May 11, 2015 by C Acunto

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VOLUME 126, NUMBER 9 / May 11, 2015

A CINN Group, Inc. Publication

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

Lawsky Departs NYDFS After Four Years Serving as the Agency's First Superintendent

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Contents [COVER STORY ] 18

NAIFA Launches an Attack on “Unreasonable” Legislation

[FEATURES] 6

Foreword: Post Ben: Revisit the Concept Steve Acunto, Publisher

Insight: Egads Charlie Brown! Peter H. Bickford

Exposures and Coverages: Computer Hacking Caused by Carelessness More Than Cleverness ISO Responds to Uber, Lyft and Other TNCs ISO Tries to Fix “Where Do You Reside” Problem in HO When Does a Party Loss Occur? Jerome Trupin, CPCU

The Social Notebook: Catch the Social Media Wave Chris Paradiso

Face to Face: Grill Baby Grill! Michael Loguercio

On the Level: The Time Is Now! Jamie Deapo

On My Radar: When are Intentional Acts Also Accidental? Barry Zalma

Looking Back: 1990

Courtside: Plaintiff ’s Failure to Comply With 90-Day Notice Results in Dismissal Lawrence N. Rogak

Classiﬁeds

May 11, 2015 | volume 126 number 9 34

In the Associations: IIABNY Honors Leaders

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Like us on Facebook… The Insurance Advocate Magazine INSURANCE ADVOCATE / May 11, 2015 3

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[ FORE WORD ]

Steve Acunto

k r

Post Ben: Revisit the Concept

oo bad that the news of Ben Lawsky’s departure from the NYDFS was greeted in the major papers almost universally with a recounting of his hard-hitting penalties and punishments of bankers. It has made him appear a bit of an over-reacher in the prosecution of errant bank operatives, when in fact he meted out many a just fine, although some were unduly harsh in our view. Problem we have is that insurance seemed to take a second place to the banking agenda, from reported problems in communicaBEN LAWSKY tions and responsiveness to problems of seeming indifference – not our words, by the way, but those of a top former regulator. Now, we feel that Ben Lawsky’s exit as the first leader of the consolidated DFS offers the Governor the chance to revisit the unification of the two financial industries and consider their separation. Insurers would prefer it, so we are told. Lawsky’s tenure was highlighted by his command performance after Super Storm Sandy hit New York. He went again and again out to the devastated areas on LI and in the boroughs and took his staff with him to find ways to get monies to needy residents. For that alone, we praise his work ethic and dedication. We also hold that he gave the State’s residents good service, not being afraid to regulate or to take on all comers. He GOV. CUOMO will depart the Department in late-June after four years serving as superintendent. In a press release, Superintendent Lawsky said: "I am deeply proud of the work our team has done building this new agency and helping strengthen oversight of the financial markets. We have assembled a great team at NYDFS and I have full confidence that the critical work of this agency will continue seamlessly moving forward. I also want to thank Governor Cuomo for the trust he showed in appointing me to this position and for providing us with the opportunity to serve the people of New York. On a personal level, I am deeply grateful to the Governor, who has been an incredible mentor and amazing friend to me over the past eight years." Supt Lawsky will form his own firm to advise clients on Bit Coins, on transactions in the highly regulated industries he served, and the like. The Insurance Advocate wishes Ben Lawsky Godspeed in his next career steps and thanks him for his care and service.[IA] 6 May 11, 2015 / INSURANCE ADVOCATE

VOLUME 126, NUMBER 9 MAY 11, 2015

EDITOR & PUBLISHER Steve Acunto 914-966-3180, x110 sa@cinn.com CONTRIBUTORS Peter H. Bickford Jamie Deapo Michael Loguercio Christopher Paradiso Lawrence N. Rogak N. Stephen Ruchman Jerome Trupin, CPCU Barry Zalma PRODUCTION & DESIGN ADVERTISING COORDINATOR Creative Director Gina Marie Balog 914-966-3180, x113 g@cinn.com

PROOF READER Maria Vano mariavano9@gmail.com SUBSCRIPTIONS P.O. Box 9001, Mt. Vernon, NY 10552 914-966-3180, x117 circulation@cinn.com PUBLISHED BY CINN Group 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, 20 times a year, and once a month in July, August, September and December by CINN ESR, Inc., 131 Alta Avenue, Yonkers, NY 10705. Periodical postage paid at Yonkers, NY and additional mailing ofﬁces. POSTMASTER Send address changes to Insurance Advocate®, P.O. Box 9001, Mt. Vernon, NY 10552. Allow four weeks for completion of changes. SUBSCRIPTION RATES $59.00 US, Canada $65.00, International $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 ESR, Inc. and is copyrighted 2015. All rights reserved. No part of this magazine may be reproduced in any form without consent. Trademark registered U.S. Patent and Trademark Ofﬁce.

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

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[ INSIGHT ]

By Peter H. Bickford

Egads Charlie Brown!

ne of my favorite Peanuts cartoons is of Linus and Charlie Brown talking. Linus says, “Well Charlie Brown, you win some and you lose some!” Charlie Brown thinks about it and through his inimitable meek smile responds: “Gee, that would be neat!” The insurance industry, particularly in

the city relied on volunteer fire brigades across the city for protection, and the history of these volunteer brigades was closely tied to the insurance business. Early fire insurers often created their own brigades to protect their insured properties. It is largely a myth that these companies would fight a fire only if the building displayed a

While the great tradition of the 150-year-old NY Fire Department lives on, the 150 years of tradition, strong leadership and stewardship of the NY Insurance Department in the world of insurance regulation has ended.

Peter H. Bickford

New York, can certainly empathize with Charlie Brown. Ever since the 2008 financial crisis demonstrated that state regulation of insurance worked far better than Federal and International regulation of financial institutions, these same Federal and International financial wizards have been working tirelessly to punish the insurance industry and its regulators for their accomplishments and to further empower and expand their own unsuccessful domain. While this perverse/reverse-punishment/reward scenario has played out mostly on the National and International stages, New York provides an interesting local microcosm of this phenomenon, giving lip service to state regulation while pushing the industry aside in favor of its own brand of bank-centric regulation. But first a little history. This May marked the 150th anniversary of the formation of the New York Fire Department and in celebration firehouses around the city were open to the public with tours and gifts for visiting children of all ages. Given the tradition of the FDNY over the decades, particularly their sacrifices on 911, it is easy to forget that prior to the establishment of a formal department with professionally trained and paid firefighters, 8 May 11, 2015 / INSURANCE ADVOCATE

plaque of its insurer. Actually, more often than not insurers would pay a reward to the first brigade on scene regardless of affiliation. The FDNY celebration is in stark contrast to the inglorious end of the NY Insurance Department. Five years before the formation of the NYFD, in 1860, the NYID opened for business. Over the next century-and-a-half, the NYID established the benchmark for cutting-edge effectiveness and professionalism in the world of insurance regulation much the same as the NYFD accomplished in its world over the same period. It was the NYID that in 1871 hosted the first meeting of insurance regulators from other states resulting in the creation of what eventually became the National Association of Insurance Commissioners, and in the 1940s NY’s statutory fire policy became the standard in most states. For most of its history the NYID was unquestionably the premiere insurance regulatory agency in the US. While the great tradition of the 150year-old NY Fire Department lives on, the 150 years of tradition, strong leadership and stewardship of the NY Insurance Department in the world of insurance regulation has ended. No ceremony; no

recognition for a job well done; no gold watch. Swept away in the name of progress and the purported efficiencies of a combined “financial services” agency. Many of my colleagues argue that the decline of the Insurance Department started long before the creation in 2011 of the Department of Financial Services, resulting from years of budget cuts, hiring freezes and forced retirements that inexorably diluted the traditional continuity and professionalism of the Department. But there is little question that under the aegis of the DFS the primacy of New York in the world of insurance regulation is no longer a given. Trouble for the insurance industry could be sensed from the moment the initial merger proposal was aired. The industry had to lobby for changes to the DFS legislation to tone down its enforcement aspects and to include a few snippets of actual support for the growth and development of the industry. It is not that the combination of insurance with banking could be done successfully or without diminishing the importance of either regulated industry. Other states have clearly done so. The track record of the DFS since the merger, however, has validated the original concern that its focus would be heavily on enforcement over regulation: punishment over growth and development. But beyond the heavy foot of enforcement is a more insidious development: ignoring the business altogether. Take a long look at the press releases, speeches and rulings posted on the DFS website. Search the record for any positive business development promoted or encouraged by the DFS. Any examination of the DFS record in its almost four-year history will show a remarkable disassociation between the DFS and the insurance industry. Since the inception of the DFS in October 2011 through early May 2015, the DFS has posted 261 press releases, 11 speeches and 24 letters. Of these 296 published items none were issued in support of an industry initiative and only two involve the establishment of a new entity continued on page 10

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[ INSIGHT ] continued from page 8

