Insurance Advocate April 8, 2013 by C Acunto

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VOLUME 124, NUMBER 7 / April 8, 2013

A CINN Group, Inc. Publication

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

Amalgamated Life Marks Its 70th Anniversary PAGE 22

DAVID WALSH PRESIDENT AND CEO AMALGAMATED LIFE

Forced-Placed Fiasco:

Insurer Fined $14 Mil ion (Thatâ&#x20AC;&#x2122;s Mil ion) by DFS

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2013

June 9-11, 2013

AT THE T TRUMP RUMP T TAJ A AJ MAHAL MAHAL CASINO R RESORT, ESORT, A ATLANTIC TLANTIC CITY, CITY, N.J.

S Schedule chedule Sunday, Sunday, June 9, 2013

Monday Monday,, June 10, 2013, continued

Noon-7:30 p.m.

PIA registration desk open

1-7 p.m.

PIA registration desk open

1-4 p.m.

Opening general session Super S uper er lessons lear learned rned fr from om a S Super uper S Storm torm Panel Discussion Panel Discussion

1:30-4:30 p.m.

Trrade show open with coffee and dessert

3-5:50 p.m.

Education sessions Cyber C yber Tech Teech 2013: Liability Exposures Exposures and Coverage and Co verage e

4-6:30 p.m.

Trade rad r show open with cash giveaway

6:30-8 p.m.

Networking cocktail reception

9-11:30 p.m.

YIP Nitecap reception

Jerry Hargrove, J.D., CIC, CPIA, FCL LA, A SCL LA, A PICS, LICS, CBIA

3-5:50 p.m.

Steve Lyon, CPCU, CIC, CRM, AAI, ARM, AIS, CRIS

Monday, Monday, June 10, 2013 7:30 a.m.-12:30 p.m. PIA registration desk open 8-11 a.m.

Education sessions C Current urrreent IIssues ssues in Constr Construction Defects uction Defects Jerry Hargrove, J.D., CIC, CPIA, IA FCL LA A, SCL LA, A PICS, LICS, CBIA

8-11 a.m.

Superstorm Sandy: Sandy: Commercial Commercial Superstorm Coverage e IIssues ssues Coverage Cathy Trischan, r CPCU, CRM, CIC, ARM, AR AU, AAI, CRIS, MLIS

8:30-10:30 a.m.

Earthquakes, Earthquakes, Hurricanes Hurricanes and Floods, Floods, Oh Oh M My! yy! Steve Lyon, CPCU, CIC, CRM, AAI, ARM, AIS, CRIS

9 a.m.-noon

Trade rad r show open with cash giveaway

9-10:30 a.m.

Continental breakfast at the trade show

12:15-1:30 p.m.

YIP luncheon

Personal Peersonal Lines and Commercial Commercial Lines Q&A

3-5 p.m.

Who’s Who’s Covered Cover ereed by by the CGL? CGL? Insureds Insureds and A Additional dditional d IInsureds nsureds Cathy Trischan, r CPCU, CRM, CI CIC, ARM, AU, AAI, CRIS, MLIS

7-10:30 p.m.

Annual recognition banquet

Tuesday, T uesday, June 11, 2013 6:30 a.m.

NJYIP Fun Run warm ups

7-8 a.m.

NJYIP Fun Run to benefit Special Olympics NJ

8-9 a.m.

NJYIP Fun Run breakfast with award presentations

8-10:30 a.m.

PIA registration desk open

9:30 a.m.-12:30 p.m. Closing general session and continental breakfast Errors Errors and Omissions Omissions Loss Prevention Preevveention Steve Lyon, CPCU, CIC, CRM, AAI, ARM, AIS, CRIS 110356 3/13

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Contents [COVER STORY ] 16

Forced-Placed Fiasco: Insurer Fined $14 Million by DFS

[FEATURES]

Foreword: Good Faith in a Handshake Steve Acunto, Publisher

Insight: Rehab the Rehabilitator! Peter H. Bickford

Face to Face: There Goes the Neighbordhood…NOT! Michael Loguercio

In the News: Amalgamated Life Marks its 70th Anniversary

In the News: PRI Names Winner of “Best Practices” Award

On the Level: Thinking About Thinking Jamie Deapo

On the Road: Turns for the Worse Report Identiﬁes Most Dangerous Roads for Pedestrians

Fraud Watch: Schneiderman Announces Arrest of Eight, Faking More than 13,000 Inspections

In the Associations: Sen. Warner to Address the Big “I”

Guest Opinion: Medical Price Transparency G. Keith Smith, M.D.

Classiﬁeds

Looking Back: March, 1988

Legal: Catholic Diocese v. Insurer Katlin Nash

April 8, 2013 | volume 124 number 7

[ AD FEATURES] 19

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38 40 32 Like us on Facebook… The Insurance Advocate Magazine INSURANCE ADVOCATE / April 8, 2013 3

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[ FORE WORD ]

Steve Acunto

Good Faith in a Handshake

n the last issue of this publication, we ran a story that remembered with affection the late Cummin Clancy. The story was written by Brian and Brendan Clancy and appeared here in an In Memoriam column. Cummin Clancy taught me a lot early on in my career with respect to what it meant to be an independent insurance agent. He epitomized the kind of clear, honest, handshake-is-enough kind of man that has defined the best independent insurance agents as individuals of trust and fidelity. Cummin’s story is a beautiful one, right up to the present day, to his grandchildren and his successors on the insurance stage including his daughter Maura who has led a number of insurance entities, carrying his tradition of service forward. Cummin and Maureen, his wife of 58 years, are precisely the kind of people who give insuring and good faith a good name. I will miss his warm and hearty friendship, his quick and easy way with Irish poetry and his warm and open manner. He was surely a fine gentleman and positively a great example for independent insurance agents in all that he did. R.I.P…In our most recent issue of the Insurance Advocate we focused on business issues of concern in a broad sense to the clients of agents and brokers. We will continue that focus in coming issues as we did receive good response to the column. Speaking of good response, a recent cover-story regarding the liquidation of the Liquidation Bureau, i.e. its desirability in the view of some, drew high praise from readers, many of whom see limited government as a benefit per se, but some of whom agree that the structure, not the people there, is faulty…In this issue we highlight a story about Physicians’ Reciprocal Insurance Company (PRI) and its work with local hospitals to enhance risk management programs and, thereby, mid-wiving excellent results for claims. We are delighted that PRI has taken this aggressive approach across the state among the many hospitals and other healthcare institutions it insures…We take a moment to wish all of our readers a blessed Easter and Passover. [IA] 4 April 8, 2013 / INSURANCE ADVOCATE

VOLUME 124, NUMBER 7 APRIL 8, 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.

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[ INSIGHT ]

By Peter H. Bickford

Rehab the Rehabilitator!

here was a time not so long ago when the New York Insurance Department took the view that if an insurance company stopped writing new business and tried to simply run-off its business, it was engaging in a prohibited activity—self-liquidation. The failure to “do the business of insurance for a period

oped over the past two decades devoted in whole or in part to legacy business, such as AIRROC (Association of Insurance and Reinsurance Run Off Companies) and IAIR (International Association of Insurance Receivers). The regulators, of course, were slow to recognize that the management of outstanding contracts was as

The rehabilitation statute also provides that: “The rehabilitator or any interested person . . . at any time, may apply for an order terminating any rehabilitation proceeding and permitting such insurer to resume possession of its property and the conduct of its business, . . .” Peter H. Bickford

of one year” was—and still is—grounds for liquidation of an insurer, and the Department’s position was that if a company was not writing new business it was not doing the business of insurance. This position, of course, pre-dated the international growth of the run-off and legacy management business, whether used for the protection and expansion of ongoing business, to manage financial stress, or simply to refocus on core or preferred business. You may recall Equitas, which was created by the Lloyd’s market in the early 1990s to wall off its troublesome old asbestos and spiral obligations, thus helping to restore financial stability to the market and enabling Lloyd’s to attract new capital for new business. Equitas may not have been the first use of a run-off vehicle to wall off old business from ongoing operations, but it certainly was the most significant up to then and helped establish the legitimacy of such use. Today the run-off and legacy business is a significant part of the business of insurance. The industry has developed expertise in all elements and levels of run-off and legacy business, including underwriting, claims, accounting, actuarial, legal and any other professional aspect of the business. A number of trade groups have also devel6 April 8, 2013 / INSURANCE ADVOCATE

much a part of the business of insurance as writing new business. Which may also explain why regulators have been slow to understand the concept of rehabilitation. It is a stale old joke that to insurance regulators rehabilitation is the state of purgatory of a financially stressed company before it is liquidated. By first placing a company into rehabilitation, the insurance commissioner as receiver can give lip service to attempts to revive a troubled company. However, as history shows, actual efforts to revive companies in rehab are few and far between and actual successes exceedingly rare. I have often been asked whether there has ever been a successful rehabilitation of an insurance company in NY. My answer is it depends on your definition of rehabilitation. The infamous NY Liquidation Bureau would argue affirmatively, and probably would point to its most recent success, Interboro Insurance Company. In my view, however, Interboro is the exception—if it is even that—that proves the rule. The Executive Life disaster – over 20 years in “rehabilitation” at a cost to policyholders and the industry of almost $2 billion to date – is a more accurate example of the failure of the rehabilitation process. Under NY Insurance Law, the basic direction to the superintendent as liquida-

tor is to “take possession of the property of such insurer and to liquidate the business of the same . . .” This is in contrast with the basic direction to the rehabilitator “to take possession of the property of such insurer and to conduct the business thereof, . . .” The rehabilitation statute also provides that: “The rehabilitator or any interested person . . . at any time, may apply for an order terminating any rehabilitation proceeding and permitting such insurer to resume possession of its property and the conduct of its business, . . .” In other words, a liquidator’s job is to marshal and distribute assets in accordance with strict statutory distribution rules, while a rehabilitator’s job is to manage the business of the company—keeping it alive— until the cause or causes of the need for rehabilitation have been addressed, and then restoring the company to the marketplace. These are not hard concepts to understand, but in practice state agencies appointed as rehabilitators (like the aptly named Liquidation Bureau in NY) have not caught on to the difference between liquidating and running an insurance company. The number of instances where companies in rehabilitation have been deconstructed as if in liquidation far outnumber those few instances where the business has been saved in some form or another and returned to the marketplace. Unfortunately, even if regulators—acting as rehabilitators—understand the difference between liquidation and rehabilitation, more often than not they do not have the expertise required to manage the business. This failure of understanding and expertise is one more reason why permanent insurance receivership bureaus are a waste of estate and public assets and should be eliminated. The independent expert resources are plentiful in the private market, and even more so since the growth and development of legacy and run-off businesses. In response to the criticism that rehabilitation is simply an interim step before liquidation, many states point to their authority to place troubled companies into supervision, where the company’s managecontinued on page 8

