed after leaving a bar in Manhattan in 2006. The prime suspect appears to be one of the bouncers at the bar where St. Guillen was last seen. “The first bar Imette visited had security cameras in place. If there had been security cameras at the last bar Imette was seen, this crime would likely have been solved by now, or may never have happened,” continued on page 26

INA 3-4-13_INA 3-4-13 2/27/13 2:29 PM Page 25

BONDING FACILITY

CONTRACT CONSTRUCTION

ADMINISTRATION

COURT BONDS

LICENSES & PERMIT

CUSTOM BONDS

FIDELITY BONDS

All Types of Surety & Fidelity Bonds

CARRIER BONDS

JANITORIAL BONDS

STANDARD RATES | Treasury Listed Sureties | Immediate Binding Facilities

Call Our Highly Experienced Team For All Your Bonding And Surety Needs!

U.S. SURETY SERVICES AGENCY, INC. 108 Greenwich Street, New York, NY 10006 Phone: 212-968-9100 • Fax: 212-248-0380 WATS: 800-924-0398

INA 3-4-13_INA 3-4-13 2/27/13 2:29 PM Page 26

[ ALBANY NOTEBOOK ] continued from page 24

according to Senator Hassell-Thompson (D-WF-Bronx).

Bingo! New legislation has been implemented to allow senior citizen organizations to play “free” bingo up to twice a week. Free bingo is defined as a game where the value of a single prize awarded shall not exceed ten dollars and the total value of all the prizes awarded shall not exceed one hundred fifty dollars in any calendar day. Current law restricts the number of bingo games conducted by senior citizens group to fifteen days during any calendar year. The value of the prizes should not exceed ten dollars for any one game or a total of one hundred fifty dollars in any calendar day. The same conditions apply to any bona fide social, charitable, educational, recreational, fraternal, religious, not-forprofit or age group organization, club or association solely for the purpose of amusement and recreation of its members.

Racing and Retail Join Forces Legislation to allow racing event producers and retailers to combine forces to make joint arrangements on both the scheduling and the times of their races, or to sell and/or purchase broadsheet and simulcast rights has been introduced by Assemblyman Gary Pretlow (D-WFWestchester).

Animals in the Front Seat Do you drive with you animal in the front seat? “Like alcohol and electronic devices, animals pose unique safety risks to drivers, pedestrians, and animals alike,” according to Assemblyman Nelson Castro (D-Bronx). Arizona, Connecticut, Maine, Hawaii, New Jersey, and Rhode Island have legislation and laws restricting drivers from holding pets on their laps. The State of New Jersey explicitly prohibits drivers from having an unrestrained animal in their vehicles. Tickets range from $250to $1,000 per violation and drivers can also face a person’s offense charge under animal cruelty laws.

Tobacco Sales to Children The unlawful purchase or possession of tobacco products by a child and the use 26 March 4, 2013 / INSURANCE ADVOCATE

Child day care centers providing care for more than seven children at a time are required to obtain a license from the Office of Children and Family Services and must carry general liability insurance. of false identification to purchase tobacco products by a child could face fines up to $50.00 to a class B misdemeanor. The legislation was introduced by Assemblyman Dennis Gabryszak (D-I-CErie) provides that a person is guilty of the unlawful sale of tobacco products to a child when he or she sells or causes to be sold tobacco in any form to a child less than eighteen. The unlawful sale of tobacco products to a child will remain a class B misdemeanor. The bill also stipulates the unlawful purchase or possession of tobacco products by a child and the use of false identification by a child will result in the forfeiture of any tobacco product and/or driver’s license, non-driver’s identification card or passport in his or her possession. Children will also be liable for a fine of not more than fifty dollars and/or an amount of community service not to exceed eight hours. The establishment of two new offenses, the unlawful purchase or possession of tobacco products by a child and the use of false identification to purchase tobacco products by a child, are intended to curtail further tobacco use by children and highlights how serious the concern is regarding the use of tobacco products.

Foreign Mortuary Students Mortuary students who are not United States citizens must be lawfully admitted for permanent residence in the United States in order to take the funeral directing examination necessary for licensure as a funeral director in New York State. In order to sit for the National Board Exam, New York requires that a person either have United States citizenship or, if an alien, be lawfully admitted for permanent residence in the United States.

