June 23, 2014 by C Acunto

INA 6-23-14_INA 6-23-14 6/27/14 2:09 PM Page 1

VOLUME 125, NUMBER 12 / June 23, 2014

A CINN Group, Inc. Publication

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

NYIA Gathers

Leaders Set Agenda PIANY/PIANJ Annual Conference Draws Record Crowd STORY PAGE 26

INA 6-23-14_INA 6-23-14 6/27/14 2:09 PM Page 2

INA 6-23-14_INA 6-23-14 6/27/14 2:09 PM Page 3

Contents

June 23, 2014 | volume 125 number 12

[COVER STORY ]

[ AD FEATURES]

MSO: Dealing With Identity Theft

LICONY: Let’s Secure Financial Independence for People in Retirement

NYIA Gathers; Headers Set Agenda

[FEATURES] 4

Foreword: U.S. RE Analytics Sets Pace Steve Acunto, Publisher

Insight: Certiﬁcates of Reliability Peter H. Bickford

On the Level: 75 Years Strong…When it Comes to Teamwork, PIA is the Best! N. Stephen Ruchman

In the Associations: TriCounty IIAA Installs Ofﬁcers and Directors 2014-15

In the Associations: IIABSC Installs Ofﬁcer and Directors 2014-15

Face to Face: Bring it On! Michael Loguercio

In the Associations: PIANJ/PIANY Joint Annual Conference Marked by Milestones and Records

On My Radar: Asbestos Litigation Creates Vague Notions About the Law Barry Zalma

Looking Back: May 1989

Guest Opinion: Healthcare Fixed, on to Climate Change Janet M. Orient, M.D.

Classiﬁeds

In the Associations: White Honored by NYIA

Like us on Facebook… The Insurance Advocate Magazine

www.insurance-advocate.com INSURANCE ADVOCATE / June 23, 2014 3

INA 6-23-14_INA 6-23-14 6/27/14 2:10 PM Page 4

[ FORE WORD ]

Steve Acunto

U.S. RE Analytics Sets Pace

ongratulations to Thomas White, named the New York Insurance Association’s (NYIA) Distinguished Service Awardee at the association’s annual conference in Bolton Landing, N.Y. White is president of Community Mutual Insurance Company, an affiliate of Union Mutual of Vermont Companies. He is also regional vice president of Union Mutual, responsible for New York operations. NYIA had a great event – see story inside this issue… U.S. RE Analytics is an amazing resource and it is nerd free, to boot. The enterprise is our “Top Analytics Resource” for 2014 and will be the subject of a feature story in our August 18th issue. Insurance Advocate® selects top performing insurance and reinsurance entities for its highlighted features six times per year. The article will profile the U.S. RE Analytics battery of resources and its leadership team, led by Marc Piccione and Jim Campbell. U.S. RE Analytics possesses catastrophe risk management and analysis tools that surgically and meaningfully enhance the analyses performed on clients’ exposures. Their presentation dashboards and their grasp of the subjects – in plain English, despite the complexity, are refreshing. U.S. RE recognized early the burgeoning analytics field and the increasingly important role it was to play in MARC PICCIONE enhanced risk analysis in the development of the field. Mr. Piccione, Senior Vice President, told us: “Early on it was as much a marketing strategy as a true product offering; today, providing relevant and granular analytics, well beyond mere catastrophe modeling is an essential part of the arsenal of any top-level participant in the insurance/reinsurance space. At U.S. RE, we are proud of the risk management tools we have developed that give us a strong competitive edge on the world’s stage.” Some of the ahead-of-the-state-of-the-art innovations that distinguish the U.S. RE Analytics platform, according to Mr. Campbell, include U.S. RE Risk Manager, an easy to use, highly customizable web-based portfolio management tool that provides clients the ability to manage profitability by identifying key cost-of-risk drivers such as the cost of reinsurance and the cost of capital, while pinpointing areas to expand writings in order to build a better-diversified and more profitable portfolio. Mr. Campbell stated: “In addition, the U.S. RE Analytics platform also includes IRIS U.S., which is a distinctly powerful, web-based, analytical tool that provides risk management professionals in executive, product management, underwriting and claims functions reliable insights into key exposures in catastrophe-prone territories. IRIS U.S. aggregates data from various state and federal entities and transforms it all into remarkably clear analytical reports that allow the user, interactively, to apply the data for detailed risk exposure trending.” Such tools are of great advantage all the way up and down the chain of insuring. And they are fascinating in their many applications. Watch for the feature. SA 4 June 23, 2014 / INSURANCE ADVOCATE

VOLUME 125, NUMBER 11 JUNE 9 , 2014 2

EDITOR & PUBLISHER Steve Acunto 914-966-3180, x110 sa@cinn.com CONTRIBUTORS Peter H. Bickford Jamie Deapo Sari Gabay-Raﬁ 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 SUBSCRIPTIONS P.O. Box 9001, Mt. Vernon, NY 10552 914-966-3180, x126 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, 21 times a year, and once a month in July, August 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 2014. All rights reserved. No part of this magazine may be reproduced in any form without consent. Trademark registered U.S. Patent and Trademark Ofﬁce.