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[ INSIGHT ] continued from page 6

These are not hard concepts to understand, but in practice state agencies appointed as rehabilitators (like the aptly named Liquidation Bureau in NY) have not caught on to the difference between liquidating and running an insurance company. ment stays in place but operates under the strict supervision of the regulators without having to be placed into formal liquidation or rehabilitation. The NY Department, which does not have statutory authority for formal supervision, has sought such authority in the past as a way of addressing the concerns of companies wary of the

consequences of consenting to formal liquidation or rehabilitation. However, there is no reason that a properly run rehabilitation could not provide the same benefits as a formal supervision, but with the added protection of appropriate court injunctive relief that is often missing under a regulator’s order of supervision. There is nothing in the rehabilitation statute to prevent the court appointed rehabilitator from keeping management of a distressed but savable company in place as his or her designated agents until the company is rehabilitated – like a debtor in possession bankruptcy. Even if State insurance commissioners continue to serve as statutory receiver, their role should be limited to overseeing the liquidation or rehabilitation process and not assuming the role as manager of insurance entities — a role they are generally not equipped to handle. The Bottom line is that State insurance commissioners should stick to their regulatory and oversight roles and get out of the business of trying to run insurance companies without proper expertise! [IA]

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[ FACE TO FACE ]

By Michael Loguercio

There Goes the Neighborhood…NOT!

hose of you who have been reading my column for the past five years have witnessed an overall shift in my philosophy from the spring of 2008 when I “came out” and announced that I converted from being a NIMBY (that I have affectionately called so many of you over the years) and took the side of those in favor of empowering a Property and Casualty personal lines

Industry leaders… are taking huge, bold initiatives to assist the independent agent in competing with the mega-carriers in their own arena to gain back some of the lost market-share that has occurred over the past decade. Michael Loguercio

prospect to instantly receive a real time quote via an agency website, versus another school of thinking that prefers to simply collect the prospect/risk information on your website and then through the agent speaking directly with the potential insured delivering the quote either in person or over the telephone. As a matter of fact, exhibiting an attitude similar to that of a disgruntled former smoker sitting in a cigar bar in Ybor City surrounded by a contingency of “aficionados fumadores”, I went so far as to challenge many of you to “cross over to the dark side” and join me in my mission to spread the word on the amount of “escarole” (a term we used for “money” back in my ole Bensonhurst neighborhood) left on the table by those who still do not want “that type of business” on their books. Also, over the years, we have witnessed how this thing of ours has for the most part embraced change and this item in particular, recognizing that in order to compete with some of the direct writing carriers whose pockets run deep (one in particular that spent almost $1 billion in advertising in order to write about $16 billion in premium, while producing a gross profit of about 10% of written premium), the independent insurance agent must, as a segment of this industry, compete not necessarily on the same financial scale as these direct writers, but at least utilizing the same tools, so that you don’t end up “bringing a knife to a gun fight.” Industry leaders and trade associations have recognized this and are taking huge, bold initiatives to assist the independent agent in competing with the mega-carriers in their own arena to gain back some of the lost market-share that has occurred over the past decade. One initiative in particular that is very soon to be implemented is by Trusted Choice, via their new www.trustedchoice.com website. The following is a press release recently distributed regarding Project CAP, a program that speaks directly to what we have been talking about in this column for years: “TrustedChoice.com Consumer 10 April 8, 2013 / INSURANCE ADVOCATE

Website Targets Multicarrier Quoting” Consumer Portal Selects EZLynx Rating Engine for Real Time Pricing Project CAP has selected EZLynx to be the key real-time rating technology partner for Project CAP’s new TrustedChoice.com website, which is set to launch nationwide in 2013, announced Charles “Chip” Bacciocco, CEO of Project CAP, site developer of the new TrustedChoice.com. The EZLynx Rating Engine will be used to power the website’s ‘get a quote’ function and allow consumers shopping online to get accurate, real-time quotes for home and auto insurance from multiple insurance companies. From the day it launches in mid-2013, the new TrustedChoice.com website will give consumers in all 50 states the ability to research insurance topics, and ﬁnd information on insurance companies and local independent agents. As the ‘get a quote’ functionality is introduced on a state by state basis throughout 2013, the website will also provide accurate real-time quoting from multiple insurance companies. “Our past experience with our own lead generation service told us very clearly that consumers prefer to research insurance and get price quotes online,” said Nag Rao, President of EZLynx. “But then they prefer to buy from a local agent. Direct writers and captive agent companies simply cannot offer consumers the kind of choices our independent agents bring to bear. We are very excited to be part of this industry-changing initiative.” “The new TrustedChoice.com is meant to complement the strengths of the independent agents and give consumers a way to readily access agents, insurance information and pricing on the web,” explained Chip Bacciocco, CEO of Project CAP. “Independent agents have always offered a highly attractive combination of local service, advocacy, and choice of carriers that distinguishes independent agents from the limited offerings of direct and captive agent channels.” EZLynx pioneered the concept of real-time quoting from multiple insurance companies and is the leading agency solution vendor for independent agents. We are really happy that their technology will power the new TrustedChoice.com,” Bacciocco said. “The new portal will launch in 2013 and transform the way consumers shop for and buy insurance.” About TrustedChoice.com: Created through an industry alliance of the Independent Insurance Agents and Brokers of America and six insurance companies, the new TrustedChoice.com is a new web portal, under development, that will offer consumers a one-stop-shop to get multiple insurance quotes and to choose from multiple independent insurance agents all in one place. The new TrustedChoice.com is being developed by Project CAP, an initiative of Consumer Agent Portal, LLC, a Delaware limited liability company formed in 2011. About EZLynx: EZLynx is the leading client lifecycle management solutions vendor for the agency market place. EZLynx pioneered the concept of real-time quoting and remains today the leading provider for independent agents. EZLynx processes more than four million auto, home and package transactions every month, continued on page 12

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[ FACE TO FACE ] continued from page 10

offering a choice of rates from over 150 top insurance companies in 48 states. For more information please visit www.EZLynx.com Around town another one of our industry trade leaders, PIA of CT, held its annual conference at the MGM Grand Foxwoods Resort and Casino. In addition to a sold out trade show and very appropriate and in my opinion extremely interesting continuing education courses, eight Connecticut independent insurance agents were elected to serve on the board of directors of the Professional Insurance Agents of Connecticut Inc. Augusto Russell, CIC, of Farmington, Conn., and a partner at May, Bonee & Walsh Inc. in Glastonbury, was elected president of PIACT. Also elected were President-elect: Peter Frascarelli, CPIA, of Cheshire. Vice president: Teri Walsh, of Fairfield. Vice president: Marissa Barbera of Westport. Treasurer: Loretta Lesko, CIC, of Shelton. Secretary: Mary Kay Andrews, CIC, of Prospect. Timothy Russell, CPCU, of Sandy Hook will serve as immediate past president. In addition, the following individuals were re-elected to serve for a three-year term on the PIACT Board: Mary Kay Andrews, CIC, of Prospect, Conn. is vice president of operations for the Sutherland Insurance Group in Naugatuck, Conn. Marissa Barbera, of Westport Conn. is president of Charter Oak Agency in Darien, Conn. Mark Connelly, CIC, of Trumbull, Conn. is president of Connelly Agency Inc. in Fairfield, Conn. Loretta Lesko, CIC, of Shelton, Conn. is vice president of operations for the DiMatteo Group in Shelton, Conn. William F. Malloy, CIC, of Stamford, Conn. is president and owner of Wm. F. Malloy Agency Inc. in Stamford. The following individuals were elected to serve for a threeyear term: Shannon Rabbett, CIC, of Windsor, Conn. principal of Rabbett Insurance Agency in Windsor. John McGuire, CIC, of Branford, Conn. is president of Ferguson & McGuire Inc. in Wallingford Conn, and Kevin McKiernan, CIC, CPIA, of Wilton, Conn., is executive vice president of Abercrombie, Burns, McKiernan Co. in Darien, Conn. Keynote Speaker at the PIA of CT conference was Deputy Commissioner of Insurance Anne Melissa Dowling, CFA, who in her address expressed a note of appreciation for independent agents in Connecticut, lauding the work of sales and support that professional agents provide to the state’s insurance buying public. Reiterating the Governor’s message to PIA during his previous address at the conference, she reported the Insurance Department and Governor’s desire to continue the state’s reputation as “the insurance capital of the world.” While I’m on a roll about leading insurance trade organizations, one more group that is also near and dear to my heart is the Council of Insurance Brokers of Greater New York. In a recent press release, CIBGNY commended the Department of Financial Services for their ongoing efforts in helping consumers navigate the difficult situations that were created by Superstorm Sandy. The new initiative for getting banks and homeowners together is one step in a series undertaken by DFS to try and expedite the claims process. Recently, five of New York’s largest continued on page 14

12 April 8, 2013 / INSURANCE ADVOCATE

DURING THE PIACT ANNUAL BUSINESS MEETING, THURSDAY, MARCH 14, NEWLY ELECTED PIACT PRESIDENT AUGUSTO RUSSELL, CIC CEREMONIOUSLY ACCEPTS THE GAVEL FROM IMMEDIATE PAST PRESIDENT TIMOTHY G. RUSSELL, CPCU AT THE PROFESSIONAL INSURANCE AGENTS OF CONNECTICUT INC.’S 2013 ANNUAL CONVENTION, HELD AT MGM GRAND AT FOXWOODS IN MASHANTUCKET, CONN.