Meningitis Immunization A bill to mandate school districts to distribute written information about meningococcal meningitis and meningitis immunizations to all students entering the seventh grade is being opposed by Mayor Michael Bloomberg. School districts would also be responsible for distributing a response form to parents to indicate whether or not their child has received the vaccination, and for maintaining a record of the responses. The legislation was introduced by Senator Kemp Hannon (R-C-INassau) and Assemblywoman Crystal Peoples-Stokes (D-WF-Erie) of the Public Health Committee.

General Liability Insurance for Day Care Centers Child day care centers providing care for more than seven children at a time are required to obtain a license from the Office of Children and Family Services and must carry general liability insurance. However, small day care centers caring for at least three, but less than seven children are required to obtain a registration certification and are not required to carry general liability insurance. The bill was sponsored by Senator Lee Zeldin (R-C-I-Suffolk). The legislation proposes that no matter how many children are cared for, the ages of the children, or the venue, liability insurance should be carried by all licensed and registered child day care centers, including small day care centers, and group and family day care homes to further protect all parties in the case of accidental injury or property damage.

Veterans Free Tuition at SUNY and CUNY Returning veterans who have served in Afghanistan and Iraq could receive tuition free education at schools of the State University of New York or the City University of New York. “These men and women have sacrificed greatly for this nation, and providing them with free tuition to SUNY and CUNY is a small way that we can honor their service,” said Senator DeFrancisco (RC-I-Onondaga). The bill was also sponsored by Assemblyman Cusick (D-I-CWF-Richmond). continued on page 28

D D

INA 3-4-13_INA 3-4-13 2/27/13 2:29 PM Page 27

DOCTORS DIRECT

SAME CLIENTS, MORE COMMISSIONS! TRANSPARENT H E A L T H C A R E Your Healthcare, Negotiated

deeply discounted medical, pharmacy, dental, vision & more!

TRANSPARENT HEALTHCARE is proud to announce its newest member benefit, AmeriDoc, a FREE telemedicine program that connects members to doctors by phone, video or email anytime of the day or night. Telemedicine doctors can discuss symptoms, treatment options and prescribe medicine when appropriate, RIGHT OVER THE PHONE. It’s fast and convenient, often savings members hundreds of dollars a year. When members do need to see a doctor, they can get affordable care from the thousands of doctors in TRANSPARENT HEALTHCARE’s network.

only

$29/month

one price for the member & everyone living with them!

customer service that is with you every step of the way!

access to specialty services such as assisted living

888.770.7450

TRANSPARENT HEALTHCARE… Bringing cost containment strategies used by the insured directly to the uninsured.

START SELLING THC TODAY & EARN $20,000/YEAR FOR ONLY 300 MEMBERSHIPS SOLD! Learn more by visiting… www.Transparenthealthnetwork.com/Sales and downloading our updated sales materials, now including AmeriDoc!

TRANSPARENT H E A L T H C A R E Your Healthcare, Negotiated Transparent Healthcare is not health insurance. It’s easy access to affordable care.

INA 3-4-13_INA 3-4-13 2/27/13 2:29 PM Page 28

[ ALBANY NOTEBOOK ] continued from page 26

Plaque or Statue? On June 15, 2012, Nik Wallenda became the first man in over 100 years to cross the Niagara River Gorge on a high wire. The occasion was an unprecedented event drawing tens of thousands of people to Niagara Falls and generating a multimillion dollar economic impact. Senator Maziarz (R-C-I-WF-Niagara)

Body-piercing and tattooing poses substantial hazards to public health and warrants the imposition of regulation and licensure to protect the health, safety, and welfare of the public and should be licensed.

Personal Liability coverage in a five-minute phone call.

has asked the Office of Parks, Recreation, and Historic Preservation to install a permanent monument to help ensure the proper and timely commemoration of Nik Wallendaâ&#x20AC;&#x2122;s historic walk while simultaneously providing visitors to Niagara Falls State Park with an interesting and enjoyable attraction.

Licensing of Body-Piercing and Tattooing Body-piercing and tattooing poses substantial hazards to public health and warrants the imposition of regulation and licensure to protect the health, safety, and welfare of the public and should be licensed. Currently, there is no law regulating the practice of body-piercing and if this procedure is done improperly, it can lead to a number of diseases. Doctors in the State Department of Health have indicated that piercing the tongue and other mucous-membrane sites of the body can lead to potentially life-threatening infection, even if the posts used are sterile.