– one insurer in 2012 and a virtual currency company – yes, bitcoins – in May 2015. Neither announcement included industry or consumer voices. One insurer, one virtual currency company in almost four years. That’s the NY reality! Compare Vermont’s announcement of recently adopted legislation expanding the types of investments that can be used for meeting minimum capital requirements for captives. The signing ceremony includ-

ed captive insurance industry professionals and expressions of mutual support among industry and regulators. Now try envisioning industry representatives on a podium with senior DFS officials jointly announcing a new insurance venture in New York. The most troubling aspect of New York’s dismissive attitude toward the insurance business is its adherence to the current National and International trend to diminish insurance as a separate and distinct business from other “financial serv-

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The more regulators use the generic “financial services” to include insurance, banking, securities and all other financial products, the more blurred the lines between each become in terms of their treatment.

ices” - particularly banking - while at the same time purporting to be a supporter of state-based regulation of insurance. The more regulators use the generic “financial services” to include insurance, banking, securities and all other financial products, the more blurred the lines between each become in terms of their treatment. To their credit state regulators through the NAIC have been fighting to maintain the distinctive nature of insurance from other “financial services.” New York’s regulators, however, despite lip service in support of state regulation of insurance, have contributed unabashedly to the ongoing trend to diminish the insurance industry and to meld it into one pot of indistinguishable financial services. Charlie Brown would feel right at home![IA] Peter Bickford has over four decades of experience in the insurance and reinsurance business, with particular focus on regulatory, solvency, agency, alternative market and dispute resolution issues. In addition to his experience as a practicing attorney, he has been an executive officer of both a life insurance company and of a property/casualty insurance and reinsurance facility. A complete biography for Mr. Bickford may be accessed at www.pbnylaw.com.

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[ EXPOSURES AND COVERAGES ] Computer Hacking Caused by Carelessness More Than Cleverness ISO Responds to Uber, Lyft and Other TNCs ISO Tries to Fix “Where Do You Reside” Problem in HO When Does a Property Loss Occur? Phishing, not Phenoms, Cause Most Computer Hacking Problems It’s not Professor Moriarty, Darth Vader, or even Crabby Appleton who wreak havoc on our computers, it’s our own gullibility. More than two-thirds of the 290 electronic espionage cases studied by Verizon and Symantec involved someone victimized by phishing (computerspeak for emails that trick you into clicking on a dangerous link), not high-powered hackers. We are just too willing to click on tainted links or email attachments that give the bad guys access to our computers. So many people fall for these ruses that sending phishing emails to just 10 employees will get hackers into a business’s computer system 90 percent of the time.1 As an insurance professional, you should: • Educate your clients (and your staff) about safe computing. Clicking a link in response to the message “You’ve got to see this” is going to lead to nothing but trouble. • Even if safe-computing works all the time, and of course it doesn’t, it won’t protect against the one-third of hacking incidents that weren’t the result of biting on a phish hook. For that, insurance is the answer.

More than two-thirds of the 290 electronic espionage cases studied by Verizon and Symantec involved someone victimized by phishing…not high-powered hackers.

ISO Responds to Uber, Lyft, and Other TNCs (Transportation Network Companies) ISO has responded to the Uber, Lyft and the TNC craze that’s disrupting the taxi industry by filing new endorsements. It’s a response that will leave ISO-based insurers out of the game. The most important change is a mandatory endorsement that eliminates coverage while the insured is logged on to a TNC (PP 23 40 10 15 – Public Or Livery Conveyance Exclusion Endorsement). ISO intends that this endorsement makes clear there is no coverage while the insured’s vehicle is logged on to a transportation network platform. (“Transportation network platform” means an online-enabled continued on page 14

1 Caitlin Bronson “Hackers Aren’t ‘Geniuses’: The Real Reasons Behind Most Cyber Attacks” Insurance Business America April 16, 2015 http://www.ibamag.com/news/hackers-arent-geniuses-the-realreasons-behind-most-cyber-attacks-22122.aspx (accessed 5/1/15)

12 May 11, 2015 / INSURANCE ADVOCATE

By Jerome Trupin, CPCU

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

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[ EXPOSURES AND COVERAGES ] continued from page 12

application or digital network used to connect passengers with drivers using vehicles for the purpose of providing prearranged transportation services for compensation.”). ISO’s filing points out that this is a “reinforced (emphasis added) public or livery conveyance exclusion.”2 It adds the underlined words below to the public or livery conveyance exclusion: We do not provide Liability Coverage for any “insured”: …For that “insured’s” liability arising out of the ownership or operation of a vehicle while it is being used as a public or livery conveyance. This includes but is not limited to any period of time that “insured” is logged into a “transportation network platform” (TNP) as a driver, whether or not a passenger is “occupying” the vehicle. Remember that for personal auto liability “insured” is broadly defined to include the named insured and any family member, anyone using the covered auto, and any person or organization responsible for their use of the covered auto. The “public or livery conveyance” exclusions applying to Damage to Your Auto coverage and Medical Payments coverage are similarly changed. Once the insured logs on to a TNC there’s no collision or other physical damage coverage until the driver logs off. ISO will make changes to under and uninsured motorist coverage on a state-by-state basis. ISO is also filing two optional endorsements to provide some coverage, but in neither case does coverage apply while there is a fare-paying passenger in the vehicle. PP 23 41 10 15 – Transportation Network Driver Coverage (No Passenger) is an optional endorsement to provide coverage for the period of time from when the driver logs in to a “transportation network platform” up until a passenger has entered the vehicle. PP 23 45 10 15 – Limited Transporta-

Remember that for personal auto liability “insured” is broadly defined to include the named insured and any family member, anyone using the covered auto, and any person or organization responsible for their use of the covered auto. tion Network Driver Coverage (No Passenger) is another optional endorsement. It provides coverage from the time the insured logs on to the network until the driver accepts an assignment. PP 23 41 provides coverage until the passenger enters the vehicle. The insured’s personal policy would respond when he or she is not logged on to a TNC. Otherwise the insured has to rely on the coverage provided by the TNC’s insurer. (Some more coverage can be provided by the two optional endorsements, but they come nowhere near closing the gap. I predict that few insurers will offer the optional extensions and few insureds will want them.) My preference is always for one policy that provides continuous coverage. Erie and GEICO are testing the waters with continuous coverage. I hope other insurers will join the fray.

ISO Fixes the Residence Problem in Homeowners Policies— Somewhat. Mary, an elderly widow, suffers from a number of chronic ailments and has signs of dementia. Her family decides that she can no longer live on her own and must be moved to a nursing home. They realize that Mary will never recover sufficiently to return to her home and plan to put it up for sale. Mary has an ISO homeowners policy in her name. No changes are made

to the policy. The house is destroyed by a hurricane a few days later. Is Mary covered for the loss? Ed and Yvonne divorce. As part of the divorce settlement, Yvonne receives title to the home and continues to live there with their children. Ed moves to another home. Ed is the only named insured on the homeowners policy; no change is made in the name of the insured. The house is destroyed by fire some months later. Are either Ed or Yvonne covered for the loss? There’s no vacancy or unoccupancy exclusion in a homeowners policy, so you might expect that there is coverage. I agree that there certainly should be, but many adjusters and courts don’t. I feel their position is inconsistent. An ISO HO policy can be used to insure a home under construction and coverage remains in force under an ISO HO even if the insureds are absent while on an extended vacation.3 Nevertheless, the dissenters point to the statement in the ISO HO policy that the policy covers the residence premises shown in the declaration and that the residence premises means the one family dwelling where the insured resides. Since the house is no longer Mary’s or Ed’s residence, courts, including some in New York, have ruled that the homeowners policies in their names do not provide coverage. Similar situations arise when an insured moves to a new home intending to sell the old one or buys a home but doesn’t move in until renovations are completed.4 ISO is filing a new endorsement that will cure some, but not all the problems. Via a mandatory endorsement, the definition of residence premises is changed to read: “…dwelling where you reside…on the inception date of the policy period shown in the Declarations and which is shown as the ‘residence premises’ in the Declarations.” Therefore if Mary and Ed were residing in the home on the inception date, there will be coverage. However, when the current policies expire the continued on page 16

2 ISO PAP Forms Filing PP-2015-OTNFR 3 In discussing this issue, Bill Wilson, the IIABA Virtual University guru, writes: “Courts that have found FOR coverage have generally interpreted the ‘where you reside’ language to be ‘words of description,’ not a warranty of occupancy or a condition for coverage.” For more of Bill’s arguments, see: http://www.independentagent.com/Education/VU/Pages/featured-resources/reside/where-you-reside.aspx (accessed 5/9/15) 4 I wrote about this problem in more detail in “Let’s Get Personal: Homeowners and Personal Liability Insurance Problems” Insurance Advocate March 19, 2012 pages 12, 14, and 16.