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

INA 6-23-14_INA 6-23-14 6/27/14 2:10 PM Page 5

Kiids O Out ut Of Schoool, Summer Vacation, Drives To the Shore, More Travel Planss... More Travel Hazardss Let Park Insurance ance Guide You Through Thee Maze Of The New York State Commerci ommercial Insurance Industry. try.

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

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

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

INA 6-23-14_INA 6-23-14 6/27/14 2:10 PM Page 6

[ INSIGHT ]

By Peter H. Bickford

Certificates of Reliability

here is an interesting dilemma that the NY regulators have been facing for literally decades now. It involves a well-defined and acknowledged violation of the insurance law and regulations that has defied any viable enforcement solution. The subject is the issuance of insurance certificates that improperly expand or pro-

the standard ACORD form, to include “terms or clauses that the public entity requires but are not contained in the insurance policy.” Additionally, these forms often provided that in the event of conflict or inconsistency with the policy, the terms of the certificate controlled. Unfortunately, the focus of enforce-

Apparently, however, going after the little guy (the producers) has not stopped the big guys (the public agencies and other entities) from continuing to defy the law and ignore the repeated lines in the sand drawn by the regulators.

Peter H. Bickford

vide coverages not intended or included in the policy itself, or which are not properly filed with the regulators. This is a problem that was first formally recognized in 1995 when the Insurance Department issued a circular letter to all licensed p/c companies noting that “some cities, counties, and other organizations” have been insisting on receiving certificates of insurance that “appear to alter the terms of the actual policy,” including the addition of “hold harmless” provisions. The circular letters pointed out that certificates of insurance should only reflect the actual terms of the policy, and if they expand on or add terms, then they are “policy forms” requiring filing. Seems pretty straight-forward, right? Well, apparently not. In 1997 the Department issued a second circular letter on the issue, this time broadcast not just to p/c companies, but also to all licensed producers and “City, State and Municipal Agencies and other Public Authorities and Corporations.” In addition to reiterating the problem of insureds demanding expanded certificates, the letter confronted the developing practice of public agencies requiring the producer to execute the agencies’ own forms of certificates, or that modify the terms of

ment has been on the producer caught between the proverbial rock and a hard place by being pressured to issue the certificate or agency imposed form or lose a major account to another producer willing to do the public agency’s bidding. Over the next fifteen years or so the Department issued numerous opinions on various aspects of the issue—at least seven opinions issued by the office of general counsel from 2000 though January 2011 (none, of course, have been issued by the Department of Financial Services since taking over in October 2011—the DFS simply does not issue opinion letters). All of these opinions repeat the mantra that certificates issued to or forms generated by public entities that expand terms of coverage, or add terms that have not been approved by the carrier or filed with the Department, violate the insurance law and are prohibited. These rulings also repeatedly warn producers—the only licensed entity the Department has direct control over in these scenarios—of the consequences of issuing such improper certificates that expand coverage. Apparently, however, going after the little guy (the producers) has not stopped the big guys (the public agencies and other entities) from

continuing to defy the law and ignore the repeated lines in the sand drawn by the regulators. Enter the Legislature. For the third consecutive year, the NY Legislature has considered a bill to address the certificate issue. The approach is to make it a violation of law for any person or governmental entity to “prepare, issue, request, or require the issuance of a certificate” that expands, adds or alters terms of coverage, or knowingly requests the issuance of a certificate of insurance that contains false or misleading information. In other words, the legislation targets the end-user of certificates and not just the producer stuck in the middle. The proposed legislation also expands enforcement. In addition to the usual investigative and enforcement authority to the superintendent of financial services, the proposed legislation also empowers the state inspector general to investigate and enforce the provisions of the law against “any governmental entity that is considered a covered agency” under the State’s Executive Law. It is noted that while the definition of “covered agency” is broad, it includes an interesting exclusion—“multistate or multi-national authorities”—that may prove problematic down the road (i.e., does that mean that a public entity such as the NY-NJ Port Authority is beyond the reach of the legislation?). The legislation was passed in both houses of the NY Legislature in June 2013, but—as is often the case—it was not delivered to the Governor until December 2013 as part of a year-end bundle of legislation, and was one of 32 pieces of legislation vetoed by the Governor before year-end. What may have seemed to be a logical piece of legislation from an insurance perspective apparently was not so logical to certain public entities—particularly those with their own forms of certificates. The legislation was reintroduced in the 2014 term and again passed both houses. The only difference I could find in its current form over last-year’s vetoed version is the addition of an exception if “the certificate is a form promulgated by a governcontinued on page 8