CHRIS PANG TAUGHT HEALTH-CARE REFORM ON THURSDAY MORNING AT THE PIACT ANNUAL CONVENTION

DEPUTY COMMISSIONER ANN MELISSA DOWLING, CFA, DELIVERED THE KEYNOTE ADDRESS DURING THE AWARDS LUNCHEON, FRIDAY, MARCH 15.

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[ FACE TO FACE ] continued from page 12

banks and mortgage servicers had representatives available at the Department of Financial Services’ Disaster Assistance Centers in order to offer “one-on-one” assistance to help homeowners seeking the release of Superstorm Sandy insurance settlement funds. The program is designed to help homeowners complete steps needed to have their banks endorse their insurance settlement checks, which are often written jointly to homeowners and their banks or servicers. Bank representatives will also be able to help people who are struggling to make their mortgage payments. Thank you to all three of these wonderful organizations, in addition to all of the groups and folks who make this industry what it is, for all you do for all of us! Well, that’s what happening around town, and until next time, “Ciao for now!”[IA] 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 2012 Michael was honored with a NY-YIP/PIA Lifetime Achievement award; and in 2010 with the NY-YIP/PIA Insurance Professional of the Year 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.

PIACT ANNUAL CONVENTION’S OPENING RECEPTION, THURSDAY, MARCH 14 AT MGM GRAND, FOXWOODS 14 April 8, 2013 / INSURANCE ADVOCATE

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[ COVER ]

Forced-Placed Fiasco: Insurer Fined $14 Mil ion (That’s Mil i

16 April 8, 2013 / INSURANCE ADVOCATE

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Mil ion) by DFS

[ COVER ]

The DFS investigation revealed that the premiums charged to homeowners for force-placed insurance can be two to ten times higher than premiums for voluntary insurance — despite the fact that force-placed insurance provides far less protection for homeowners than voluntary insurance.

New York State Department of Financial Services (DFS) investigation has concluded with a major settlement with the country’s largest “forceplaced” insurer, Assurant, Inc., which may motivate a nationwide reform effort for this industry. The settlement includes restitution for homeowners who were harmed, a $14 million penalty paid to the State of New York, and industry-leading reforms that will save homeowners, taxpayers, and investors millions of dollars going forward through lower rates, according to Governor Cuomo’s office. “The force placed insurance industry has for too long been plagued by an intricate web of relationships between insurers and banks that pushed distressed families over the foreclosure cliff,” said Governor Andrew M. Cuomo. “Today’s agreement starts us on the road to reform, which will clean up this industry and truly protect working people.” Benjamin M. Lawsky, Superintendent of Financial Services said: “Our investigation found that insurers and banks built a network of troubling relationships and payoffs that helped drive premiums sky high. Those improper practices created significant conflicts of interest and saddled homeowners, taxpayers, and investors with millions of dollars in unfair and unnecessary costs. This settlement includes major reforms that will put a stop to those practices at Assurant, provide restitution to

homeowners who were harmed, and save millions of dollars for homeowners, taxpayers, and investors going forward through lower rates.”

The Findings of DFS’s Investigation of Assurant In October 2011, DFS launched an investigation into the force-placed insurance industry, including Assurant and its subsidiaries. Force-placed insurance is insurance taken out by a bank, lender, or mortgage servicer when a borrower does not maintain the insurance required by the terms of the mortgage. This can occur if the homeowner allows their policy to lapse (often due to financial hardship), if the bank or mortgage servicer determines that the borrower does not have a sufficient amount of coverage, or if the homeowner is force-placed erroneously. The DFS investigation revealed that the premiums charged to homeowners for force-placed insurance can be two to ten times higher than premiums for voluntary insurance — despite the fact that forceplaced insurance provides far less protection for homeowners than voluntary insurance. Indeed, even though banks and servicers are the ones who choose which force-placed insurance policy to purchase, the high premiums are ultimately charged to homeowners, and, in the event of foreclosure, the costs are passed onto investors. And when the mortgage is owned or backed by a government-sponsored enterprise, such as Fannie Mae or Freddie Mac, those costs are ultimately borne by taxpayers. DFS’s investigation found that Assurant competed for business from the banks and mortgage servicers through what is known as “reverse competition.” That is, rather than competing by offering lower prices, the insurers competed by offering what is effectively a share in the profits. This profit sharing pushed up the price of force-placed insurance by creating incentives for banks and mortgage servicers to buy force-placed insurance with high premiums. That’s because the higher the premiums, the more that the insurers continued on page 18

INSURANCE ADVOCATE / April 8, 2013 17

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[ COVER ] continued from page 17

Key Terms of the Settlement

paid to the banks. This was done by: • Paying commissions to insurance agents and brokers affiliated with the banks even though the agents and brokers did not perform the customary tasks that would justify a commission. • Paying banks “expenses” related to force-placed insurance. These expenses were typically a percentage of premium and were paid to banks that did not have agents or brokers that would collect a premium. • Paying lump sum amounts, such as one bank’s $1 million termination fee for switching its business to Assurant from another insurer. • Allowing a reinsurance company owned by a bank to take as much as 75 percent of the premium and therefore 75 percent of the profit. A reinsurance company provides insurance to insurance companies by sharing risk. But since there was little risk in force-placed insurance relative to the high premiums, this was effectively a way to transfer profits. Thus, the bank put itself on both sides of the transaction, paying an inflated premium that hurt the homeowner and then reaping 75 percent of those gains back from Assurant through a reinsurance agreement. For example, JPMorgan Chase has made approximately $600 million since 2006 by taking 75 percent of the profits from the force-placed business it gave Assurant. One measure of how profitable forceplaced insurance has been for Assurant is how little it has paid in claims—what is known as the loss ratio. In its 1994 rate filing with DFS, one of Assurant’s subsidiaries based its rate on the expectation that it would pay 58 percent of premium on claims. In fact, from 2006 through 2011, that subsidiary actually paid only 24.7 percent, 19.4 percent, 17.3 percent, 22.8 percent, 24.3 percent, and 24.7 percent, respectively. Despite years when it paid out claims less than half of what it projected, Assurant did not file for lower rates. For voluntary homeowners insurance the loss ratio has historically been around 63 percent nationally.

The settlement that Assurant and the New York State Department of Financial Services signed includes restitution for homeowners who were harmed, a $14 million penalty, and a set of major reforms for force-placed insurance at Assurant. Superintendent Lawsky said: “By agreeing to implement these critical reforms, Assurant is serving as an industry leader. These reforms will make Assurant a stronger and better company focused on its customers. Other force-placed insurers, including QBE, need to step up to the plate now and put in place these reforms. Our work on this issue is far from done and we expect that this settlement will help lead a nationwide reform effort for this industry.” The key terms of the settlement include: To lower the cost of force-placed insurance going forward for all non-ﬂood business: • Assurant shall file with DFS a premium rate with a permissible loss ratio of 62 percent, supported by the required data and actuarial analysis that is acceptable both professionally and to DFS. This will substantially reduce homeowners’ premiums. • Every three years, Assurant will be required to re-file its rates with DFS for review. • If Assurant’s actual rates in any year result in an actual loss ratio of less than 40 percent for the immediately preceding calendar year, Assurant will be required to re-file its rates for the next year for DFS review in order to bring the loss ratio back up. • Assurant must report annually to DFS on its actual loss ratio, earned premiums, itemized expenses, losses, and reserves. To put a stop to the improper and unfair practices found in DFS’s investigation, many of which helped Assurant support inﬂated premiums: • Assurant shall not issue force-placed insurance on mortgaged property serviced by a bank or servicer affiliated with Assurant. • Assurant shall not pay commissions to a bank or servicer or a person or entity affiliated with a bank or servicer on force-placed insurance policies obtained by the servicer. • Assurant shall not reinsure forceplaced insurance policies with a per-

18 April 8, 2013 / INSURANCE ADVOCATE

son or entity affiliated with the servicer that obtained the policies. • Assurant shall not pay contingent commissions based on underwriting profitability or loss ratios. • Assurant shall not provide free or below-cost, outsourced services to servicers or their affiliates. • Assurant shall not make any payments, including but not limited to the payment of expenses, to servicers, lenders, or their affiliates in connection with securing business. To provide restitution to those who were harmed by Assurant’s practices: • Refunds will be provided to consumers through a claims process and a third-party administrator selected by DFS and paid for by Assurant for homeowners who have been forceplaced at any time after January 1, 2008 and meet the eligibility criteria for one of the following three categories of claimants: • Homeowners who defaulted on their mortgage or were foreclosed because of force placement. • Homeowners who were charged for force placement at a coverage limit higher than permitted by their mortgage. • Homeowner’s who were erroneously charged for force-placed insurance: either because they had voluntary insurance in effect, or they were charged commercial rates for a residence. Additionally, under the terms of the settlement, Assurant will pay a civil penalty of $14 million to the State of New York; provide improved disclosures and notices to homeowners; improve its email retention policy; and ensure that the amount of coverage force placed on any homeowner shall not exceed the last known amount of coverage, provided that if the last known amount of coverage did not comply with the mortgage, then the amount of coverage shall not exceed the replacement cost of improvements on the property. [IA]