14 May 11, 2015 / INSURANCE ADVOCATE

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ADVERTORIAL

Swimming Pool Safety THE USE OF SWIMMING POOLS AND HOT TUBS is a popular recreational activity. The Centers for Disease Control and Prevention (CDC) estimates that there are 7.4 million swimming pools and five million hot tubs in residential or public use in the United States. (www.cdc.org) Pools and hot tubs represent an increased liability exposure for their owners. Extra liability limits as well as an umbrella/excess policy are recommended. Alerting clients to the possible risks of hot tubs and swimming pools and how to avoid losses is another sign of the true insurance professional. Winter weather can wreak havoc on outdoor plumbing for pools. Leaks can be costly both in terms of lost water and ensuing damage. To check for leaks, mark the water level and see where it is 24 hours later. A pool should usually not lose more than ¼” in that time. In addition, check electrical connections around the pool to ensure that wires are not corroded, frayed or chewed. Pools and hot tubs should never be considered “safe”. Over 3,400 people drown in the United States each year, with more than 1 in 5 being 14 years old or younger. (www.cdc.org) 350 children under 5 die each year, with more than 2000 treated for nonfatal drowning accidents. (www.consumeraffairs.com) Those who survive may suffer permanent brain damage. Drowning can happen within minutes, and in only two inches of water. Pool owners should check that they are in compliance with local laws. Basic safety precautions include at least a four foot fence around pool/hot tubs, with a locking gate. An alarm on the gate is a good idea when there are young children in the household or neighborhood. If the fence is attached to the house, alarms on doors and safety guards on windows that can access the pool area are recommended. Spas/hot tubs may require a locking safety cover. Drain covers must also be in compliance, as hair and clothing can become stuck in the drain. A basic pool safety kit in the pool area is essential in an emergency. The kit should include scissors to cut clothing, hair or even a pool cover. Keep a floatation device, first aid kit and a charged phone nearby as well. A surface wave or underwater alarm will provide an alert when a child or animal has fallen into the pool. Basic knowledge in CPR and first aid is recommended for everyone, not just pool owners. Keep toys out of the pool when not in use. They are an attractive nuisance to local children. Children should be supervised at all times, and learn how to swim at an early age. They

should stay away from filters, pumps and other mechanical devices. Diving and diving boards present safety and insurance issues. In fact, the presence of a diving board can either raise the insurance costs, or preclude eligibility altogether. Aboveground pools are never safe for diving. Children between the ages of 10-14 (www.momsteam.com) suffer the most divingrelated injuries. Keep trampolines and other possible jumping-off points away from the pool. Hot tubs present additional challenges. Warm water can be a breeding ground for all types of bacteria. If the temperature is too hot, scalding can occur. (http://www.cdc.gov/healthywater) For public hot tubs at resorts or hotels, health inspector records should be available. Pregnant women should avoid using a hot tub, especially in the first trimester. Contrary to what may be believed, chlorine does not kill all germs and bacteria, and those it does kill do not always succumb for a few hours or days. The “chlorine” smell we all remember from swimming at the Y as kids is actually an indication of chloramines, which are produced when chlorine combines with ammonia and nitrogen products, such as saliva and sweat. Sanitizing power is greatly reduced. Chlorine is also an irritant to eyes, throat and lungs. Indoor pools and hot tubs must be properly ventilated. Swimming in a pool or soaking in a hot tub should be relaxing and fun. Helping clients avoid potential injury, property damage and illness is another sign of the true insurance professional.

139 Harristown Road Glen Rock, NJ 07452, Suite 100 (800) 935-6900 | www.msonet.com INSURANCE ADVOCATE / May 11, 2015 15

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[ EXPOSURES AND COVERAGES ] continued from page 14

renewal policies will not provide coverage. Furthermore, it’s very often the case that insureds that purchase a new home move in some days or weeks after putting a homeowners policy in force to meet closing requirements. Should a loss occur before they move in, they may be without coverage. ISO is filing an optional endorsement to suspend the residency requirement for a specific period of time, but sadly most insureds find out about the availability of that type of endorsement after the loss. It’s a situation that cries out for a better solution.

When Does a Property Loss Occur? It’s generally clear when a property loss has occurred. The building burns down, the insureds call the fire department, and then call their insurance producers. But sometimes the damage occurs and the insured doesn’t know about it. It’s the insurance variation of “If a tree falls in a forest and no one is around to hear it, does it make a sound” philosophical question. Is coverage provided by the policy in force when the damage occurred even though the insured didn’t report it until years later? Suppose one or more policies expire and are renewed before the insured becomes aware of the loss. In that case, which policy, if any, is triggered? While problems with policy triggers are infrequent in property policies, they do happen. There are two theories that courts use to determine which policy is triggered: • Manifestation trigger—the policy in force when the injury or damage can first be detected is triggered. • Continuous trigger—all policies in force while the claimant is exposed to the harmful conditions; policies in force when the actual injury or damage occurs, and the policy in force when the injury or damage is manifest are triggered.5 Here are two examples of losses that

It’s the insurance variation of “If a tree falls in a forest and no one is around to hear it, does it make a sound” philosophical question. were discovered long after they commenced. Winding Hills Condo in Pompton Lakes, NJ received a report in January 1991 from its engineering consultant that deficiencies in the on-site drainage system had resulted in structural failures of the foundation footings of its two buildings. Winding Hills gave notice to the six insurance companies that had provided coverage for the condo between 1986, when it opened, and 1991. All the insurers declined the claim and Winding Hills commenced suit. The court decided that the loss was covered and that coverage was triggered when the loss became manifest; that is, the insured could reasonably be expected to be aware of the damage. The court ruled that the loss became manifest when the engineering consultant delivered its report in January 1991. Therefore, the summary judgment motions of five of the insurers who provided coverage prior to January 1991 and had denied liability were granted. Only the motion by North American Specialty, whose policy was in force from May 1990 to May 1992, was denied. Because it provided coverage when the loss became manifest, the court decided its policy covered the loss. North American Specialty appealed. It argued that the continuous loss theory should apply and therefore all the insurers should share the loss. The appellate court, however, agreed with the lower court that the manifest theory was the correct one to use.6 A Wisconsin court came to a different conclusion in the case of Randal and Diane Strauss’s home in Mequon, Wisconsin.

Their home was insured under a Chubb Masterpiece Deluxe Home Coverage policy from 1994, when it was built, until 2005. After that it was insured with other insurance companies. In October 2010, the Strausses discovered that water infiltration had been causing damage to their home. The infiltration was ongoing, starting around the time of original construction and continuing with each subsequent rainfall. The Strausses submitted a claim to Chubb in December 2010. Chubb denied liability on two bases: (1) the damage wasn’t discovered while any of the Chubb policies were in force and (2) the claim was barred by the time limit to make claim contained in the policy. In 2011 the Strausses filed a lawsuit. The Wisconsin court decided that the policy covered ongoing losses and that the “continuous” trigger theory applied. Because the “continuous” trigger theory applied, the district court also held that the Strausses’ claim was not time-barred. The Chubb policy required that claim be made within one year after a loss occurs. The court pointed out that this differs from one year after the inception of the loss. The implication being that if Chubb had used “inception” wording, the Strausses would have lost. (ISO HO policies say that suit must be started within two years “after the date of loss.” That wording would probably not have improved Chubb’s position.) The district court’s decision was affirmed on appeal. There are lessons here for us as insurance practitioners: Losses that occurred in the past can be covered by the policy(ies) in force when the loss is discovered or by the policies that were in effect while the loss was continuously occurring. Different states, different legal interpretations. If you’re faced with a loss that may have occurred during prior policy periods and the insured was unaware of its occurrence, report it as soon as possible to all the insurers who provided coverage or recommend that the insured get an opinion from an insurance coverage attorney.[IA]

5 Liability policies are treated differently. There are four ways to decide which liability policy(ies) is/are triggered: (1) (2) Exposure trigger—The policy(ies) in force while the claimant is exposed to the condition that produced the injury or damage. (3) Injury-in-fact trigger – The policy(ies) in force during the time compensable injury or damage is shown to have actually taken place. (The continuous trigger is sometimes called the “triple-trigger” because it encompasses all the others.) All four are used in some liability claims in certain states. 6 Winding Hills Condo Ass’n v. North Am. Specialty Ins. Co., 332 N.J. Super. 85, 752 A.2d 837 (N.J. Super. Ct. App. Div. 2000)

16 May 11, 2015 / INSURANCE ADVOCATE

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Defensive Driving Class Opportuni es! We are looking for Delivery Agents, Instructors, and Facili es in ALL Areas of New York to Par cipate! The Benefits of choosing Empire Safety Council: · LOW START UP COST All required materials compare favorably in price. · EASY TO TEACH FORMAT Instructor’s manual is logically organized and cross referenced to the student workbook and the NYS Vehicle & Traffic Laws. · PIRP IS GROWING Every year, on average, 150,000 of New York’s drivers choose Empire for their Point / Insurance Reduc on needs. · BACKED BY SCIENTIFIC RESEARCH Empire’s Accident Preven on Workshops, in fact, save lives by reducing both the number of vehicle accidents and repeat traffic offenses for the highest overall effec ve rate in driver safety educa on. · MAINTAIN THE HIGHEST INTEGRITY Empire maintains the highest integrity among all sponsors by referring all students to Empire’s officially approved Delivery agencies.