Advertisement on Online Lottery Games

Call. Quote. Bind. !5,0* APCOâ&#x20AC;&#x2122;5 &1746(175 $0' 241/26 &$.. &(06(4 (4510$. ,$%,.,6; &18(4$*( &$0 %( 3716(' %170' $0' '(.,8(4(' 61 ;174 ( /$,. ,0%1: 37,&-.; $0' $&&74$6(.; '74,0* 10( ),8( /,076( 2+10( &$...

(4510$. ,$%,.,6; /$'( 5,/2.( > ,/,65 )41/ 61 > /(',&$. 2$;/(06 ,0&.7'(' > 26,10$. *1.) &$46 &18(4$*( $8$,.$%.e > 4(/,7/5 $5 .19 $5 0 > $4-(65 $8$,.$%.( )14 2(4510$. 7/%4(..$

18(4$*( 8$,.$%.( )14 > 90(4 1&&72,(' '9(..,0*5 > 10'15 > ($510$. 5(&10'$4; +1/(5 > "$&$06 '9(..,0*5 > "$&$06 .165

The TAPCO Service Pledge > â&#x20AC;&#x153;A? 4$6(' 010 $'/,66(' &$44,(4 > 1/2(6,6,8( 24,&,0* > $56 21.,&; 6740$4170' > 0 +175( ),0$0&,0* $8$,.$%.(

1,000 Strong

> 7,&- &.$,/5 +$0'.,0* >

&4(',6 61 ;174 2(4510$.,<(' TAP # 7&-5 ",5$ '(%,6 &$4' 9,6+ ($&+ 21.,&;

This bill would allow the Director of Lottery to contract for the placement of advertising on any available media related to an online lottery game. Advertising space could be broadcast upon media between Quick Draw games; there is the potential to generate considerable revenue for New York State by contracting out for the advertising space.

Age Requirements for NYC Correctional Officers The maximum age requirements for New York City correctional officers would be 21. Currently, the City of New York does not prescribe age requirements for appointment to a uniformed correction officer position. Correction officers are part of the uniformed services of New York and, thus the age requirement should be the same as those for police officers. [IA]

> ",s$ $56(4 $4' $0' H 2$;/(065 $&&(26('

More than 1,000 classes of P&C business written under binding authority.

877-743-6977 www.gotapco.com

www.insurance-advocate.com 28 March 4, 2013 / INSURANCE ADVOCATE

INA 3-4-13_INA 3-4-13 2/27/13 2:29 PM Page 29

Simplify Simp Si liif Y lif Your Life Liff

ONE C ALL FOR CONNEC TIONS TO 12 LEADING DBL PR OVIDERS. "SDI *OTVSBODF (SPVQ t 'JSTU 3FIBCJMJUBUJPO -JGF t 'PS U %FBSCPSO -JGF (VBSEJBO -JGF *OTVSBODF $PNQBOZ t .VUVBM PG 0NBIB t /BUJPOBM #FOFĂśU -JGF *OTVSBODF $PNQBOZ 1SFTJEFOUJBM -JGF t 1SVEFOUJBM *OTVSBODF $PNQBOJFT t 4FDVSJUZ .VUVBM -JGF 4UBOEBSE 4FDVSJUZ -JGF t 5IF )BSUGPSE t 5IF 4UBOEBSE t ;VSJDI *OTVSBODF $PNQBOZ

Combined DBL Resour Combined Resources ces will get y you ou the b best est deal on DBL b ec ause we because we make make the most of our established relationships. relationships. Weâ&#x20AC;&#x2122;ve b Weâ&#x20AC;&#x2122;ve been een doing it for for over over 75 y years. ears. N No ow wonder onder w weâ&#x20AC;&#x2122;re eâ&#x20AC;&#x2122;re Preferred Market.â&#x20AC;? ccalled alled â&#x20AC;&#x153;The â&#x20AC;&#x153; The Brokerâ&#x20AC;&#x2122;s Broker â&#x20AC;&#x2122;s Preferred M arket.â&#x20AC;? We Are #1 Combined DBL Resources Ltd. & Complete Accident & Health Agency

t 5PQ DPNNJTTJPO TDBMFT CPUI MFWFM BOE IJHI MPX

0WFS ZFBST PG EFEJDBUFE TFSWJDF

t #JOEJOH POMJOF PS PWFS UIF QIPOF DPOĂśSNBUJPOT NBJMFE UIF TBNF EBZ t &YDFMMFOU SFMBUJPOTIJQT XJUI UPQ SBUFE DBSSJFST QSPEVDJOH SFTVMUT t -PXFTU SBUFT GPS CPUI ĂśMFE BOE FYQFSJFODF SBUFE MJOFT 4FS WJOH #SPLFS T 4UBUVUPS Z %JTBCJMJUZ 1MBOT *O New York (DBL) Âˇ New Jersey (TDB) Âˇ Hawaii (TDI) Âˇ California (SDI) Âˇ Puerto Rico Âˇ Rhode Island (TDI) Richard B. Lewis President