6 June 23, 2014 / INSURANCE ADVOCATE

paul_s

INA 6-23-14_INA 6-23-14 6/27/14 2:10 PM Page 7

Real Dividends! $145 Million Paid

“The Friedlander Group and Donna Nygard are incredible to work with!!! They respond to the many issues in placing new business and provide answers quickly. Glad that we are working with Donna and the Friedlander Group.” Paul S. Pellerito, Area Vice President Arthur J. Gallagher & Co. Tampa, Florida

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

Wholesalers

Restaurants

Hotels/Motels

Oil Dealers

Social & Health Services

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

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

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

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

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

Social and Health Services Group of NY, Workers’ Comp. Safety Group #585*

2011-12

2010-11

2011-12

25%

20%

25%

10%

2011-12

2010-11

10%

2010-11

35%

2010-11

25%

2009-10

35%

2010-11

15%

2009-10

35%

2009-10

25%

2008-09

40%

2009-10

20%

36% average dividend since inception in 1992

33% average dividend since inception in 1993

38% average dividend since inception in 1993

20% average dividend since inception in 2006

7.5% average dividend since inception in 2010

2011-12

Group formed on 8/1/2011

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

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

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

*Underwritten by the State Insurance Fund

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

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

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

paul_s_pellerito_INS_ADV.indd 1

5/28/13 12:40 PM

INA 6-23-14_INA 6-23-14 6/27/14 2:10 PM Page 8

[ INSIGHT ] of delaying presentation of passed bills to the Governor is a time-honored way to give the Governor’s office sufficient opportunity to consider the numerous “nonessential” bills passed by the Legislature so they do not become law by unintended neglect). I do not know if the current legislation will satisfy the Governor’s office or the public entities that have opposed the prior attempts to address the expansive certificate issue. I also do not know whether the

continued from page 6

mental entity that is considered a covered agency under section fifty-one of the executive law, provided such form has been approved for use by the superintendent.” As of this writing, the newly passed bill has not been forwarded to the Governor, and we’ll have to wait and see whether it will be done soon or held and forwarded as part of a year-end bundle (the practice

SIMPLIFYING IT Our award-winning Aspire Information System is real-time... web-based... a complete end-to-end scalable solution custom configured to address all of your business requirements for policy, claims and reinsurance transactional administration.

CUSTOM CONFIGURED SOLUTIONS

What may have seemed to be a logical piece of legislation from an insurance perspective apparently was not so logical to certain public entities – particularly those with their own forms of certificates.

new legislation, if signed into law, will be any more successful in ending the issuance of improperly expansive certificates than the past efforts of the insurance regulators under the seemingly clear terms of the current laws and regulations. One would hope, however, that at the very least a dialogue among carriers, public entities and the regulators has developed throughout this process to address the underlying needs and problems of each. The only successful long-term solution may be the ability of the parties themselves, through dialogue and compromise, to balance the insurance needs of the public entities with the underwriting needs of the carriers and the enforcement obligations of the regulators – and, of course, to get the producers out of the line of fire![IA]

I N F O R MATION TECHNOLOGY SOLUTIONS THAT WORK FOR YOUR BUSINESS

SYSTEM FEATURES

Software as a Service Rating Engine Forms Generation Engine Automated Batch Processing Bulk Payment Processing Accounting (premium and loss) Financial Analyt ic s Data Migration Services 3rd Party Service Integrations Portable Data Analytics Agent/Broker Profiles

TRADING PORTALS

CORE MODULES

Company Producer C onsumer

SUPPORTED P&C - All A&H AD&D

Policy Claims Reinsurance

BUREAUS I SO AAIS & all other Stat Plans

Serving New York,

SUPPORTED

Admitted Surplus Lines Risk Retention Groups Captives Self Insureds

New Jersey, Pennsylvania and Connecticut

Maple

Technologies A L i m i te d L i a b i l i t y C o m p a ny

...building technology solutions to grow your business... 8 June 23, 2014 / INSURANCE ADVOCATE

500 Craig Road Second Floor Manalapan, NJ 07726 Tel: (732) 863-5523 Web: www.maple-tech.com

Since 1889 www.insurance-advocate.com

INA 6-23-14_INA 6-23-14 6/27/14 2:10 PM Page 9

Our Role in Your Office We’re specialists.