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By law, NYS drivers who complete Empire’s 6-hour accident preven on workshop save 10% on all their vehicle liability, personal injury protec on, and collision insurance premiums for three years. Addi onally, students can reduce up to four traffic violator points on their driving record every 18 months. Upon comple on of the course, students will receive an official course comple on cer ficate. ESC helps organize classes, appoint delivery agents, train instructors, fill out applica on to obtain approval (usually within two weeks), refer students, and further assist you with adver sing support programs.

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[ COVER ]

By Phil Gusman

“BILLIONS OF DOLLARS IN SAVINGS ARE LOST EAC FIDUCIARY STANDARD, BUT WE CAN’T WAIT TO GI THIS NEW LAW WILL ENSURE T

18 May 11, 2015 / INSURANCE ADVOCATE

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[ COVER ]

LOST EACH YEAR BECAUSE OF HIDDEN FEES AND CONFLICTED FINANCIAL ADVICE. WE NEED A UNIFORM, NATIONAL AIT TO GIVE NEW YORKERS THE COMMON SENSE REFORMS THEY NEED TO MAKE INFORMED INVESTMENT CHOICES. ENSURE THAT NEW YORKERS KNOW WHETHER THE INVESTMENT ADVICE THEY RECEIVE IS IN THEIR BEST INTEREST.” - New York City Comptroller Scott M. Stringer

he National Association of Insurance and Financial Advisors–New York State (NAIFA–NYS) has launched an all-out attack on an initiative introduced in the legislature that would institute what it sees as unreasonable requirements upon providers of Financial counsel. NAIFA which represents the interests of tens of thousands of agents, their associates, and their clients who are consumers throughout New York, states its dedication to ensuring that only the most competent, qualified and ethical insurance and financial service practitioners serve the public interest by providing beneficial products, service, guidance, and information to the consumer on issues that affect their financial security and protection. New York City Comptroller Scott M. Stringer framed a proposal to enact a state law requiring that financial advisors disclose whether they put their own financial interests above those of their clients. The Comptroller also released a report examining the history of the fiduciary standard, expressing his support for enacting the fiduciary standard nationwide and detailing his pioneering state proposal. “Billions of dollars in savings are lost each year because of hidden fees and conflicted financial advice,” Comptroller Stringer said. “We need a uniform, national fiduciary standard, but we can’t wait to give New Yorkers the common sense reforms they need to make informed investment choices. This new law will ensure that New Yorkers know whether the investment advice they receive is in their best interest.” Most New Yorkers assume that their financial advisors provide objective advice that is to their benefit. However, under current law, most financial advisors are not required to provide advice that is in the client’s best interest—a legal standard of care known as the fiduciary standard, according to Stringer. Instead, many brokers, financial planners, and retirement advisors, he claims, are allowed “to operate under a more permissive ethical code known as the suitability standard, which allows advisors to push investments that yield high fees or commissions, provided those investments are suitable for their clients,” his communication stated. Stringer is proposing a measure that would require all advisors operating under the suitability standard to state at the outset of any financial relationship: I am not a ﬁduciary. Therefore, I am not required to act in your best interests, and am allowed to recommend investments that may earn higher fees for me or my ﬁrm, even if those investments may not have the best combination of fees, risks, and expected returns for you. “This pledge will ensure transparency and accountability in relationships between investors and their advisors in New York State and provide needed protections to millions of New Yorkers. Hard-working New Yorkers should not be penalized by a system that doesn’t adequately address potential conflicts of interests and financial mismanagement,” Stringer said. The Comptroller’s report follows two recent actions at the federal level that signaled movement toward stricter standards for financial advice. President Obama recently called continued on page 20

INSURANCE ADVOCATE / May 11, 2015 19

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[ COVER ] ACCORDING TO NAIFA NEW YORK, THE DISCLOSURE STATEMENT continued from page 19

IMPLIES THAT IF AN AGENT SELLS AN ANNUITY, FOR EXAMPLE, for the Department of Labor to issue a new rule requiring all retirement advisors to abide by the fiduciary standard. Securities and Exchange Commission Chairwoman Mary Jo White commented that her personal view was that a “uniform standard” for financial advisors was needed. New York President Lawrence Holzberg responded that, while NAIFANYS shares the sponsor’s intent of protecting consumers, “We believe the approach of the bill is misguided and that the disclosure statement required by the legislation will have a chilling effect on an insurance agent or financial advisor’s ability to properly service a client’s needs.” Holzberg said: “Our members are trusted financial advisors who assist their clients in making important decisions on issues ranging from asset management, growth of net worth, employee benefits, retirement and elder planning, life, health, long term care and disability insurance planning, college funding, and business succession and legacy planning. This guidance includes the consideration of the purchase of insurance, annuities, mutual funds and other financial products. A6933 would require that brokers and financial advisors who are not subject to a fiduciary standard of conduct make disclosures about their level of obligation to clients that are biased against anyone who is not a fiduciary and that are neither fair to the advisor nor balanced in nature. The bill would require a broker who is not subject to a fiduciary duty, to be required to make such a statement as the one reported above prior to engaging a client. NAIFA holds that in all likelihood, a client of the broker would end their meeting at once, poten-

THEN HE CANNOT POSSIBLY BE ACTING IN A CLIENT’S BEST INTEREST. AN ANNUITY, WHICH WOULD FALL UNDER THIS PROPOSED LEGISLATION, IS NOT A PURE INVESTMENT, BUT AN INSURANCE PRODUCT WITH AN INVESTMENT FEATURE AND A VERY IMPORTANT PART OF AN INVESTOR’S PORTFOLIO. tially leaving many middle-market New Yorkers underserved and without access to needed products and services. NYS supports appropriate, balanced disclosures. The one-sided disclosure required by A6933, however, does not come close to telling the complete story and amounts to little more than saying “fiduciary good, all others bad.” According to NAIFA New York, the disclosure statement implies that if an agent sells an annuity, for example, then he cannot possibly be acting in a client’s best interest. An annuity, which would fall under this proposed legislation, is not a pure investment, but an insurance product with an investment feature and a very important part of an investor’s portfolio. Many times a client’s interests are best served by the insurance benefits that annuities offer. In NAIFA’s view, an appropriate disclosure would “paint a more complete picture of the standard of care landscape: - to include a discussion of the protections provided by FINRA’s suitability standard, and the robust rules-based regulatory regime applicable to the broker-dealers and registered repre-

sentatives covered under that standard; - to discuss the frequency and types of examinations that broker-dealers are subject to by FINRA (as well as the frequency and types of examinations that registered representatives are subject to by both FINRA and the reps’ broker-dealer); and - to compare and contrast these factors with the regulatory regime and frequency of examinations applicable to investment advisors who are currently subject to a fiduciary duty. Mr. Holzberg concluded, “Only by providing consumers with this type of thorough and balanced disclosure will consumers be given the information they need to make an informed decision about what type of advice is best for their own situation. It should also be noted that New York State Department of Financial Service’s Regulation 194 - Producer Compensation Transparency, adopted in 2010, mandates commission disclosure. “In addition, in New York, as in all states, fees and commissions on insurance products are regulated and approved by the Department of Financial Services.”[IA]

FOR ADVERTISING OR SUBSCRIPTION INFORMATION Call 914-966-3180 - g@cinn.com New York and New Jersey’s Leading Insurance Magazine Since 1889. www.insurance-advocate.com Like us on Facebook… www.facebook.com/InsuranceAdvocate

20 May 11, 2015 / INSURANCE ADVOCATE

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201 2015

Schedule Sunday, June 7, 2015

JUNE 7-9, 2015

B BALLY’S ALLY’S P PARK ARK P PLACE, L AC E, ATLANTIC ATL ANTIC CITY, CITY, N.J. N . J.

SSunday, unday y, June 7 Cocktail reception Kick oﬀ an all-new event at the trade show networking lounge. Be sure to join colleagues as you o plan the next two days of making valuable contacts and getting up-to-date with events that will help you grow your o business. bu Hors d’oeuvres will be available; cocktails can be purchased, too!

Monday, June 8, 2015

Education sessions

Neetworrking k lounge sponsorred e by:

YIP Nitecap The Yooung Insurance Professionals invite you to party the night away … Dance and be seen, as even the young at heart will be sure to have fun!