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[ IN TH E NEWS ]

Amalgamated Life Marks its 70th Anniversary

HITE PLAINS, N.Y.—Amalgamated Life (www.amalga matedlife.com), a leading provider of life and health insurance, is now celebrating its 70th year in business. The anniversary comes following a year of many achievements for the carrier whose current President and Chief Executive Officer David Walsh had a definite mission when he joined the company back in 2008. “Strategic growth and development was important, but not at the cost of maintaining strong financials and achieving the highest standards in customer service,” said Walsh. “From its very beginnings, Amalgamated Life’s mission was to serving working Americans and that remains at the core of our focus.” Last year, Amalgamated Life earned its 37th consecutive A.M. Best “A” (Excellent) Rating, attesting to its strong fiscal condition and excellent claims paying performance, and completed its licensing to sell products in all 50 states and the District of Columbia, thereby establishing a national footprint. Additionally, the company expanded its line to include new disability, vision, dental, accidental death and dismemberment, and legal insurance offerings, all intended to further address the needs of working Americans. In 2012, Amalgamated Life also gained recognition among the “Ward’s 50” group of top performing insurance companies for “achieving outstanding financial results in the areas of safety, consistency and performance over a five year period” from 2007 to 2011. This and all of its previous achievements are no small feat considering the insurance industry’s many challenges. Walsh noted that, “There’s no question that these are trying times for Americans and for our industry, but Amalgamated Life started during trying times and has never lost focus on its objectives. For seven decades, the company has played its own game and not allowed external factors to compromise its core values. I believe that is why we are now marking our 70th anniversary and are poised to reach our centennial.” Amalgamated Life was founded by Sidney Hillman, a leader of the men’s tai22 April 8, 2013 / INSURANCE ADVOCATE

market. Subsequently, in the 90s, Amalgamated Life also formed two other synergistic companies; AliCare Medical Management, Inc., a case management and utilization management firm, and AliGraphics, a full-service printing and graphics firm. All of the entities were ultimately unified in 2011 under a new brand, the “Amalgamated Family of Companies.” Amalgamated Life currently employs an estimated 425 employees in its White Plains, NY headquarters and additional sales representatives across the country. Collectively, the Amalgamated Family of Companies generates over $900 million in premium equivalents. DAVID WALSH, PRESIDENT AND CEO AMALGAMATED LIFE

lored clothing industry who saw the harsh working conditions of immigrant garment workers who toiled without any form of protection. He subsequently founded Amalgamated’s National Health Fund to provide hospital, medical and other welfare benefits to these workers, apparel industry union members. Next he founded Amalgamated’s National Retirement Fund, which today has over $2 billion in assets and provides retirement benefits on behalf of over 1,500 contributing employers to 105,000 active participants, 180,000 retirees and 160,000 deferred vested participants. In 1987, in an effort to be even more responsive to its customers, Amalgamated Life established three other companies: AliComp, to provide customized information technology and data center services; AliCare, Inc., a third-party administrator of health and pension benefit plans; Amalgamated Agency, a property and casualty insurance brokerage; and AliGraphics, a printing and graphics company. 1992 was another significant year for Amalgamated Life during which it gained approval from the New York State Insurance Department to sell life, health and disability insurance to a broader market of trade union members as well as nonunion customers. That decision set in motion the company’s growth into broader geographic areas and into the corporate

About Amalgamated Life Since its inception in 1943, Amalgamated Life has grown into a leading provider of high quality life and health insurance solutions. The Company’s extensive portfolio features group life insurance products ranging from basic coverage, to accidental death and dismemberment, dependent life, retiree life and group term life. Additionally, the Company offers longand short-term disability insurance, a suite of voluntary insurance products, and medical stop loss insurance. Amalgamated Life’s proven track record is evidenced in its 37 consecutive A.M. Best “A” (Excellent) ratings attesting to its financially strong condition and excellent claims-paying ability. Amalgamated Life is a member of the Amalgamated Family of Companies which also includes: Amalgamated Agency, a property and casualty insurance brokerage; AliCare, a third-party administrator; AliCare Medical Management, a medical care management firm; AliComp, an Information Technology and data center outsourcing company; and AliGraphics, a printing and graphics firm. For more information, visit: www.amalgamatedlife.com or contact: kspalding@amalgamatedlife.com. [IA]

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[ IN TH E NEWS ]

PRI Names St. Charles Hospital Winner of Risk Management and Patient Safety “Best Practices” St. Catherine of Siena Medical Center, Smithtown, New York, Earns Honorable Mention.

oslyn, N.Y.—Physicians’ Reciprocal Insurers (PRI) presented St. Charles Hospital, Port Jefferson, L.I. its Risk Management and Patient Safety Best Practices Award for 2013. St. Catherine of Siena Medical Center of Smithtown, L.I. won Honorable Mention. PRI, New York’s second largest medical professional liability insurer, established the awards in 2011 to promote the knowledge and adoption of best practices to benefit the healthcare industry as a whole. The awards were made during a ceremony held at the company’s Roslyn, New York headquarters attended by medical professionals from many segments of the field. According to Mr. Anthony J. Bonomo, CEO of Administrators for the Professions, Inc. ("AFP") and Board Member of Physicians' Reciprocal Insurers, PRI recognizes that the healthcare community faces unique challenges in today’s litigation prone marketplace and requires active collaboration from its insureds to make patient safety “best practices” a top priority. Mr. Bonomo said “We are proud to recognize the diligent efforts of our insureds to improve patient outcomes through awareness, through a “best practices” agenda, and through conscious risk management education”, he said, adding, “We are proud to be associated with these well-run institutions.” First place honors went to St. Charles Hospital in Port Jefferson, New York, for its innovative program “Improving Patient Engagement by Active Rounding by Leadership – I Pearl Program. The award, presented by Jeanne Braun, Executive Vice President, Hospitals and Special Programs for PRI, was accepted by Karen A. Fielder, RN, Esq., Director of Risk Management; Dante K. Latorre, FACHE, Vice President of Quality and & Regulatory Affairs; and Lee Kucera, RN, MS, FACHE, Director of Quality & Performance Improvement. Honorable Mention went to St. Catherine of Siena Medical Center, in Smithtown, New York for its program “The 26 April 8, 2013 / INSURANCE ADVOCATE

Educator. PRI, through its hospital risk management program, led by Dawn Lewis, has received numerous plaudits for innovation and for the expansion and adoption of its risk management education programs. [IA]

ANTHONY BONOMO, CEO OF ADMINISTRATORS FOR THE PROFESSIONS, INC. AND BOARD MEMBER, PRI

“We are proud to recognize the diligent efforts of our insureds to improve patient outcomes through awareness, through a “best practices” agenda, and through conscious risk management education. We are proud to be associated with these well-run institutions.”

ABOUT PHYSICIANS’ RECIPROCAL INSURERS Physicians’ Reciprocal Insurers (PRI), headquartered in Long Island, New York, is a leading provider of professional liability insurance to physicians and medical facilities. As the second largest medical malpractice insurer in New York State and one of the Top Ten in the country, PRI is recognized as one of the most respected names in medical malpractice insurance. Founded in 1982 by doctors to serve the healthcare industry and its professionals, PRI continues to be a leader providing coverage and innovative products that anticipate the needs and further the ﬁnancial goals of policyholders, and offers key services to help improve the liability environment for doctors, chiropractors, dentists and healthcare facilities.

– Anthony J. Bonomo, CEO of Administrators for the Professions, Inc. ("AFP") and Board Member of Physicians' Reciprocal Insurers

Reduction of Falls Without the Use of Restraints”, a model program for patient safety. The award was accepted by Laurie Yuditsky, RN, MBA, BSN, Nursing PI Coordinator; Ed Attard, Director of Regulatory Affairs; Barbara Gibbons, Director, Nurse Education; Patricia Butera, Nurse Educator; and Debbie Kohn, Nurse

JEANNE BRAUN, EXECUTIVE VICE PRESIDENT, HOSPITALS AND SPECIAL PROGRAMS, PRI; LYNN JENNINGS-TAYLOR, SENIOR VICE PRESIDENT, RISK MANAGEMENT & PATIENT SAFETY OFFICER, CATHOLIC HEALTH SERVICES OF LONG ISLAND

Photos continued on page 28

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[ IN THE NEWS ]

L-R: ED ATTARD, DIRECTOR OF REGULATORY AFFAIRS, ST. CATHERINE OF SIENA MEDICAL CENTER; LAURIE YUDITSKY, RN, NURSING PI COORDINATOR, ST. CATHERINE OF SIENA MEDICAL CENTER; BARBARA GIBBONS, DIRECTOR, NURSE EDUCATION, ST. CATHERINE OF SIENA MEDICAL CENTER; PATRICIA BUTERA, NURSE EDUCATOR, ST. CATHERINE OF SIENA MEDICAL CENTER; DEBBIE KOHN, NURSE EDUCATOR, ST. CATHERINE OF SIENA MEDICAL CENTER