Small- to mid-sized “Main Street” accounts Workers’ compensation “lead line” Complementary coverages in select states (including Disability in New York!)

We’re secure.

Part of Warren Buffett’s Berkshire Hathaway A+ (”Superior”) A.M. Best Company rating

We’re growing.

Direct written premium of $500 million Doubled in size in recent years Active in 37 states (many with our BizGUARD Plus BOP product)

We’re competitive.

Accurate pricing (that can be sold!) Tiered workers’ comp rate structure Other standard and unique special discounts

We’re fast and easy.

Same day (often samehour) turnaround on workers’ comp quotes On-line rating application Extensive Service Centers

Remember: We’re the quote you could come up against . . . so why not join us?

Berkshire Hathaway GUARD Insurance Companies can be a key carrier resource in your office. We have a well-defined focus that has enhanced the income stream of countless agencies across the country. Plus . . . our longer-range vision is to bring one-stop insurance shopping to smaller business owners nationwide. We’re growing and hope you are interested in joining us! We currently have agency appointments available.

To learn more, visit: www.guard.com/apply

INA 6-23-14_INA 6-23-14 6/27/14 2:10 PM Page 10

[ ON TH E LEVEL ]

By N. Stephen Ruchman, CPA

75 Years Strong … When it Comes to Teamwork, PIA is the Best!

write this article in the afterglow of the PIANJ/PIANY Joint Annual Conference, which took place June 810 at the Trump Taj Mahal in Atlantic City. This event is particularly special to me for several reasons.

responsible for him for the remainder of it. I have that kind of connection with the PIANJ/PIANY Joint Annual Conference. I’m also humbled to have been recognized this year with an award for community service—an honor for which I believe

I’m also humbled to have been recognized this year with an award for community service—an honor for which I believe many of my colleagues are surely more worthy.

N. Stephen Ruchman

First, I have a personal connection to the event itself. In 2000, I was convention chair for the PIANY Annual Convention, which traditionally had been held in different locations around the state of New York: Saratoga Springs; Niagara Falls; the Catskills .... That particular year, the event was held in the old Granite Hotel in Kerhonkson, N.Y. Frankly, attendance at these events had started to wane a bit. It was at that time we had a discussion about the necessity of the event and how to improve it. Our sister affiliate in New Jersey was having a successful annual convention close by, and we had the idea to merge the two. The merged conference started out slowly, but it has become a great success. In fact, over the years it has become the biggest insurance show in the Northeast. It was nice to see all the old supporters as well as new vendors with some great products. Even more exciting is the company participation, which has grown bigger each year, with the carriers visiting with their agents, taking advantage of the venue. More New York agents attended the conference in Atlantic City this year than ever before, which shows they recognize the value of attending this event. There’s a Japanese proverb that says once you’ve saved a man’s life, you are 10 June 23, 2014 / INSURANCE ADVOCATE

many of my colleagues are surely more worthy. As insurance agents, we all are active in either our communities or other associations. I won’t belabor my comments from that evening, but I had the opportunity to mention many such professionals, including the Savino brothers, who are active with ACORD and other progressive industry groups; Justin Fries, whose extensive charitable and industry work includes work with the UJA; Kevin Ryan, who sits on the boards of hospitals in the Hudson Valley and continues political activities on behalf of agents; Marshall Rubinstein, who has mentored a young agent even in his retirement; John Parsons and Mike Skeele and Tony Kubera, who each have been coaches or troop leaders, directors on local school boards or colleges; not to mention their professional affiliations with so many organizations. We are not unique: As professional agents and association members this is what we do, and I find it a great reward to work with fellow agents in the spirit of community. There were also several milestones celebrated at the conference this year, in addition to the 75th anniversary and several professional awards. Two awards that were given to long-time PIA staff: Char Gaylord, PIA’s government affairs coordinator for