Monday, Monday y, June 8 Networking lunch Join Master of Ceremonies, PIANY President Anthony Kubera, u CIC, and congratulate your new PIANJ oﬃcers and honoree Greg Maciag, retiring CEO of ACORD. See the new generation of professionals as NJYIP welcomes its new administration. Ease into conversations with the industry’s VIPs and up-and-comers at the buﬀet lunch. Sponsor p red e by:

Poolside reception

Education sessions

Dance at a poolside paradise with music by Jimmy and the Parrots at Bally’s Pool and Deck. Meet up with old friends and make new connections while enjoying appetizing food stations. (Flip-ﬂops optional.) Spo ponsorred e by:

TTuesday, uesd u day y, June 9 The annual Fun Run u for Special Olympics New Jerseyy, a 30-year tradition that continues with Fun Run u 2015. To date, PIANJ and NJYIP have raised more than $3.3 million for SONJ. Help make this the best yet. Yoou FUN RUN ’1 15 5 don’t have to be a world-class athlete to participate. Ru un, jog or walkk; complete the course at your o own pace. NJYIP requests a $20 donation at the door for breakfast on Tuesday u y, June 9. Sp ponsorred e by:

Tuesday, June 9, 2015

And, don’t forget! TTrade rrade show and exhibition Don’t miss the biggest insurance exhibition in the Northeast! See hundreds of vendors eager to meet with you from New Jersey and New Yor o k. Yoour competitors are sure to be there, checking out the latest innovations, products and markets … you won’t want to be left out! Wiine and cheese reeception sponsorreed by:

QUESTIONS?

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[ THE SOCI AL NOTEBOOK ]

By Chris Paradiso

Catch the Social Media Wave

ocial media has become one of the most prominent marketing channels. A recent study shows that nearly 91 percent of all businesses are using social media as a new marketing tool to reach customers and prospects. Itâ&#x20AC;&#x2122;s also reported that Americans spend more than 3.5 hours a day using social media. Thatâ&#x20AC;&#x2122;s more time than we spend watching television! Â Yet, the average businessperson has no idea how to grow their business expoChris Paradiso nentially using social media because either they donâ&#x20AC;&#x2122;t know how it works or they donâ&#x20AC;&#x2122;t know who to hire to help them build their online presence. Below I have provided some answers to questions that should help you along your marketing journey.

What makes you Different in the Social World? If you were to use Google to search for social media agencies, youâ&#x20AC;&#x2122;d come across hundreds of thousands of agencies promising to bring you more customers, and in turn producing a positive return on investment (ROI). Just know, not every social media agency is right for every business, especially when it comes to the insurance marketing world. First, search for a marketing agency that acts in the best interest of your insurance agency â&#x20AC;&#x201C; one that has proven to be successful in the past. The agency thatâ&#x20AC;&#x2122;s right for you should have a positive track record, a portfolio of case studies within the insurance space, and a

well facilitated and designed process for your agency.

Does my agency need to be on every social media site?Â This question helps determine if the marketing agency is being honest or not and distinguishes their level of expertise. If the answer is YES, this could be a red flag that the agency is not going to act in the best interest of your insurance agency. One component to marketing is reaching out to people; the other is being able to listen. Not all social media platforms are the same, and every insurance agencyâ&#x20AC;&#x2122;s brand isnâ&#x20AC;&#x2122;t either. You should choose social media platforms that reach the target audience for your insurance agency. For instance, the majority of Facebook users are female, nearly 82 percent of Pinterest users are also female who tend to have more education and a higher income. The right marketing agency for you will seek to determine your target audience and ensure the best use of your money by only using platforms that will be more likely to help your business succeed. Though for some agencies it may be ideal to be present on multiple social media websites, the important aspect is that the agency seeks to understand your target market and your targeted audience.

How do you develop creative content for your agency? One of the most important questions to ask a social media agency is how do they conduct research and create content. A reputable agency will have a defined strategy that has proven to work for other clients. Their defined strategy should always include consideration of the target audience. Brands should not be impressed by agencies

claiming to go with their gut feeling for the content. A major focal point to social media content strategy is to post quality pictures and videos. Nearly 44 percent of Facebook users claim that quality photographs are more enticing to click on rather than boring images or too much text.

Data and Tracking? Having an effective process for reporting information to you regarding both positive and negatives of your businessâ&#x20AC;&#x2122;s social media networking is important. You should expect to receive feedback regularly (weekly) after your brand has had adequate time to reach consumers through social media channels. The initial breakthrough of communication between your agencyâ&#x20AC;&#x2122;s brand and consumers may take a little time at first, but after that, you should expect regular feedback. Tracking is EVERYTHING when it comes to following and understanding your agencyâ&#x20AC;&#x2122;s marketing success.

How will you measure success for your agencyâ&#x20AC;&#x2122;s marketing team? The first question on your mind, before hiring any marketing agency, probably has to do with ROI. While thatâ&#x20AC;&#x2122;s a fairly unpredictable question to answer, a solid agency should be able to effectively explain how youâ&#x20AC;&#x2122;re going to achieve ROI by using their methods of social media marketing. Before signing on with any agency, ensure you have communicated your vision, mixing it with their expertise, for the overall process and what metrics you would like to use for measuring the branding success. An effeccontinued on page 29

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[ FACE TO FACE ]

By Michael Loguercio

Grill Baby Grill!

o as we approach Memorial Day and the dog days of summer, many of us have thoughts in our minds of traveling on vacation, trips to the beach, and backyard barbeques. Well, as we commit to these different events, there are a few

it that there will be a substantial amount of fires related to this statistic. For instance, each year approximately 8,800 home fires are caused by outdoor barbeques, and almost half of all injuries involving barbeque grills are due to thermal burns.

…from 2007 to 2011, fire departments in our country answered an average of 156,600 actual home structure fire alarms where some sort of cooking equipment was involved in the ignition, or where the fire was identified to be at a cooking apparatus and did not spread past the device. Michael Loguercio

reminders that I want to share for us to keep in mind and to pass on to our families, friends, and clients. In a land where three out of five households own a gas barbeque grill, odds have

Statistics also indicate that half of these grill owners will barbeque year-round, however, July is the peak month for barbeque grill fires followed by May, June and August. The following are a few more interesting

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statistics regarding barbeque grill casualties: • In 2012, 16,900 patients went to emergency rooms because of injuries involving grills. • One of every six (16%) home structure fires in which grills were involved in ignition, something that could catch fire was too close to the grill. • Overall, leaks or breaks were factors in one of every five reported grill fires. • Gas grills contribute to a higher number of home fires overall than their charcoal counterparts. In addition, from 2007 to 2011, fire departments in our country answered an average of 156,600 actual home structure fire alarms where some sort of cooking equipment was involved in the ignition, or where the fire was identified to be at a cooking apparatus and did not spread past the device. As per an annual survey taken by the US Fire Administration’s National Fire Incident Reporting System and NFPA’s fire department, these types of fires caused an average of 400 civilian deaths, 5,080 reported civilian fire injuries, and $853 million in direct property damage each year. Additionally, these events were the cause of two out of every five home fires (43%), home fire injuries (38%), deaths in the home (16%) and directly related fire caused property damage (12%). Furthermore, with respect to all household fires caused by cooking equipment: • 57% were caused by a range or cooktop and responsible for - 86% of civilian deaths - 77% of civilian injuries • 16% caused by an oven or rotisserie and responsible for - 4% of civilian deaths - 6% of civilian injuries • 5% from a microwave and responsible for - 1% of civilian deaths - 3% of civilian injuries • 4% from portable cooking or warming unit and responsible for - 6% of civilian deaths - 4% of civilian injuries So armed with the above statistics, I share with you some common sense rules

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[ FAC E TO FACE ] to help prevent outdoor summer barbeque related fires and injuries:

Grilling Safety • Propane and charcoal BBQ grills should only be used outdoors. • The grill should be placed well away from the home, deck railings and out from under eaves and overhanging branches. • Keep children and pets away from the grill area. • Keep your grill clean by removing grease or fat buildup from the grill and in trays below the grill. • Never leave your grill unattended.