L-R: DAWN LEWIS, DIRECTOR OF HOSPITAL RISK PROGRAMS, PRI; KAREN FIELDER, RN, DIRECTOR OF RISK MANAGEMENT, ST. CHARLES HOSPITAL; DANTA LATOREE, FACHE, VICE PRESIDENT OF QUALITY AND REGULATORY AFFAIRS, ST. CHARLES HOSPITAL; LEE KUCERA, RN, MS, FACHE, DIRECTOR OF QUALITY AND PERFORMANCE IMPROVEMENT; JEANNE BRAUN, EXECUTIVE VICE PRESIDENT, HOSPITALS AND SPECIAL PROGRAMS, PRI

L-R: DAWN LEWIS, DIRECTOR OF HOSPITAL RISK PROGRAMS, PRI; LAURIE YUDITSKY, RN, NURSING PI COORDINATOR, ST. CATHERINE OF SIENA MEDICAL CENTER; JEANNE BRAUN, EXECUTIVE VICE PRESIDENT, HOSPITALS AND SPECIAL PROGRAMS, PRI 28 April 8, 2013 / INSURANCE ADVOCATE

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Short-Term Disability Insurance kicks in as soon as an employee or individual is unable to work due to a medical illness or injury. The wisest employees are cognizant of the short term financial needs of the employee and provide some type of coverage, ranging from just a few days to as much as one year. In some cases, the length of time an employee is entitled for this benefit is based set criteria such as the number of years of employment. In most instances, the longer the service of employment, the larger the Short Term Disability payment. Long-Term Disability Insurance usually goes into effect once Short-Term Disability Insurance benefits expire. Unfortunately, there are not enough state laws that mandate employers to provide long-term disability, but many mid to large sized firms who care about their employees do often this fundamental insurance benefit. Voluntary Disability Insurance Benefits enable employees and individuals to take charge of their lives. An injury or illness no matter how small to catastrophic that leads to disability can change an individual’s life and the lives of their loved ones forever. To find out how to best offer these fundamental Disability Insurance Programs, visit www.InsuranceWholesaler.Net or contact us personally at the DBL Center. INSURANCE ADVOCATE / April 8, 2013 29

INA 4-8-13_INA 4-8-13 4/1/13 2:28 PM Page 30

[ ON TH E LEVEL ]

By Jamie Deapo

Thinking About Thinking

o you find yourself completely drained at the end of the work day but frustrated because you didn’t have time to think about what you were doing? Were there projects you worked on that you didn’t have the time to complete as well as you wanted? You just needed to get them done. If you feel like the little boy plugging the leak in the dam only to have

time to think things through and be creative. It really only takes some minor adjustments to our daily routine to get refreshed and take the time to think and develop creative ideas. Tip One: Easy Meditation New age proponents suggest meditation and mindfulness and offer it as a solu-

The world is moving so fast it’s hard to keep up. Quality suffers because of time demands. There never seems to be enough time to take a few minutes to think, review and develop creative solutions to our problems. We’re stuck on a business treadmill that seems to be gaining speed. Jamie Deapo

another leak spring up elsewhere you’re not alone. The world is moving so fast it’s hard to keep up. Quality suffers because of time demands. There never seems to be enough time to take a few minutes to think, review and develop creative solutions to our problems. We’re stuck on a business treadmill that seems to be gaining speed. Sound familiar? That is what business is like for so many of us today. Communication is instantaneous and worldwide. Social media, email, smart phones, mobile devices and the internet make many people’s days hectic and sometimes overwhelming. Clients and prospects demand instant service while your email and voicemail is growing like wildfire. It’s no wonder that stress levels are increasing and people feel overwhelmed. Unfortunately, for business to run effectively and grow; people need to be able to gain their composure, take inventory on where they are relative to where they need to be and to think about creative solutions for their business. So what’s the answer? Creating time to center ourselves, destress and block out 30 April 8, 2013 / INSURANCE ADVOCATE

tion to businesses. Many large corporations are bringing in consultants to train their employees on how to do this. The practice is fairly simple and just requires some minor adjustments in your day. Meditation can be done in as little as 5 minutes right at your desk. Sit comfortably in your chair, close your eyes and clear your mind by concentrating on your breathing. Breathing slowly and deeply from the diaphragm, just relax and focus on listening to the sound of your breath as you inhale and exhale. Those 5 minutes will clear your head, lower your stress and allow you to refocus. Tip Two: Fresh Air As the weather gets better a short walk at lunchtime concentrating on the walk, the sun’s light and warmth as well as the fresh air can do wonders to clear your mind and invigorate you for the afternoon’s work. Tip Three: Planning Your Day Plan time regularly to stop, think and review your work. Spend a few minutes looking for creative solutions to your issues and problems. Schedule time, just like an

appointment, for this important work. If your job is time sensitive, break the time up into smaller, frequent time periods that overall allow you to achieve the same results as one longer period. Actually, shorter more frequent periods may be more effective as consciously and subconsciously you’ll be contemplating the issue at hand. Allowing time to think and create solutions is critical to a growing and profitable business. Tip Four: Be Easy to Work With Keep in mind the people you deal with everyday and the clients and prospects you handle are suffering from the same time demand and stress you are. Try to make sure that the interaction they have with you doesn’t add to their stress but instead reduces it. When you present yourself and issues in a positive way, that attitude is often mirrored back at you. Boy does all that I just wrote sound really good! Now if I could just put the things I mentioned into play. That’s right, I suffer as much as any of you when it comes to being overwhelmed and stressed. In my case I like to throw in a little dash of procrastination to spice up the mix. The answers aren’t easy but like they mention in most treatment programs the first step is admitting you have a problem. They say misery loves company so just know I feel for those of you suffering like me and I hope all of us find the ability to take control of the situation. The world would be a better place if people had the time to think, reflect and be creative. Let’s hope we get it.

Pay It Forward Before I end my column I want to mention an extraordinary program practiced by an IIABNY member who recently received an award for their commitment to community service. For one day anyone who went to purchase a cup of coffee at the local café were told it was already paid for and they needed to “pay it forward” by doing a good deed for someone else. That act of unselfish community service is typical of John and Kevin O’Brien who run their family agency in Glens Falls, New York.

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[ ON T HE LEVEL ] Keep in mind the people you deal with everyday and the clients and prospects you handle are suffering from the same time demand and stress you are. Try to make sure that the interaction they have with you doesn’t add to their stress but instead reduces it. When you present yourself and issues in a positive way, that attitude is often mirrored back at you.

The O’Brien brothers don’t like the limelight but on the night of the award they decided to use the opportunity to help some more people. During the acceptance speech John asked everyone to reach beneath their chairs as 5 lucky people would find a “pay it forward” placard that entitled them to receive $90, the cost of the dinner ticket for the event. The only requirement was that the recipients pay it forward somehow. They also challenged everyone in attendance to anonymously do something nice for someone at work the following day and keep the “pay it forward” efforts going. The O’Brien’s epitomize the charitable spirit that resides in all of us and I sincerely thank them for setting such a great example. Our staff here at IIABNY is trying to determine how we can take the O’Brien’s lead and incorporate an unexpected random act(s) of kindness that only asks that the recipient “pay it forward”. Knowing how many caring and generous people there are in our industry I would encourage those of you that read my column to seriously consider creating your own “pay it forward” program. Imagine how it will feel to participate in such an awesome program with the possibility of having such a far reaching effect. All started by the simple and unselfish acts of kindness of 2 brothers who run a family insurance agency in Glens Falls, New York. [IA]

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[ ON TH E ROAD ]

Turns for the Worse: Report Identiﬁes Region’s Most Dangerous Roads for Pedestrians Regional pedestrian deaths call for investment in pedestrian safety programs and expanded implementation of complete streets policies

new report from Tri-State Transportation Campaign finds that more than 1,200 pedestrians were killed on roads in Connecticut, New Jersey and downstate New York in the three years from 2009 through 2011. According to a new analysis by TriState Transportation Campaign, a policy watchdog organization, Route 24 (Hempstead Turnpike) in Nassau County is the region’s most dangerous road for pedestrians for the fifth consecutive year since the Campaign’s first analysis in 2008. Between 2009 and 2011, 14 pedestrians were killed along the 16-mile stretch of roadway. In 2012, after years of advocacy from the Campaign, New York State Department of Transportation (NYSDOT) Commissioner Joan McDonald announced that Hempstead Turnpike would receive significant pedestrian safety treatments. Beginning in March 2012, NYSDOT began to make the road safer by redesigning the road to include, among other things, eight raised medians and five new crosswalks, as well as relocating six

32 April 8, 2013 / INSURANCE ADVOCATE

bus stops closer to crosswalks and altering traffic signals to calm traffic. “We have seen again and again that relatively low-cost improvements such as the improvements being done to Hempstead Turnpike can save lives,” said Veronica Vanterpool, Tri-State Transportation Campaign’s executive director. “We applaud NYSDOT’s attention to Hempstead Turnpike and look forward to working with agencies across the region to make other deadly roads safer,” said Ryan Lynch, associate director with the Campaign. The analysis found that arterial roads – roads with two or more lanes in each direction that are designed to accommodate vehicle speeds of 40 mph or higher – are the most deadly for pedestrians, with almost 60 percent ofpedestrian deaths in Connecticut, New Jersey and downstate New York occurring on this type of road. “Arterials were traditionally designed to move vehicles from one destination to the next without regard for other road users like pedestrians and bicyclists. We continue to see that designing roads like this results in needless loss of life,” said Renata Silberblatt, report author and staff analyst with the Campaign. Following Route 24 (Hempstead Turnpike), Broadway in Manhattan, Route 25 (Jericho Turnpike) in Suffolk County and Route 27 (Sunrise Highway) in Nassau County were the region’s most dangerous roads. The analysis found the region’s most dangerous roads for walking over the three-year period are displayed in a chart on the next page. “It’s alarming that New York City’s major arterial streets are so dangerous for pedestrians and bicyclists. New Yorkers need safe and convenient access to the businesses that populate these major streets to keep the wheels of our economy