Scott Bernstein Vice President

Selena L. Kutschera Vice President - Administration

Richard Slavin Vice President

Website: www.combinedDBL.com

INA 3-4-13_INA 3-4-13 2/27/13 4:27 PM Page 30

[ IN TH E ASSOCIATIONS ]

By Ron Brunell

Downstate Holds Annual Legislative Forum

n Wednesday February 6th Downstate held its annual Legislative Forum at Chateau Briand in Carle Place. Attendance was once again good. Downstate has, over the past few years under the leadership of Earle Eaton, involved into a new role, one which I believe goes back to its inception over 80 years ago. New York State is a larger state with different issues effecting different parts of the state. When Downstate was formed it was to deal with the different legislative issues effecting the downstate region. Over the years, downstate agents were less concerned with farming issues effecting upstate territories and more con-

cerned with Urban & costal issues which effected “Downstate”. The new role of Downstate is to hold a legislative forum once a year, & bring the lobbyists from the three producer group trade associations together to discuss the “downstate issues” affecting the territory and see if we can form a common goal of attack. This has proved to be VERY successful. Several years ago at this meeting CIB & IIABNY agreed to join forces and fight “Producer disclosure 194”. This year Jill Muratori, IIABNY lobbyist, Matthew Guilbault, Esg, PIANY director of Government & Industry Affairs & Tom Faist Esg, CIBGNY lobbyist, agreed

to sit on a panel moderated by Steve Acunto, Editor & Publisher of the Insurance Advocate. Steve did a great job firing questions to the panel on Workers’ Compensation issues, 240 & 241 labor law issues, & Super storm Sandy issues. The interesting outcome is that all three trade group lobbyists pretty much agree on these issues and the approach as to how to attack them is very similar. Many good questions were generated from the audience and answered. Everyone that attended felt fulfilled and informed by this wonderful panel. Dinner followed the program as well. [IA]

L-R: JILL MURATORI, IIABNY LOBBYIST; MATTHEW GUILBAULT, ESQ., PIANY DIRECTOR OF GOVERNMENT AND INDUSTRY AFFAIRS; TOM FAIST, EXQ., CIBNY LOBBYIST

JEFF GREENFIELD, NGL GROUP

30 March 4, 2013 / INSURANCE ADVOCATE

JUSTIN FRIES, GARBER, ATLAS, FRIES; RON BRUNELL, B&B COVERAGE; LEWIS BERNSTEIN, B&B COVERAGE

INA 3-4-13_INA 3-4-13 2/27/13 4:27 PM Page 31

www.outsourcingaides.com

Our team possesses… Real Fluency • Insurance Experience • Care … and We Work on EST. Our team helps you… Reduce Rent Costs • Cut HR Expenses • Avoid Employee Insurance Payments • Decrease Payroll Taxes A profitable new angle on data entry, compliance, filtering, billing, claims, faxes and more!

L-R: RON BRUNELL; JEFF GREENFIELD; PETER RESNICK, INTERBORO/AUTOONE INSURANCE; JUSTIN FRIES; AND MATTHEW GUILBAULT, ESQ.

Call DANNY GAGO Sales Associate | 732.898.9666 | danny@outsourcingaides.com

L-R: PETER RESNICK, JUSTIN FRIES AND MATTHEW GUILBAULT, ESQ.

PAT CALVERT WITH EARLE EATON L-R: JIM SUTTON, SUTTON AGENCY AND TOM CROWLEY, PRESIDENT, IIABNY

STEVE ACUNTO, EDITOR & PUBLISHER, INSURANCE ADVOCATE MAGAZINE

OUTPACE THE COSTS AND THE STRESS OF EXPANDED STAFFING

outsourcing aides [ IN T H E ASSOCIATIONS ]

INSURANCE ADVOCATE / March 4, 2013 31

INA 3-4-13_INA 3-4-13 2/27/13 4:37 PM Page 32

[ COURTSI DE ]

By Lawrence N. Rogak

Excessive Fee Paid to Subpoenaed Witness Does Not Disqualify Him, But Jury Gets to Know About it Caldwell v Cablevision Sys. Corp.