Charcoal grills • There are several ways to get the charcoal ready to use. Charcoal chimney starters allow you to start the charcoal using newspaper as a fuel. • If you use a starter fluid, use only charcoal starter fluid. Never add charcoal fluid or any other flammable liquids to the fire. • Keep charcoal fluid out of the reach of children and away from heat sources. • There are also electric charcoal starters, which do not use fire. Be sure to use an extension cord for outdoor use. • When you are finished grilling, let the coals completely cool before disposing in a metal container.

more than 49 miles between May 21st and May 25th, up 4.7% over last year, with nine out of ten travelers going by car. The reason for this uptick in travel is “fueled” (sorry, couldn’t resist that one!) by lower gas prices and a rising economy. Personally, I think that the horrendous winter that we had here in the northeast is also causing people to want to get away to celebrate and enjoy as many days of summer as possible. Speaking of celebrating, a very special heartfelt and loving congratulations to my dear friends Alan and Roslyn Plafker (Member Brokerage, Queens, NY) on their marriage this weekend! All the best, Mazel Tov, and Cent’anni to the happy couple! Well, that’s all for now, and until next time, be safe in your travels, and please enjoy the weekend responsibly. Ciao for now![IA] Michael Loguercio is the Regional Sales Manager for EZLynx; and has been active in the insurance industry since 1978 as a licensed insurance broker and an insurance technology professional. He is an active Past President and Lifetime Member award honoree of the Young Insurance Professionals of New York State, current ACT/AUGIE, Profes-

sional 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. NY-YIP/PIA has honored Michael with a “Distinguished Service” award in 2001; “Insurance Professional of The Year” award in 2009; “Lifetime Achievement” award in 2012; and “Special Service” awards in 2013, 2014 and 2015. In his community, Michael is the Immediate Past President and current member of the Longwood Central School District Board of Education on Long Island, NY since 2004; is a Director on the board of REFIT NY (Reform Educational Financing Inequities) and is a member of The Middle Island, NY, Rotary Club; Central Brookhaven Lion’s Club; and Ridge, NY, Volunteer Fire/EMS Department. He also served two terms on his Church’s vestry, and in 2013 he was awarded the SCOPE “Community Service” award for his dedication to the public. Michael is a regular Contributor to the Insurance Advocate since 2008, and may be contacted at 631-345-9359 or michael.loguercio@ezlynx.com.You may also follow him on Twitter @MLoguercioJr; and on Facebook @ Michael Anthony Loguercio Jr.

Propane grills Check the gas tank hose for leaks before using it for the first time each year. Apply a light soap and water solution to the hose. A propane leak will release bubbles. If your grill has a gas leak by smell or the soapy bubble test and there is no flame, turn off the gas tank and grill. If the leak stops, get the grill serviced by a professional before using it again. If the leak does not stop, call the fire department. If you smell gas while cooking, immediately get away from the grill and call the fire department. Do not move the grill. So for those who are going to hit the road this Memorial Day weekend, this year is estimated to be the most highly traveled holiday by car in over 10 years. Over 37 million folks in our country will travel

4441 Sepulveda Blvd., Culver City, CA 90230-4847 www.zalma.com | zalma@zalma.com 310-390-4455 | fax: 310-391-5614 http://zalma.com/blog Zalma Insurance Consultants provides expert advice to counsel for insurers and counsel for policyholders. Advice from Zalma Insurance Consultants is indispensable to the resolution of insurance disputes. Consultation from Zalma Insurance Consultants can save you, your counsel or client hundreds of hours of investigative and legal work. INSURANCE ADVOCATE / May 11, 2015 25

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[ ON TH E LEVEL ]

By Jamie Deapo

The Time Is Now!

he insurance business is changing. Many insurance consumers have been programmed to believe all insurance coverage is the same and there is no need for the professional services of an insurance agent in the buying process. Unfortunately we all know this isn’t true

At this point you are probably thinking “no kidding Captain Obvious but what is your point.” My point is that as independent agents and brokers we have a duty and obligation to educate consumers on the perils of buying protection without professional advice. You may think the phrase

If you’re lucky enough to be an IIABNY member you are part of the Trusted Choice® national brand that spreads the word about the advantages of working with an independent agent and educates consumers on coverage. and shudder to think of what might Jamie Deapo happen to the unsuspecting consumer who relies on this lie and has a significant loss that is either not covered or only partially covered. Insurance policies are legal contracts subject to clauses and exclusions that can restrict or deny coverage. The average consumer, even a highly educated one, has trouble reading and understanding an insurance policy. It’s funny that the same people who will so easily purchase an insurance policy they haven’t read or understood will hire a lawyer to review the purchase agreement for a home. They’re concerned they might be forced into buying a home that has problems or they don’t ultimately want but they aren’t as concerned about how well the home of their dreams is insured against different types of damage, some of which could be devastating. Not only are insurance policies contracts, they also provide different forms of coverage that are beyond the general training and knowledge of the average consumer. I’ve even had conversations with non-insurance lawyers who don’t understand auto and/or home insurance protection and how it will respond. I think it’s fair to say that there is very likely a significant number of consumers currently written by a direct response carrier who are not properly protected and may very well be at risk for a serious uncovered loss. 26 May 11, 2015 / INSURANCE ADVOCATE

duty and obligation is too strong, however if you really aspire to be a professional you need to feel that kind of commitment. In conversations with agents and brokers many claim that it’s impossible to overcome the billions of dollars being spent to convince consumers that insurance protection is a commodity to be selected primarily on the lowest available price. We know that’s not true and we need each and every independent agent and broker to commit to educating consumers of that fact, as well as convincing them of the value of purchasing protection from an independent agent or broker. Done individually and sporadically the effect of this education will be limited and may go unnoticed by many consumers. Committed to and practiced regularly by the majority of independent agents and brokers, there is a very good chance that a significant number of consumers will be reached and will not be lured into believing what is truly misleading and dangerous advertising. As I write this I realize there are those naysayers who will say it’s a waste of time but I’m sure they said that about the ALS Ice Bucket Challenge when it was proposed and look at how successful that was. Social media offers a great opportunity to get this message out repetitively and to expand its distribution. Consumers need to see it everywhere possible and as many times as possible. Imagine them seeing it on every agency member’s Facebook,

Twitter and other social media channels. They would see it on every agency website and mobile app. They would see it in written communication and snail mail pieces they receive. It would be everywhere in agents’ offices as well as in their advertising. Every proposal would include the message. Every agency staff member should understand it, believe it and communicate it with every person with whom they have a conversation. If you’re lucky enough to be an IIABNY member you are part of the Trusted Choice® national brand that spreads the word about the advantages of working with an independent agent and educates consumers on coverage. The brand website, TrustedChoice.com, is a focal point for consumers to learn about how coverage works, check carrier coverage and pricing and be referred to an independent agent for professional advice and service. We need agents and brokers to talk to their carriers about it and encourage them to get on-board, especially those that have kept the promise of only offering coverage through independent agents and brokers. If carriers offer advertising, brochures and/or videos promoting the independent agency system, use them and let those companies know you appreciate their efforts. Thank those carriers who have backed the Trusted Choice® brand and that offer their products and pricing on the TrustedChoice.com website. We are at a turning point. The concept of being an independent agent, an entrepreneur who runs their business the way they want is the basis of who we are. We all compete against one another and the rest of the marketplace for business. But on the subject of educating consumers about the fallacy of buying coverage based on price and convincing them of the benefits of working with a professional independent agent, we need to work together as one. We need to spread the word everywhere and with everyone. That takes everyone’s commitment and effort. I hope you will make that commitment today. At IIABNY we are ready and willing to provide you with support and help you with your efforts.[IA]

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[ ON M Y RADAR ]

By Barry Zalma

When are Intentional Acts Also Accidental? When Herbicides Destroy Crops Litigation Follows

nsurance policies are said to give everything in large print and take it away in fine print. That canard is no longer true since all modern policies are written in common language and each part of the policy is written in the same size print with headings even larger. However,

Action”). Date Palm operates a commercial nursery in Palm Beach County. Florida Crystals and Sugar Farms own and maintain nearby sugar-cane growing and processing operations. Defendants contract with a company specializing in the aerial application of

Endorsement Seven provides that the Policy “does not cover claims directly or indirectly occasioned by, happening through or in consequence of … pollution and contamination of any kind whatsoever.” To “contaminate” means, among other things, “to soil, stain, corrupt, or infect by contact or association.” Barry Zalma

insurance policies provide coverage for every possible risk of loss except those specifically excluded. Some exclusions are written broadly and then give back coverage for certain types of risks of loss so that what looks like an exclusion is actually a grant of limited coverage. This method of writing insurance policies causes confusion and often leads to litigation with each side reading the same language differently. In National Union Fire Ins. Co. of Pittsburgh, PA v. Florida Crystals Corp., Slip Copy, 2015 WL 2195092 (S.D.Fla., 5/11/15) the U.S. District Court for the Southern District of Florida was called upon to resolve such a dispute.

BACKGROUND This case involves a dispute over insurance coverage in a related state-court action. Plaintiff National Union Fire Insurance Company of Pittsburgh, PA (“National Union”) issued an insurance policy (the “Policy”) to a third party, Fanjul Corp. Defendants Florida Crystals Corporation (“Florida Crystals”) and Sugar Farms Co-op (“Sugar Farms”) are insured under the Policy. On October 24, 2013, Date Palm Wholesalers, Inc. (“Date Palm”), sued Defendants in state court (the “Date Palm 28 May 11, 2015 / INSURANCE ADVOCATE

chemicals, Roma Air Corp. (“Roma”), to apply herbicide at their operations. The Complaint in the Date Palm Action alleges that in March 2013, Defendants directed Roma to spray a powerful herbicide on a large area of land (“Date Palm Complaint”). This area included not only Defendants’ operations, but also Date Palm’s nursery. The herbicide damaged many of Date Palm’s trees. Date Palm thus sued Defendants and Roma for negligence, strict liability, and trespass. National Union subsequently commenced the instant lawsuit, seeking a declaration that the Policy imposes no duty to defend Florida Crystals or Sugar Farms in the Date Palm Action. National Union’s Complaint advances numerous theories as to why the claims in the Date Palm Action fall outside the Policy’s scope.