INA 4-8-13_INA 4-8-13 4/1/13 2:28 PM Page 33

[ ON T H E ROAD ] Rank

Change in Ranking (Prior Year's Rank)

(6)

(14)

(3)

(6)

(3)

(26)

New

turning. It’s imperative that the candidates who seek to lead our city as Mayor offer a vision for New York that will keep New Yorkers safe on our streets with proven solutions like bike lanes, pedestrian refuges and other necessary safety improvements,” said Paul Steely White, executive director of Transportation Alternatives. The Campaign praised municipal, county and state government as well as state agencies for taking significant steps in recent years to make roads safer for all users. State complete streets laws exist in New York and Connecticut and the New Jersey DOT endorsed a complete streets policy in 2009. In addition, over 40 municipal and county governments in the tristate region have adopted complete streets policies. These local policies will help ensure that the roadways under local and county jurisdiction are designed and redesigned with all users – pedestrians, bicyclists and motorists in mind. “Recent improvements to New York’s most dangerous roadways are very encouraging and AARP is hopeful that this report will instill a sense of urgency to make even more improvements where necessary,” said Will Stoner, associate state director for AARP in New York. “Designing our roadways with pedestrians in mind, today and in the future, is paramount considering the aging population we have on Long Island.”

Pedestrian Fatalities (2009-2011)

Road SR-24 (HEMPSTEAD TPKE, FULTON AVE), Nassau County, NY BROADWAY, Manhattan, NY SR-25 (JERICHO TPKE, MIDDLE COUNTRY RD), Suffolk County, NY SR-27 (SUNRISE HWY), Nassau County, NY SR-110 (NEW YORK AVE, BROADHOLLOW RD, BROADWAY), Suffolk County, NY US‐322/40 (Blackhorse Pike), Atlantic County, NJ US-130 (BURLINGTON PIKE), Burlington County, NJ ROUTE 1, Middlesex County, NJ SR-27 (SUNRISE HWY, MONTAUK POINT STATE HWY, CR 39), Suffolk County, NY US-30 (WHITE HORSE PIKE), Camden County, NJ ROUTE 9, Middlesex County, NJ However, with 1,242 needless pedestrian deaths from 2009 through 2011, more can, and should, be done to protect pedestrians in Connecticut, New Jersey and downstate New York. The report offers region-wide recommendations that can be implemented on a state or city level. These recommendations include increased spending on Safe Routes to School, Safe Routes to Transit and Safe Routes for Seniors programs, and tracking and monitoring complete streets laws and policies to ensure their implementation. The report also offers specific recommendations for each state. In addition, to help municipalities on Long Island towards faster implementation of safe pedestrian infrastructure, Tri-State Transportation Campaign, in partnership with Wendel Companies and Vision Long Island, will host a complete streets forum on April 11, 2013. “We are saddened that our region continues to be plagued by many dangerous roadways that are unsafe for residents of all ages, customers and workers in our local communities. This report once again points to the need to move quickly to fund complete streets projects and enhance pedestrian safety,” said Eric Alexander, director of Vision Long Island. The report uses the most up-to-date data available from the National Highway

14 12 11 9 9 9 9 9 8 8 8

“Recent improvements to New York’s most dangerous roadways are very encouraging …”

Traffic Safety Administration’s Fatality Analysis Reporting System (FARS) to determine which routes within each county had the highest number of pedestrian fatalities from 2009 to 2011. The analysis excludes Interstates and other roads where pedestrians are prohibited. County fact sheets showing the most dangerous routes for walking are also available and include an interactive map showing the locations of each pedestrian fatality, with descriptive details for each victim killed. [IA] The full report, as well as county fact sheets and maps can be found at http://tstc.org/ reports/danger13/index.php Tri-State Transportation Campaign is a non-proﬁt organization working toward a more balanced, transit-friendly and equitable transportation system in Connecticut, New York and New Jersey. INSURANCE ADVOCATE / April 8, 2013 33

INA 4-8-13_INA 4-8-13 4/1/13 2:28 PM Page 34

[ FRAUD WATCH ] Inspecting the Inspectors:

Schneiderman Announces Arrest of Eight, Faking More Than 13,000 Inspections

ttorney General Eric T. Schneiderman has announced the arrests of eight New York City motor vehicle inspectors who issued more than 13,000 fraudulent inspection certificates to untested vehicles. Each defendant, including several of the companies the inspectors work for, was charged with numerous felony counts for violations of the New York State Vehicle and Traffic Law, penal and environmental laws. The inspectors face up to seven years in prison and thousands of dollars in fines. “These individuals were trusted to perform state-required inspections specifically aimed at keeping unsafe cars off the road. Instead of performing safety inspections, they took advantage of their expertise and cheated the system,” Attorney General Schneiderman said. “New York’s emissions standards are crucial for ensuring that dangerous pollution isn’t spewed into the air we breathe, and that unsafe vehicles are kept off our streets. These perpetrators will be held accountable for polluting our skies, threatening our children’s health and undermining public safety.” Every motor vehicle registered in New York State must be inspected annually for safety and appropriate emissions compliance. The defendants were employed at seven of New York City’s busiest DMVlicensed inspection stations, which are legally required to use DMV-regulated equipment and follow standard procedures to conduct inspections. According to the criminal complaints filed in Bronx Criminal Court, the defendants bypassed these procedures by performing “clean scans,” a fraudulent process that substitutes data from a secondary vehicle. The inspector first entered the identification number, model information and license plate number for the vehicle in need of certification. The inspector then connected the DMV computer to a secondary vehi34 April 8, 2013 / INSURANCE ADVOCATE

Flouting these state requirements permits thousands of substandard vehicles to remain on New York roads, leading to increased safety risks for drivers and the significant degradation of New York air quality.

cle and used its data to “pass” the safety and emissions tests for the vehicle in need of certification. A fraudulent inspection certificate was issued for the untested vehicle, which would potentially have failed an inspection or was not even present. Flouting these state requirements permits thousands of substandard vehicles to remain on New York roads, leading to increased safety risks for drivers and the significant degradation of New York air quality. Stations that utilize “clean scans” or simply sell inspection stickers also gain an unfair advantage over law-abiding facilities by substantially decreasing both the amount of time and the cost of employing skilled workers to conduct vehicle inspections. The Attorney General’s office, along with the DMV and the DEC, conducted undercover operations at the seven stations, which are among the busiest DMV licensed inspection stations in New York City, between December 2012 and February 2013. An undercover investigator took a vehicle that was rigged to fail a legitimate motor vehicle inspection to each station and each station provided passing

inspection results to the vehicle even though the inspectors performed minimal or no actual inspection on it. Employees of several stations didn’t even perform “clean scans” but rather illegally sold inspection stickers to the undercover investigator without performing any inspection of the undercover vehicle. While motor vehicle inspectors can legally charge up to $37 for a motor vehicle inspection, all of the inspectors and stations in this case charged significantly higher payments for these fake inspections — some up to $150. Together, the defendants faked a total of 13,437 inspections, court documents show. The Attorney General’s criminal prosecution is the result of a joint investigation with the New York State Department of Environmental Conservation (DEC) and the New York State Department of Motor Vehicles (DMV). New York State Department of Motor Vehicles Commissioner Barbara J. Fiala said, “This action demonstrates that government agencies working together can bring to justice those that are intent on breaking the law, defrauding consumers or polluting the air. The DMV will continue to work with the agencies involved in this investigation to aggressively protect New Yorkers from such fraudulent activity.” New York State Department Of Environmental Conservation Commissioner Joe Martens said, “The vehicle repair shops targeted in this sting operation represent 40 percent of the suspected illegal inspections conducted throughout the state. New Yorkers, particularly those living in our urban settings, should not have to tolerate the polluted air and unsafe vehicle conditions these illegal inspections promote. Individuals that place profit and greed over our health and safety will continued on page 36

D D

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[ FRAUD WATCH ] continued from page 34

Individuals that place profit and greed over our health and safety will be brought to justice through the efforts of our State Environmental Conservation Police investigators and officers, along with DEC program staff, Department of Motor Vehicle staff and the Office of Attorney General Eric Schneiderman.

be brought to justice through the efforts of our State Environmental Conservation Police investigators and officers, along with DEC program staff, Department of Motor Vehicle staff and the Office of Attorney General Eric Schneiderman. To combat this ongoing problem, I have instructed my law enforcement officers to aggressively pursue illegal inspections to put an end to this reckless activity.” The following individuals were charged today: • Micael Compres, 29, of the Bronx, a licensed DMV inspector and employee of All Prestige Muffler Inc., a licensed New York State motor vehicle inspection station located at 1705 Jerome Avenue; • Claudon Harriote, 52, of the Bronx, a licensed DMV inspector and employee of East 222 Automotive Inc., a licensed New York State motor vehicle inspection station located at 1135 East 222nd Street; • Gustavo Lopez, 30, of Manhattan, a licensed DMV inspector and employee of Washington Motors Inc., a licensed New York State motor vehicle inspection station located at 2106 Washington Avenue; • David Nunez, 41, of Manhattan, a licensed DMV inspector and president/owner of Serpro Auto Repair Inc., a licensed New York State motor vehicle inspection station located at 1898 Boston Road; • Luis Peralta, 37, of Yonkers, a licensed DMV inspector and president/owner of RapidCar Inc., a licensed New York State motor vehicle inspection station located at 690 Southern Boulevard;