t issue on this appeal is whether the testimony of a subpoenaed fact witness, who receives a fee alleged to be disproportionately in excess of CPLR

8001 (a)’s mandatory fee requirement for attendance at trial, is inadmissible as a matter of law. We conclude that such testimony is generally admissible, but that the trial

court should, in a proper case, charge the jury as to the witness’s potential bias, in light of the perceived excessiveness of the fee. Where, as here, the party that subpoenaed the witness offers no explanation for a fee that is seemingly in excess of reasonable compensation for lost time and incidental expenses, the trial court, upon a timely request by an objecting party, must charge as to the witness’s potential bias.

I. In September 2006, defendant Communications Specialists, Inc. (CSI), per its contract with Cablevision Systems Corporation, began the installation of high-speed fiber-optic cable underneath Benefield Boulevard in Peekskill, New York. The work required CSI to cut a twofoot-deep and four- or-five-inch-wide trench along the entire length of the 3,000foot street. CSI also dug 58 one-foot-wide “test pits” in certain locations adjacent to the trench in order to locate pre-existing utility lines. CSI backfilled the trench and test pits but, at the time of the incident giving rise to this action, the street had not been re-paved. On October 11, 2006 at approximately 10:00 p.m., plaintiff Bessie Caldwell, who resided on Benefield Boulevard, took her dog out for a walk. She crossed Benefield Boulevard and walked the dog for a short distance. As she was crossing the street again, returning to her residence, plaintiff tripped and fell, injuring her leg. Plaintiff and her husband (suing derivatively) commenced this negligence action against, among others, CSI for creating a hazardous and unsafe condition in the road by failing to properly backfill the trench and test pits, failing to properly or adequately pave over those areas, and failing to install temporary asphalt. After CSI answered and the parties conducted discovery, the matter proceeded to a bifurcated trial with liability being tried first. Plaintiff testified that she stepped into a “dip in the trench” that caused her to fall. To rebut this testimony, CSI subpoenaed 32 March 4, 2013 / INSURANCE ADVOCATE

INA 3-4-13_INA 3-4-13 2/27/13 2:29 PM Page 33

[ COURTS ID E ] a physician who had treated plaintiff in the emergency room shortly after the accident. The doctor was called merely as a fact witness to testify concerning his entry in the “history” section of his consultation note that plaintiff “tripped over a dog while walking last night in the rain.” He testified consistently with his documented note. During cross-examination, plaintiff ’s counsel elicited from the doctor that CSI had paid him $10,000 for appearing and testifying. The doctor denied that his testimony was influenced by the payment, stating simply that he was there to “testify to my records.” His testimony consisted only of his verification that he made the entry into the emergency room record. No professional opinion was sought nor given. Plaintiff ’s counsel requested that the court strike the doctor’s entire testimony or, in the alternative, issue either a curative instruction or a jury charge concerning monetary influence. The following day, before summations, plaintiff ’s counsel asked that the court charge the jury that, pursuant to CPLR 8001, the doctor, as a fact witness, was entitled to a witness fee of $15 per day and $.23 per mile to and from the place where he was served with the subpoena. Defense counsel countered that the witness fee was the statutory minimum and that there was no prohibition against paying a fact witness for time missed from work. The court suggested that, rather than issuing a charge, the parties could address the issue during summation and the jury could draw whatever inference it wished from those facts. The court cautioned the parties against referencing the statutory criteria of CPLR 8001. After summations, where the parties addressed the doctor’s fee payment in detail, the court gave the jury a general bias charge but made no specific reference to the doctor’s testimony or the payment he received for appearing at trial. Following deliberations, the jury found CSI negligent, but that such negligence was not a substantial factor bringing about the accident. Supreme Court denied plaintiff ’s motion to set aside the verdict. The Appellate Division affirmed, holding that although CSI’s “substantial payment” to the doctor did not warrant exclusion of his testimony, Supreme Court erred in failing “to adequately charge the jury regarding the

suspect credibility of factual testimony by a paid witness,” but that reversal was not required because the error was harmless (86 AD3d 46, 48 [2d Dept 2011]).