DISCUSSION National Union contends that the Date Palm Complaint alleges no accident that could give rise to coverage under the Policy, and that the claims in the Date Palm Action come within the scope of the Policy’s various exclusions. National Union first contends that it owes no duty to defend because the Date Palm Complaint does not rest upon an acci-

dent. The Policy covers damage caused by an “occurrence” arising out of the use of certain aircraft. The Policy defines an occurrence as “an accident during the policy period….” National Union argues that the Date Palm Complaint alleges only intentional wrongdoing, thus there is no accident that could give rise to a covered occurrence. The Date Palm Complaint contains allegations of accidental injury to their property. Paragraph 21(h) of the Date Palm Complaint states that the spraying of Date Palm’s property arose from a failure to investigate the ownership of the property. Though not pled with exacting clarity, this allegation can plausibly be read as attributing the failure of investigation to Defendants, in addition to Roma. Date Palm premises its negligence claims in part upon the resulting mistaken designation of its property among the land to be sprayed with herbicide. In other words, Date Palm alleges not only that negligence was involved in the act of spraying its property with herbicide, but also that the designation of its property for spraying was an accident. In the Date Palm Action, Defendants allegedly failed to investigate the ownership of Date Palm’s property, resulting in the mistaken designation of the property for the application of herbicide. This allegation plausibly alleges a mistake giving rise to damage to property of a third party that Defendants neither expected nor intended. Therefore the Date Palm Complaint pleads an “accident.” That Roma intentionally sprayed herbicide on the mistakenly designated property does not require a different outcome. National Union next argues that the language of Endorsements Seven and Thirteen of the Policy exclude the claims in the Date Palm Action from coverage. Endorsement Seven provides that the Policy “does not cover claims directly or indirectly occasioned by, happening through or in consequence of … pollution and contamination of any kind whatsoever.” To “contaminate” means, among other things, “to soil, stain, corrupt, or infect by contact or association.” Endorsement Thirteen extends

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[ ON MY RADAR ] Coverage B to include the aerial application of chemicals “of benefit to or of direct use in the business of ” Defendants. This explicit addition of coverage for the aerial application of chemicals in the course of Defendants’ business conflicts with Coverage B’s exclusion of claims for damage resulting from services performed on Defendants’ behalf. Where an endorsement conflicts with the body of an insurance policy, the endorsement controls. Because Endorsement Thirteen appears to create coverage for a portion of the claims in the Date Palm Action, the Policy’s exclusion for services performed on Defendants’ behalf does not relieve National Union of a duty to defend.

To read, understand and properly apply an insurance policy it is necessary to read the entire policy, each and every endorsement, and all of the words that make up the promises of the insurer to defend and indemnify its insured. Then, a thorough investigation of the facts of the claimed loss must be completed with the facts applied to the wording of the policy.

CONCLUSION In sum, National Union has not shown its entitlement to summary judgment on the absence of a duty to defend in the Date Palm Action. The Date Palm Complaint alleges accidental harms that could qualify as an “occurrence” giving rise to coverage under the Policy. Although a number of the Policy’s exclusions might have applied to claims in the Date Palm Action, Endorsement Thirteen restores coverage at least for parts of those claims. The Court rejected National Union’s argument that Defendants necessarily exercised “control” over Date Palm’s property when Roma sprayed herbicide on it from above.

ZALMA OPINION To read, understand and properly apply an insurance policy it is necessary to read the entire policy, each and every endorsement, and all of the words that make up the promises of the insurer to defend and indemnify its insured. Then, a thorough investigation of the facts of the claimed loss must be completed with the facts applied to the wording of the policy. The District Court did what was necessary and found that the policy wording was sufficient to allow the potential for coverage.[IA] Barry Zalma, Esq., CFE, has practiced law in California for more than 42 years as an insurance coverage and claims handling lawyer. He now limits his practice to service as an insurance consultant and expert witness specializing in insurance coverage, insurance

claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes. He founded Zalma Insurance Consultants in 2001 and serves as its only consultant. Look to National Underwriter Company for the new Zalma Insurance Claims Library, at www.nationalunder writer.com/ZalmaLibrary. The new books are Insurance Law, Mold Claims Coverage Guide, Construction Defects Coverage Guide and Insurance Claims: A Comprehensive Guide. The American Bar Association, Tort & Insurance Practice Section has published Mr. Zalma’s book “The Insurance Fraud Deskbook” available at http://shop.americanbar.org/eBus/Stor e/ProductDetails.aspx?productId=2146 24, or 800-285-2221 which is presently available.

Legal Disclaimer: The author and publisher disclaim any liability, loss, or risk incurred as a consequence, directly or indirectly, of the use and application of any of the contents of this blog. The information provided is not a substitute for the advice of a competent insurance, legal, or other professional. The Information provided at this site should not be relied on as legal advice. Legal advice cannot be given without full consideration of all relevant information relating to an individual situation.

[ THE SOCIAL NOTEBOOK] continued from page 22

tive agency should be able to help you set clearly defined metrics in which they can keep you updated regularly. Being able to manage your brand’s success in the social media marketing world will help your agency be able to better serve you as a customer and may even have you rethinking your branding strategy or target market. A lot of good information can be derived from the metrics used to measure the success of your brand. Take the bad with the good and it will help you move toward greater success for your agency’s brand.

What’s the COST? Cost Matters. Of course cost matters. You will want to explore how much this type of marketing will cost you, but be sure you are asking specifics about what services are included in the total cost. Are there regular posts or blogs to your social media profiles? How many websites/profiles are being maintained? What monitoring processes and metrics are involved in determining the outcome of the marketing strategy? These are just some of the factors considered in the cost. The overall cost to hire an agency for social media marketing will depend on various factors, including what services you agree to. Cost will always matter because you need to understand if there is a positive ROI with the marketing firm you’re using. Track this and review it monthly.

What’s your Experience? Experience really does make a difference when it comes to social media marketing. Just because someone is savvy with Instagram, Twitter, Facebook, or the Internet in general, it doesn’t make them successful at marketing. It’s important to look for an agency that understands and can demonstrate their knowledge of consumer data and marketing strategies that have worked for them in the past with other clients. Find out how many other insurance agencies they are working with. Another important aspect is to ensure the agency produces written content applicable to your target audience. An agency with defined strategies, mixed with business elements continued on page 33

INSURANCE ADVOCATE / May 11, 2015 29

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[ COURTSI DE ]

By Lawrence N. Rogak

Plaintiff’s Failure to Comply With 90-Day Notice Results in Dismissal South Nassau Orthopedic Surgery & Sports Medicine, P.C. v Geico Ins. Co.

ppeal from an order of the Civil Court of the City of New York, Queens County (Barry A. Schwartz,J.), entered November 28, 2012. The order denied defendant’s motion to dismiss the complaint pursuant to CPLR 3216. ORDERED that the order is reversed, with $30 costs, and defendant’s motion to dismiss the complaint pursuant to CPLR 3216 is granted. In this action by a provider to recover assigned first-party no-fault benefits, defendant moved, pursuant to CPLR 3216, to dismiss the complaint based upon plaintiff ’s failure to prosecute the action. Plaintiff opposed the motion, contending that it had been prosecuting the action and that only about four months had elapsed

52 AD3d 653 [2008]; Katina, Inc. v Town of Hempstead, 13 AD3d 343 [2004]; A.M. Med., P.C. v State Farm Mut. Ins. Co., 22 Misc 3d 43 [App Term, 2d & 11th Jud Dists 2008]). Since plaintiff failed to do either of these, it was required, in opposition to defendant’s motion to dismiss, to establish a justifiable excuse for its delay in properly responding to the 90-day demand, and the existence of a meritorious cause of action (see Baczkowski v Collins Constr. Co., 89 NY2d 499 [1997]; Felix, 52 AD3d 653; A.M. Med., P.C., 22 Misc 3d 43). As plaintiff notes, in Baczkowski (89 NY2d at 503), the Court of Appeals stated that CPLR 3216 is “extremely forgiving” and, “depending on the circumstances, a plaintiff is not always required to establish

since defendant’s motion for summary judgment had been denied by the Civil Court. The Civil Court denied defendant’s motion, finding that, since only four months had passed from the time plaintiff had served defendant with a copy of the order denying defendant’s motion for summary judgment, with notice of entry, dismissal pursuant to CPLR 3216 was not warranted. Once a 90-day demand is received by a plaintiff, in a Civil Court action, the plaintiff must either comply with the demand by filing a notice of trial within 90 days (see CPLR 3216 [c]), or move before the default date either to vacate the demand or to extend the 90-day period pursuant to CPLR 2004 (see Felix v County of Nassau,