Is your advertising looking a little dull and unnoticable? 36 April 8, 2013 / INSURANCE ADVOCATE

• Ramon S. Ramos, 59, of Manhattan, a licensed inspector at Cross Bronx Mufflers Inc., a licensed New York State motor vehicle inspection station located at 1677 Jerome Avenue; • Victor Ramos, 54, of the Bronx, a licensed DMV inspector and president/owner of All Prestige Muffler Inc., a licensed New York State motor vehicle inspection station located at 1705 Jerome Avenue; • Lillian Tapia, 32, of the Bronx, a licensed DMV inspector and employee of Mega Muffler Center Corp., a licensed New York State motor vehicle inspection station located at 1301 Westchester Avenue; All Prestige Muffler Inc., Serpro Auto Repair Inc., and RapidCar Inc., are also charged in this case. These corporations

face potentially large fines. The defendants are all charged with Criminal Possession of a Forged Instrument in the Second Degree, a class D felony that carries a maximum sentence of 2 1/3 to 7 years in prison. Other charges include Issuing a False Certificate, a class E felony carrying a maximum sentence of 1 1/3 to 4 years in jail, and Illegal Issuance of an Emission Certificate of Inspection, an unclassified misdemeanor that carries a fine of $15,000 per count. The case is being prosecuted by Assistant Attorneys General Jason P. Garelick and Rajiv Shah of the Environmental Crimes Unit under the supervision of Deputy Bureau Chief for Criminal Prosecutions Stephanie Swenton, Bureau Chief Gail Heatherly and Executive Deputy Attorney General for Criminal Justice Kelly Donovan. The investigation was conducted by Environmental Conservation Investigator Nicholas Desottele of DEC, Bureau of Environmental Crimes Investigation, under the supervision of Lt. John Fitzpatrick and Major Scott Florence. Investigators Sylvia Rivera, Ismael Hernandez and David Negron of the New York State Office of the Attorney General also worked on the case under the supervision of Supervising Investigators Michael Ward, John Sullivan, Deputy Chief Investigator John McManus and Chief Investigator Dominick Zarrella. The Attorney General recognizes the diligent work of the DEC and DMV staff with whose cooperation the case was developed, particularly James Clyne, DEC’s Chief of In-Use Programs Section, Division of Air Resources, and Chris Ayers, DMV’s Director of Vehicle Safety Field Services. The charges are accusations and all defendants are presumed innocent until and unless proven guilty in a court of law. [IA]

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INA 4-8-13_INA 4-8-13 4/1/13 2:28 PM Page 38

[ IN TH E ASSOCIATIONS ]

Sen. Warner to Address the Big “I”

ASHINGTON, D.C—The Independent Insurance Agents & Brokers of America (IIABA) has announced that Sen. Mark Warner (D-Va.), who serves on the Senate Committee on Banking, Housing & Urban Affairs, will address the association’s membership on Thursday, April 18, 2013. Sen. Warner will

be a keynote speaker at the legislative conference breakfast which occurs just prior to the association’s annual Big “I” Day on Capitol Hill. Every year, agents and brokers visit Capitol Hill offices to educate members of the House, Senate and their staffs on issues that directly impact independent insurance agents, brokers and consumers.

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“The Big ‘I’ is honored to have Sen. Warner address our members just before they head to Capitol Hill to talk with their members of Congress,” says Robert A. Rusbuldt, Big “I” president and CEO. “Sen. Warner’s perspective is important to independent agents and brokers because he has an understanding of the challenges facing the business community.” Sen. Warner was first elected to the Senate in 2008 and serves on the Senate Banking, Budget, Commerce and Intelligence Committees. He also serves on numerous important subcommittees including the Subcommittee on Securities, Insurance, and Investment. Sen. Warner is known for numerous bipartisan efforts including organizing the Senate’s “Gang of Six,” which has worked since 2011 to find bipartisan solutions for deficit and debt reduction. He previously served as Virginia’s governor and was a businessman and early investor in cellular technology. Sen. Warner earned his undergraduate degree from the George Washington University and a law degree from Harvard Law School. “Sen. Warner is an original cosponsor of NARAB II legislation that would reform the agent licensing system and is one of the Big ‘I’s’ top legislative priorities,” says Charles E. Symington, Jr., Big “I” senior vice president for external and government affairs. “We look forward to continuing to work with him on NARAB II and many other issues that directly impact the quarter of a million professionals we represent and the millions of insurance consumers they serve.” The Big “I” Legislative Conference is among the insurance industry’s best-attended, most effective legislative meeting. This year’s event will take place April 17-19 at the Grand Hyatt Washington Hotel in Washington, D.C. Top issues this year include: tax reform, the National Flood Insurance Program (NFIP), insurance regulatory reform, agent licensing reform, health insurance, the Federal Crop Insurance Program (FCIP), terrorism risk insurance, and other economic challenges facing independent insurance agents and the industry. For registration and hotel information, go to www.independentagent.com and select the “Events and Conferences” link. [IA]

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[ GUEST OPINION ]

By G. Keith Smith, M.D.

Medical Price Transparency

ears ago, I hired a carpenter to build a deck in my backyard. He showed up with a pencil behind his ear, a spiral notebook, and a tape measure. I told him what I was looking for, and he made a few suggestions. After 15 minutes of measuring and taking notes, he handed me a piece of paper with how much it would cost. In two days, he called me and asked for a payment for the lumber. I sent it to him.

tor’s confidence in what our new facility would cost fascinating and incredible, having heard hospital folks saying so many times that fixed, upfront pricing in health care is impossible. But we did it anyway. Sometimes I got the price wrong. In some cases I was too high, and in some cases I was too low. Adjustments were made. Not at the expense of the patient, however. Transparent pricing is necI don’t advocate legislation essary for any concept of value to have meaning, and to send to force medical facilities appropriate signals concerning to be transparent. I believe scarcity or abundance. Nontransparent pricing is a hallmark this is a violation of the of command economies, as non-aggression principle Professor Robert Higgs explains and might also provide in his brilliant book Crisis and legislators the opportunity Leviathan. There can simply be no meaningful competition to sell exemptions. when the prices aren’t transparG. Keith Smith, M.D. ent and known up front. Five days later, he showed up with the lumNot all medical facilities need to exhibit ber—cut, ready to assemble. transparent pricing in order for a competiAmazing? Yet many do this every day tive and market economy to emerge. in a free economy. They state an up-front Indeed, our internet pricing has allowed price, and get the job done. But some say individuals to leverage their local medical that isn’t possible in medicine. After all, facilities, as otherwise they would have gladbuilding a deck isn’t surgery. ly jumped on a plane and come to us for Contractors like this man, however, surgical care for a known price. have run into unanticipated problems that In spite of big hospitals’ attempts to denmake certain jobs more difficult. igrate this idea, they have found themselves Experienced contractors anticipate these in a competitive environment, like it or not. problems and factor them into their price. Whether patients are willing to fly to Costa Most of the time they get it right. If they Rica, New Delhi, or Oklahoma City, they get it wrong too often, they go broke. If their have a price in mind, and hospitals are haverror rate is low, they are able to be much ing to explain why they are six to ten times more competitive in the marketplace. more expensive while simultaneously claimI think of this carpenter often. I certain- ing to not make a profit. ly had him in mind when I formulated In Oklahoma City, upfront pricing is internet pricing for our surgicenter. I knew now available at several facilities, in addition that some cases would be more difficult to ours, by gastroenterologists, oncologists, than others. I knew that we would probably radiologists with a breast imaging center, lose on some and make a little better mar- cardiologists and cardiac surgeons with a ginal profit on others. This is what all busi- physician-controlled heart hospital, and nessmen do every day in every sector of the orthopedic surgeons. A tertiary hospital has economy—except medicine. recently joined in this effort, providing Eleven years ago, we began construction upfront pricing for procedures too complex of the large facility in which we now work for an outpatient center. This is a very excitin Oklahoma City. By this time, I had been ing development. providing occasional prices for the uninSince hospitals are responsible for the sured and poor, but still found the contrac- vast majority of medical costs in this coun40 April 8, 2013 / INSURANCE ADVOCATE

try, slashing their outrageous charges brings incredible savings without even touching physician pay. I don’t advocate legislation to force medical facilities to be transparent. I believe this is a violation of the non-aggression principle and might also provide legislators the opportunity to sell exemptions. The movement for medical price transparency is happening. It is better to let the much more unforgiving market deal with those who refuse to be transparent. Those who won’t divulge prices will lose out to those who will. Price sanity is coming to surgical care, and ultimately to all medical care. [IA] Dr. G. Keith Smith is a board certified anesthesiologist in private practice since 1990. In 1997, he co-founded The Surgery Center of Oklahoma, an outpatient surgery center in Oklahoma City, Oklahoma, owned by 40 of the top physicians and surgeons in central Oklahoma. Dr. Smith serves as the medical director, CEO and managing partner while maintaining an active anesthesia practice. In 2009, Dr. Smith launched a website displaying all-inclusive pricing for various surgical procedures, a move that has gained him and the facility, national and even international attention. Many Canadians and uninsured Americans have been treated at his facility, taking advantage of the low and transparent pricing available. Operation of this free market medical practice, arguably the only one of its kind in the U.S., has gained the endorsement of policymakers and legislators nationally. More and more self-funded insurance plans are taking advantage of Dr. Smith’s pricing model, resulting in significant savings to their employee health plans. His hope is for as many facilities as possible to adopt a transparent pricing model, a move he believes will lower costs for all and improve quality of care. Dr. Smith resides in Oklahoma City, Oklahoma. Contact: KSmith@surgery centerok.com, 405-627-0274