II. We, like the Appellate Division, are troubled by what appears to be a substantial payment to a fact witness in exchange for minimal testimony. Such payments, when exorbitant as compared to the amount of time the witness spends away from work or business, create an unflat-

tering intimation that the testimony is being bought or, at the very least, has been unconsciously influenced by the compensation provided. While we are concerned by the amount the witness was paid for this minimal attendance and testimony, we conclude that the Appellate Division’s order should be affirmed under the circumstances of this case. CPLR 8001 (a) provides that one who continued on page 34

1-800-ADJUSTERS 1-800-ADJUSTERS 1-800-ADJUSTERS

SM SM

235-8783

Public Adjusters, working hard to get you back to your pre-loss value. When disaster strikes, your only consolation is knowing you have experienced, honest insurance professionals on your side.

1-800-Adjusters

The Only Number You Need to Remember When Disaster Strikes.

David Romano Vice President Licensed in NY and NJ 2125 Utica Ave., Suite 2R Brooklyn, NY 11234 Cell 917-860-5520 | Fax 347-492-6591

Craig Spiegel President Licensed in NY and NJ 2125 Utica Ave., Suite 2R Brooklyn, NY 11234 Cell 917-822-0200 | Fax 347-492-6591

INSURANCE ADVOCATE / March 4, 2013 33

INA 3-4-13_INA 3-4-13 2/27/13 2:29 PM Page 34

[ COURTSIDE ] continued from page 33

is compelled by subpoena to appear at trial is entitled to a $15 daily attendance fee and $.23 per mile in mileage fees. Although this is only the minimum that must be paid to a subpoenaed fact witness, that does not mean that an attorney may pay a witness whatever fee is demanded, however exorbitant it might be. Our courts and disciplinary rules have long acknowledged that “[t]o procure the testimony of witnesses it is often necessary to pay the actual expenses of a witness in attending court and a reasonable compensation for the time lost” (Matter of Robinson, 151 AD 589, 600 [1st Dept 1912] [emphasis supplied] affd 209 NY 354 [1913]). “[T]here are [also] many incidental expenses in relation to the prosecution or defense of an action at law which can with propriety be paid by a party to the action” (id. at 600; see Rules of Professional Conduct [22 NYCRR 1200.0] rule 3.4 [b] [1] [permitting a lawyer to pay a witness

“reasonable compensation . . . for the loss of time in attending, testifying, preparing to testify or otherwise assisting counsel, and reasonable related expenses”]; see also NY St Bar Assn Comm on Prof Ethics Formal Op 668 [1994]).

What is not permitted and, in fact, is against public policy, is any agreement to pay a fact witness in exchange for favorable testimony, where such payment is contingent upon the success of a party to the litigation (see Bergoff Detective Serv., Inc. v Walters, 239 AD 439, 442-443 [1st Dept 1933]; Rules of Professional Conduct [22 NYCRR 1200.0] rule 3.4 [b] [prohibiting a lawyer from paying, offering to pay or acquiescing “in the payment of compensation to a witness contingent upon the content of the witness’s testimony or the outcome of the matter”]). Of course, that situation is not presented here. The doctor’s testimony was limited to what he had written on his consultation note less than 12 hours after the accident and well before plaintiff commenced litigation. Nor can it be argued that the doctor tailored his testimony in exchange for the fee or that there is any record evidence that the doctor’s consultation note was fabricated.

Wilkofsky, Friedman, Karel & Cummins ATTORNEYS-AT-LAW

➤ Representing Agents, Brokers & Adjusters in Litigation and at the Department of Financial Services ➤ Representing Insureds Against Insurance Companies ➤ SANDY RELATED CLAIMS

➤ FIRE ➤ DISABILITY

➤ THIRD PARTY PROPERTY DAMAGE

➤ WATER DAMAGE ➤ PERSONAL INJURY

➤ WINDSTORM

➤ THEFT ➤ BAD FAITH INSURANCE LITIGATION ➤ EUO’S ➤ BUILDING COLLAPSE

➤ INSURANCE DEPARTMENT & LICENSING ISSUES ➤ LIFE ➤ CONSTRUCTION LOSSES ➤ FIDELITY

299 Broadway , Suite 1700, New York, NY 10007 212-285-0510 (FAX) 212 285-0531 Web Site: www.wfkclaw.com • Email: info@wfkclaw.com OFFICES IN: NEW JERSEY • PENNSYLVANIA • LOUISIANA • TEXAS • FLORIDA 34 March 4, 2013 / INSURANCE ADVOCATE