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[ COURTSID E ] both a justifiable excuse and a potentially meritorious cause of action to avoid such a dismissal” (see Davis v Goodsell, 6 AD3d 382, 383-384 [2004]). However, the Court of Appeals further stated: “If plaintiff fails to demonstrate a justifiable excuse, the statute says the court may’ dismiss the action—it does not say must’ (see, CPLR 3216 [e])— but this presupposes that plaintiff has tendered some excuse in response to the motion in an attempt to satisfy the statutory threshold. Although a court may possess residual discretion to deny a motion to dismiss when plaintiff tenders even an unjustifiable excuse, this discretion should be exercised sparingly to honor the balance struck by the generous statutory protections already built into CPLR 3216. Even such exceptional exercises of discretion, moreover, would be reviewable within the Appellate Division’s plenary discretionary authority. If plaintiff unjustifiably fails to comply with the 90-day requirement, knowing full well that the action can be saved simply by filing a note of issue but is subject to dismissal otherwise, the culpability for the resulting dismissal is squarely placed at the door of plaintiff or plaintiff ’s counsel. Were courts routinely to deny motions to dismiss even after plaintiff has ignored the 90-day period without an adequate excuse, the procedure established by CPLR 3216 would be rendered meaningless” (Baczkowski, 89 NY2d at 504-505). In the instant case, in opposition to defendant’s motion to dismiss the complaint, plaintiff made no attempt to demonstrate the existence of an excuse, justifiable or otherwise, for plaintiff ’s failure to comply with the 90-day notice. Nor did plaintiff make any attempt to demonstrate that it possessed a meritorious cause of action. Accordingly, the order is reversed and defendant’s motion to dismiss the complaint pursuant to CPLR 3216 is granted. Pesce, P.J., Weston and Aliotta, JJ., concur.[IA] 2015 NY Slip Op 50674(U) Decided on May 1, 2015 Appellate Term, Second Department

[ THE SOCIAL NOTEBOOK]

[ CLASSIFIEDS ]

continued from page 29

and technology, can provide you with an effective social media marketing plan.

Will you provide me a referral list so I can call them? You wouldn’t think to hire an employee without first checking their references, would you? Never ever hire without looking into their referrals. Another great way to look into them is to look at Google reviews to see how others have rated the marketing firm. The same principle applies when hiring a social media agency. This company will be working for you, so don’t be shy about asking to check their references either. The agency you are looking at may, in fact, have a nice portfolio showcasing their previous successes, but what better way to confirm this information than to speak directly with their current and/or previous clients? Being able to speak directly with clients will help assure yourself that you are making the right decision, either way you go. An honest agency wouldn’t shy away from this type of request, but instead should be more than happy to put you in touch with some of their current and/or past clients. Good luck with the process and never stop tracking your results, and please contact us with any questions you may have at 860-684-5270. Christopher Paradiso, CPIA, is President of Paradiso Financial & Insurance Service. He has been acknowledged by several insurance publications as a leader in the industry for his use of digital marketing and social media to help brand his agency and promote other small businesses within his community. Chris has also been recognized for his charity work with The Connecticut Children’s Medical Center. In 2011, Chris introduced “Paradiso Presents LLC,” a social media program aimed at teaching small agencies to not only survive, but compete in today’s complex online marketing world. Chris resides in Stafford Springs, CT with his wife and two children, Mia and Gianni.

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[ IN THE ASSOCIATIONS ]

IIABNY Honor Leaders Awards given at insurance producer organization’s leadership dinner

OOPERSTOWN, N.Y.—The Independent Insurance Agents & Brokers of New York recognized excellent performance by insurers, a local trade group, volunteers and associates in a ceremony this evening. Acting for the final time in his capacity as IIABNY chair of the board, James Sutton presented the awards at the association’s 2015 Leadership Dinner, held following its 133rd Annual Business Meeting at the Otesaga Resort Hotel in Cooperstown, New York. The Outstanding Company Partner Awards went to those insurers that scored the highest in the 2015 IIABNY Industry Index. The index is calculated based on survey responses by New York agents and brokers, judging insurers on criteria such as empowerment and consistency of underwriters and field personnel; technology and documentation; the agency-carrier relationship; and compensation. Sutton gave awards to: • Outstanding Regional Personal Lines Company Partner: Dryden Mutual Insurance Company • Outstanding Regional Commercial Lines Company Partner: Erie & Niagara Insurance Association • Outstanding Super Regional Personal Lines Company Partner: Merchants Insurance Group and NGM Insurance Company (tie) • Outstanding Super Regional Commercial Lines Company Partner: Merchants Insurance Group • Outstanding National Personal Lines Company Partner: The Travelers Companies • Outstanding National Commercial Lines Company Partner: Utica National Insurance Group Jill Muratori, vice-president and counsel of Barrett Associates in Albany, took home the Vincent Alba Award. This award recognizes an individual who makes an outstanding contribution to IIABNY’s political effectiveness. Sutton cited her “hard work and tenacity” as a major reason for the recent enactment of a law regulating the use of certificates of insurance. The legislation was IIABNY’s highest public policy priority. 34 May 11, 2015 / INSURANCE ADVOCATE

The index is calculated based on survey responses by New York agents and brokers, judging insurers on criteria such as empowerment and consistency of underwriters and field personnel… Mike Crowley of Crowley Insurance Agency, Inc. in East Syracuse, New York, received the Joel S. Pollack Young Agent of the Year Award. Crowley was honored for his involvement as an officer of the Central New York agents’ association and his work in the community. Karen Peters, senior vice-president of Rose & Kiernan, Inc. in Albany, received the Distinguished Service Award for outstanding contributions to IIABNY. A member of the IIABNY board of directors since 2011, Peters has served on a number of committees, working groups and task forces. Sutton praised her as one of the association’s “goto” people for legislative issues. He specifically praised her work in the effort to get the certificates of insurance bill passed. Jamie Deapo, assistant vice president of membership and member programs for IIABNY, also received the Distinguished Service Award. Deapo joined IIABNY in 1999 after 15 years as an independent agent. During his time as an agent, he served as president of the Central New York agents’ association and as a member of the IIABNY board of directors. Sutton praised him as “an unrelenting advocate” on behalf of independent agents. He especially noted the strong relationships Deapo has built with insurance companies on IIABNY’s behalf. The Thom McDaniel Exemplar Award went to Bob Baxter, CEO of Dryden Mutual Insurance Company. The McDaniel Award recognizes an insurance company executive, manager or employee who demonstrates unwavering support of the independent agency system. Baxter is known throughout the New York State

insurance community for his work with high school students. “His support allows students to experience the insurance industry,” Sutton said, “and many have gone on to pursue successful careers with insurance companies and agencies.” Steve Zogby of Scalzo, Zogby & Wittig, Inc. in New Hartford, New York received the 1882 Fellow Award, IIABNY’s highest honor, which recognizes the individual member who has most significantly contributed to IIABNY, the industry and his or her community. Zogby was IIABNY chair of the board for the 2007-08 term. Before and after that, he served as a member of the board of directors and served on and chaired many IIABNY committees. Sutton also cited Zogby’s leadership in various organizations in the Utica, New York area. Shelley Roff of Perry & Carroll, Inc. in Elmira, New York will receive the Accredited Customer Service Representative of the Year Award at a ceremony at her agency next month. The Independent Insurance Agents & Brokers of Suffolk County will be honored as the 2015 Local Association of the Year at a ceremony in Wading River, New York next week. The award goes to the local association that has done the most outstanding job at building relationships between agents, carriers and vendors; advocating on the critical issues to the industry; encouraging professional development among members; and developing consumer knowledge and trust in the independent insurance agency system. The Independent Insurance Agents & Brokers of New York, Inc. has represented the common business interests of independent insurance professionals since 1882. More than 1,900 agencies and their 18,000 employees currently rely on the DeWitt, New Yorkbased not-for-profit trade association for legislative advocacy, continuing education and other means of industry support. In addition, many IIABNY members represent Trusted Choice®, a national consumer brand uniting more than 7,000 independent agencies across the United States. For more information, go to www.trustedchoice.com or www.iiabny.org.[IA]

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800.285.2258 | Fax 516.488.2167 ryu@hamondgroup.com

w w w.h amo n d gro up.com *Service fee on subsequent renewals and on returning members continues at our usual 20%. Underwritten by the New York State Insurance Fund

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Expect big things in workers’ compensation. E xpect to save a third of your clients 3 0% or more. Most classes approved, nationwide. For information call (877) 23 4 - 4 4 5 0 or visit auw.com/us. © 2 015 A p p l i e d Underwriters, U n d e r w r i te r s , Inc., I n c ., a Berkshire B e r k s h i re Hathaway H a t h aw ay company. c o m p a ny. Rated ©2015 Applied R a te d A+ A + (Superior) ( S u p e r i o r ) by b y A.M. A . M . Best. Best. IInsurance nsur an c e p lans p rote c te d U . S . Patent P a te nt No. N o . 7,908,157. 7, 9 0 8 ,15 7. plans protected U.S.