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In case you were wondering…

[ STATS ]

Six Millionth Fire Hydrant Recorded in the United States

ERSEY CITY, N.J—The six millionth fire hydrant in the country has been identified and recorded by ISO, which maintains the only national fire hydrant database in the United States. ISO is a member of the Verisk Insurance Solutions group at Verisk Analytics. As of February, ISO has identified and added to its GIS database 6,042,683 fire hydrants and other static water supply sources, reflecting both new installations and those previously unreported or recently evaluated by field inspection. Rather than rely on estimates based on municipal standards for the number of hydrants in a given community, the company identifies precise locations and functionality of every fire hydrant. The evaluation is part of ISO’s Public Protection Classification (PPC(TM)) program, which analyzes the quality of fire protection in thousands of communities around the nation, benefiting both community officials and insurers. “We determined that nearly 10 percent - or 3,118 of the 32,292 unique water supply systems in place to support the more than 6 million fire hydrants - do not meet our minimum criteria for effective fire protection purposes,” said Bill Raichle, president of Verisk Insurance Solutions Commercial Property, which collects the data directly from communities throughout the United States. PPC classifies every community by assigning a grading from 1 through 10, with 1 being the best. To receive a Class 8 designation or better, the water supply system must be able to deliver at least 250 gallons per minute for a period of two hours. That flow is in addition to the community’s maximum daily rate of consumption for purposes other than firefighting. The grading takes into account water pressure, consistency of water flow, and impact on the hydrant during times of high water demand in other parts of the system, such as a system’s ability to handle two fires simultaneously. In addition to hydrants, ISO also tracks alternative water systems, for example, where tankers are used to truck water to fire scenes. Currently, such water systems are recognized by ISO for public protection

purposes in 3,114 communities throughout the country. ISO also maintains detailed information on 53,576 fire stations, each of which has been field-inspected by ISO and rated for its ability to mitigate structure fires in its respective community. ISO identifies which fire stations serve every residential

and commercial address in the nation. Of those fire stations, 1,496 were determined to be lacking in one or more criteria, including 24/7 operation, sufficient staffing and/or training, immediate alarm notification, or appropriate fire response vehicontinued on page 43

INSURANCE ADVOCATE / April 8, 2013 41

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[ REGULATO RY ]

By Katlin Nash

Mandatory Insurance for Gun Owners Triggers Opposition

LBANY, N.Y.—The Conservative Party of New York State sent a legislative memo entitled “In Opposition to Liability Insurance for Firearms Owners” to all 213 members urging them to reject the proposal that mandates firearm owners to carry $1 million of liability insurance. The bill S3853/A3908 sponsored by Senator Kevin Parker (D, WF-Kings) and Assemblyman Felix Ortiz (D, WF-Kings) would act to amend the insurance law, to require firearm owners, prior to such ownership, to obtain and continuously maintain a policy of liability insurance to cover any damages resulting from the use of such firearms. “Injury and death by gun has increasingly become a problem in the U.S. and in New York State. In the wake of recent mass shooting incidents in Aurora,

42 April 8, 2013 / INSURANCE ADVOCATE

“According to the FBI Crime Report there were 445 firearm murders in New York in 2011 and 517 firearm murders in 2010,” said Senator Parker. “However, there is little attention on the economic impact these shootings have on the victims and their families.” “This legislation establishes and requires gun owners to obtain and maintain liability insurance policy prior to such ownership,” explained Senator Parker. “By having this insurance policy in place, innocent victims of gun related accidents and violence will be compensated for the medical care for their injuries.” “In such cases where the gun was stolen, the original owner is typically not liable unless the weapon was stolen through negligence on the part of the owner,” said Assemblyman Ortiz. “This insurance policy will also serve

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[ REGULATO RY ] as an incentive for firearm owners to implement safety measures in order to conduct the activity as safely as possible and only when necessary,” said Assemblyman Ortiz. The Conservative Parties position is “citizens throughout our Nation are still searching for answers on how to reduce the wanton disregard for life that occurs when a deranged person(s) take up firearms and randomly kill innocent people or when a person walks into a workplace and begins shooting,” said Shaun Marie, spokesman for the Conservative Party. “None of the laws ever written will be able to prevent these depraved acts because some people are so out of touch with reality, law does not matter when they have crossed the line of reason,” explained Shaun Marie. “This bill requires owners of firearms to carry a minimum of $1 million dollars of liability insurance essentially to be prepared to compensate innocent victims injured or killed by the firearms.” “Forcing an owner to purchase insurance will do nothing to deter crime, but it will add an extra financial burden to the cost of gun ownership. The sponsors of this bill want to compensate victims, but conventional liability insurance commonly excludes intentional acts, thereby requiring the firearm owner to purchase insurance that will not cover the stated purpose of the bill,” said Shaun Marie. “Liability for accidents are already covered by homeowner’s insurance and according to 1st

“It’s critically important to be able to enter an address and know which fire stations are the 24/7 first responders,” noted Raichle. “For approximately 20 percent of the U.S. population, the closest fire station is not the one designated to respond to those homes or businesses;

“None of the laws ever written will be able to prevent these depraved acts because some people are so out of touch with reality, law does not matter when they have crossed the line of reason”

Alliance Insurance Agency, guns must be properly secured to get decent home insurance rates. The fact that you own firearms is required to be disclosed.” “The Conservative Party believes this bill would not stand up to a constitutional challenge since the right to bear arms is guaranteed by the second amendment and clearly shall not be infringed. This bill is an infringement on the right to bear arms and we urge the Members of the Legislature to vote against it,” said Shaun Marie. “By requiring firearm owners to carry liability insurance, the proponents of this bill seek to make it more expensive for responsible people to own guns and does nothing to end the violence by people who have no regard for the laws that already exist,” said Shaun Marie. “Law abiding citizens are guaranteed the right to bear arms and as Members of the Legislature, you give an oath to uphold the Constitution.” [IA]

Six Millionth Fire Hydrant continued from page 42

cles, among others. “It’s critically important to be able to enter an address and know which fire stations are the 24/7 first responders,” noted Raichle. “For approximately 20 percent of the U.S. population, the closest fire station is not the one designated to respond to those homes or businesses; and about 3 percent of the fire stations in the country cannot successfully engage a structure fire on a 24/7 basis. That’s a huge margin of error for anyone who relies solely on fire station location.” [IA]

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LBANY, N.Y.—The New York State Court of Appeals will be hearing oral arguments in the case of Roman Catholic Diocese of Brooklyn v. National Union Fire Insurance Company of Pittsburgh, PA. The lawsuit filed against the Roman Catholic Diocese of Brooklyn and Reverend James Smith in 2003, the daughter of a church employee alleged that the priest had sexually molested and assaulted her over a period of seven years, beginning shortly after her tenth birthday in August 1996 and continuing until “in or about March to May 2002.” The suit was settled in 2007 for $2 million and “additional consideration.” During the first six years of the period of alleged abuse, the Diocese had commercial general liability (CGL) insurance policies with a liability limit of $750,000 per occurrence, subject to a self-insured retention (SIR) of $250,000 per occurrence that the Diocese was required to absorb before coverage was provided. In the seventh year, the Diocese had only an umbrella policy covering losses of $1 million. When its insurers disclaimed coverage, the Diocese brought a breach of contract action against National Union Fire Insurance Company of Pittsburgh, PA, seeking coverage solely under the two National Union CGL policies for 1995-96 and 1996-97 and against its umbrella insurer for the same two policy years. Supreme Court denied National Union’s motion for partial summary judgment, rejecting its arguments that the incidents of sexual abuse alleged in the underlying lawsuit constituted a separate occurrence in each of the seven policy periods and that the Diocese must allocate the $2 million settlement and other costs on a pro rata basis over all seven policy periods. Applying New York’s “unfortunate event” test, the court found “Smith’s repeated acts of abuse…over a sustained period of several years establishes the requisite temporal and spatial relationship which serves as a predicate for finding a single occurrence.” The Supreme Court ruled the Diocese could allocate all of its settlement costs to

“The sexual abuse allegedly occurred over a seven year period, at different times, and at multiple locations,” it said. “Thus, it cannot be said that there was a close temporal and spatial relationship between the acts of sexual abuse”…

just two policy periods, saying allocation to all seven policies was not required due to the “clear interrelationship” among the CGL policies, all but one of which were issued as renewal policies by National Union or related companies. The court also ruled the insurer had waived its right to assert that the Diocese must satisfy more than one $250,000 SIR because it did not raise that affirmative defense “until more than three years after its initial disclaimer letter.” The Appellate Division, Second Department reversed, declaring that the alleged acts of sexual abuse constitute multiple occurrences, that the settlement costs must be allocated over seven policy periods, and that the Diocese must exhaust a $250,000 SIR for each CGL policy implicated. “The sexual abuse allegedly occurred over a seven year period, at different times, and at multiple locations,” it said. “Thus, it cannot be said that there was a close temporal and spatial relationship between the acts of sexual abuse,” they therefore “constituted multiple occurrence” and the Diocese must exhaust a $250,000 SIR for each of the two CGL policies implicated. It found allocation over seven policy periods was required because “it cannot be determined to what extent the bodily injury allegedly sustained occurred during a particular policy period.” The Appellate Division also reinstated the insurer’s affirmative defenses. The case was argued Tuesday, March 19, 2013. [IA]

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