INA 3-4-13_INA 3-4-13 2/27/13 2:29 PM Page 35

[ COURTS I D E ] Plaintiff argues that, having been subpoenaed, the doctor had a legal duty to appear and a legal right to only a $15 attendance fee, and because he was paid in excess of that amount, Supreme Court should have stricken his testimony. That argument, however, is without merit since the fee set forth in CPLR 8001 (a) is a minimum fee (see 234 Siegel’s Prac Rev 1 [June 2011] [noting that payment of more than the $15 daily fee is not precluded under either the law or code of ethics]). Nonetheless, the payment of such a disproportionate fee for a short amount of time at trial is troubling, and the distinction between paying a fact witness for testimony and paying a fact witness for time and reasonable expenses can easily become blurred. A line must therefore be drawn “between compensation that enhances the truth seeking process by easing the burden on testifying witnesses, and compensation that serves to hinder the truth seeking process because it tends to ‘influence’ witnesses to ‘remember’ things in a way favorable to the side paying them” (NY St Bar Assn Comm on Prof Ethics Formal Op 668). In addition to asking the trial court to strike the doctor’s testimony, plaintiff ’s counsel asked the court to charge the jury that, per the subpoena, the doctor was required by law to appear at trial and was entitled to a $15 attendance fee and $.23 per mile and “let [the jury] do with it what they will.” This was tantamount to a charge request for a special jury instruction relative to the doctor’s potential bias. We agree with plaintiff that Supreme Court should have issued a bias charge specifically tailored to address the payment CSI made to the doctor. Supreme Court generally instructed the jury that bias or prejudice was a consideration that it should consider in weighing the testimony of any of the witnesses, but this was insufficient as it pertained to CSI’s payment to the doctor. To be sure, Supreme Court properly acted within its discretion in concluding that the fee payment was fertile ground for cross-examination and comment during summation. But because CSI did not even attempt to justify the $10,000 payment for one hour of testimony, Supreme Court should have also crafted a charge that went beyond the CPLR 8001 requirements. Supreme Court should have instructed the jury that fact witnesses may

be compensated for their lost time but that the jury should assess whether the compensation was disproportionately more than what was reasonable for the loss of the witness’s time from work or business. Should the jury find that the compensation is disproportionate, it should then consider whether it had the effect of influencing the witness’s testimony (see PJI 1:90.4). Of course, such a charge must be requested in a timely fashion. Additionally, it is within the trial court’s discretion to determine whether the charge is warranted in the context of a particular payment to a witness, and to oversee how much testimony should be permitted relative to the fact witness’s lost time and other expenses for which he is being compensated. We conclude that, although a more specific jury charge should have been given, Supreme Court’s failure to issue one in this case was harmless. The dispute underlying the doctor’s testimony was not whether he fabricated the contents of the consultation note. In other words, the substance of the doctor’s testimony was such that the jury’s assessment was only tangentially related to the doctor’s credibility. Accordingly, the order of the Appellate Division should be affirmed, with costs. [IA]

[ CLASSIFIEDS ] www.insurance-advocate.com NASSAU COUNTY BROKER Seeking Ass. CSL and CSR Min 5yrs Exp. Knowledge Applied or AMS Excellent Salary & Benefits Email: Jamodeo@namspec.com

PROPERTY & CASUALTY INSURANCE AGENCY FOR SALE ★ Eastern Suffolk County ★ ★ Established For 30 Years ★

Located in High Volume & Highly Visible Shopping Center ★ EXCELLENT OPPORTUNITY ★ Call (516) 350-2994

ATTENTION LICENSED INSURANCE BROKER Busy Bronx brokerage seeks licensed experienced insurance broker. Bi-lingual preferred. Must be familiar with Plan, CWICO, and other company systems. Very fast paced office. Excellent communication skills required. Decent pay plus incentive bonus. Email resume to: jmason@jnmasonagency.com

Classified Opportunities Classified advertisements must be received by MONDAY NOON prior to publication date for inclusion in that week’s issue. Rate is $38 per inch, per insertion, payable in advance of publication date. In addition, there is a $5 charge for advertisers requesting to assign box numbers forwarded via first class mail.

(Response forwarding expires 30 days after publication.)

914.966.3180 g@cinn.com

AGENTS • PRODUCERS • BROKERS “LET OUR OFFICE BE YOUR OFFICE” SERVICE and/or PURCHASE 35 Major National & Regional Carriers Competitive Commercial & Personal Lines Private Offices & Conference Rooms Licensed in all States - Est. 1974 Plainview, N.Y.

Ask For Richard or Evan Bower. 516-576-0400 Ext. 0 E-Mail: rbower@thebggroup.com www.thebggroup.com

www.insurance-advocate.com

Michael Leff LICENSED BROKER

914.245.4500, X12 • FAX 914.245.0461 135 EAST MAIN ST. / PO BOX 119 JEFFERSON VALLEY, NY 10535 INSURANCE ADVOCATE / March 4, 2013 35

INA 3-4-13_INA 3-4-13 2/27/13 2:29 PM Page 36

[ LOOKING BACKâ&#x20AC;Ś Insurance Advocate, 25 years ago]

Serving New York, New Jersey, Pennsylvania and Connecticut Since 1889 www.insurance-advocate.com

36 March 4, 2013 / INSURANCE ADVOCATE

INA 3-4-13_INA 3-4-13 2/27/13 2:29 PM Page 37

[ LOOKING BACK… Insurance Advocate, 25 years ago]

INSURANCE ADVOCATE / March 4, 2013 37

INA 3-4-13_INA 3-4-13 2/27/13 2:29 PM Page 38

IN THE MATTER OF THE LIQUIDATION OF CAPITAL MUTUAL INSURANCE COMPANY Supreme Court County of New York Index No.: 402044/00 NOTICE Pursuant to an order of the Supreme Court of the State of New York, County of New York (“Court”), entered on October 5, 2000 (“Liquidation Order”), the then-Superintendent of Insurance of the State of New York and his successors in office were appointed as liquidator (“Liquidator”) of Capital Mutual Insurance Company (“Capital Mutual”) and, as such, has been directed to take possession of Capital Mutual’s property, liquidate its business and affairs, and dissolve its corporate charter pursuant to Article 74 of the New York Insurance Law (“Insurance Law”). The Superintendent of Financial Services of the State of New York has now succeeded the Superintendent of Insurance as Liquidator of Capital Mutual. The Liquidator has, pursuant to Insurance Law Article 74, appointed Michael J. Casey, Acting Special Deputy Superintendent (“Acting Special Deputy”), as his agent to liquidate the business of Capital Mutual. The Acting Special Deputy carries out his duties through the New York Liquidation Bureau, 110 William Street, New York, New York 10038. The Liquidator has submitted to the Court a verified petition (“Verified Petition”) seeking an order: (i) establishing April 15, 2013, as the bar date (“Bar Date”) for the presentment to the Liquidator of all claims against Capital Mutual or its insureds other than the Liquidator’s claims for administrative costs and expenses; and (ii) providing for such other and further relief as this Court may deem just and proper. A hearing is scheduled on the Verified Petition on the 27th day of March 2013, at 11:00 a.m., before the Honorable Alice Schlesinger, JSC, New York Supreme Court at the Courthouse, IAS Part 16, 60 Centre Street, Room 22, in the County, City and State of New York, 10007. If you wish to object to the Verified Petition, you must serve a written statement setting forth your objections and all supporting documentation upon the Liquidator and Clerk of the Court, at least seven business days prior to the hearing. Service on the Liquidator shall be made by first class mail at the following address: Superintendent of Financial Services of the State of New York as Liquidator of Capital Mutual Insurance Company 110 William Street New York, New York 10038 Attention: John Pearson Kelly, General Counsel In order to participate in Capital Mutual’s liquidation proceeding, all claims must be presented to the Liquidator on or before the Bar Date, which is the last date set by the Court to present claims in Capital Mutual’s liquidation proceeding. The Verified Petition and Report are available for inspection at the above address. In the event of any discrepancy between this notice and the documents submitted to Court, the documents control. Requests for further information should be directed to the New York Liquidation Bureau, Creditor and Ancillary Operations Division, at (212) 341-6665. Dated: January 25, 2013 Benjamin M. Lawsky Superintendent of Financial Services of the State of New York as Liquidator of Capital Mutual Insurance Company 38 March 4, 2013 / INSURANCE ADVOCATE

INA 3-4-13_INA 3-4-13 2/27/13 2:29 PM Page 39

Simply include it with your next DBL submission – it only takes one click!

first rehab life ®

INA 3-4-13_INA 3-4-13 2/27/13 2:29 PM Page 40

Expect big things in workersâ&#x20AC;&#x2122; compensation. Expect to save a third of your clients 30% or more. Expect broad acceptance and few class limitations nationwide. Expect competitive commissions. For information call (877) 234-4450 or visit auw.com/us.

ÂŠ2013 Applied Underwriters, Inc. A Berkshire Hathaway company. Rated A by A.M. Best.