almost 30 years, who is retiring this month, was recognized. Char is beloved by everyone who has worked with her and we wish her a happy retirement. Another award went to Kim Zielinski, PIA’s conference manager, who, working with Kim Zeoli the conference director, is the heart of this convention and the other major events PIA in Glenmont hosts. Her first year in this position was the first joint conference with New Jersey in 2001, and she’s been at it ever since—I offer her my heartiest congratulations for the well-deserved recognition. I would also like to thank the entire PIA staff for all their hard work. The convention was a success because of the planning and the professional staff carrying out the plan. One of the best parts about the conference is that while I was there, I satisfied all of my continuing education requirements for the year with some really interesting classes and great instructors. I was able to meet with agents from as far away as Buffalo, and of course there were plenty of agents from the Hudson Valley, Long Island and New York City there to network, keep current with products and markets and earn CE credits, while actually learning things in classes that we can take back to our offices and use to make more money. In a conference of superlatives, the only downside I experienced was at the tables, where I made less than other years. Now that the conference is over and PIA has begun working on next year’s event, it’s back to the grindstone. We have significant problems to address, such as reform of New York’s unique Labor Law. Casey O’Brien wrote an excellent column in the May 12 edition of this publication on why this law should be changed. Even more pressing is our work to urge Gov. Cuomo to sign New York’s certificates of insurance bill, which we all have worked so hard to pass through both houses of the legislature. This bill’s newest incarnation answered the concerns the governor cited when he vetoed it last summer. I hope we continued on page 12

INA 6-23-14_INA 6-23-14 6/27/14 2:10 PM Page 11

We We Do Don’t n’t J Just ust O Offer ffer W Workers’ orkers’ C Comp… omp…

W We eN Now ow O Offer ffer DB DBL LC Coverage overage T Too! oo! AmTrust North America now of fers mandator y Disability Benefits Law (DBL) coverage after acquiring Na ational Benefit Life’s (NBL) DBL business and experienced team. NBL is a recognized leader in the statutor y disability marketplace with a commitment that spans more than 50 years, and its business as usual for existing NBL customers!

T The he AmTrust AmTrust A Advantage dvantage •

One-stop shop for workers’ comp and DBL coverage

•

Competitive rates for all size groups

•

DBL Deluxe™- enriched benefits plans available

•

Fast claim turnaround by dedicated examiners who are assigned to each group

•

Online ser vices including policy and claim information

Am Ter rruest Group carriers rated “A” (E xcellent), place contact info fo he h her here Financial Size XI by A.M. Best

Tom o Lacertosa Regional Sales Director State Disability Plans 646.458.3561

INA 6-23-14_INA 6-23-14 6/27/14 2:10 PM Page 12

QSR

Quaker Special Risk

EXCLUSIVELY SERVING RETAIL AGENTS SINCE 1960

Exclusive Construction Managers Program CMAA Endorsed (Construction Management Association of America)

Combined PL/GL Form to Cover Professional & BI/PD - Duty to Defend Form; - Bilateral Tail Options; - Incident Sensitive Trigger; - Coverage for Acts While Involved in a Joint Venture; - Disciplinary Proceeding Supplementary Payments ($500 day/up to $10,000); - Subpoena Expense Supplementary Payments ($500 day/up to $10,000); - Project Specific Coverage Available.

Dedicated claims team for Construction Managers Program

QSR

QSR has a profound understand of this niche industry segment and has partnered with CMAA to provide Quaker Special Risk a differentiating solution for Contact Frank Walsh at: Construction 800-447-4180 • email: fwalsh@qsr-insurance.com Managers. P.O. Box 1350 • Eatontown, NJ 07724 Fax 732-223-9072 • www.QSR-insurance.com 12 June 23, 2014 / INSURANCE ADVOCATE

[ ON T H E LEVEL ] continued from page 10

In a conference of superlatives, the only downside I experienced was at the tables, where I made less than other years.

will see the bill signed to relieve agents and their clients from the pressures put upon them by third parties asking for coverages that don’t exist in the policies. In closing, I want to mention my sorrow at the passing of Joe Costa. Joe was an active member of the IIABNY, and was one of the finest gentlemen I’ve had the pleasure to know in this industry. He will be sorely missed by anyone who had the good fortune to know him.[IA] N. Stephen Ruchman, CPIA, is a retired partner of B&B Coverage LLC, and founder of Ruchman Associates Inc., the agency he started in 1961. A past president of the Professional Insurance Agents of New York State Inc., he is an active supporter of PIANY, and has sat on, or chaired, nearly every committee including the Executive Committee and the Long Island Advisory Council and PIANY’s Political Action Committee. A graduate of Michigan State University, with a major in insurance, Ruchman is past president of the Peninsula Counseling Center and a member and past president of the Rockville Centre Chamber of Commerce board of directors. He is division chair for the Insurance Division of the United Jewish Appeal and has served on the business advisory board of The First National Bank of Long Island. He can be reached via email at nsruchman@ gmail.com .

www.insurance-advocate.com

INA 6-23-14_INA 6-23-14 6/27/14 2:10 PM Page 13

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

first rehab life ®

INA 6-23-14_INA 6-23-14 6/27/14 2:11 PM Page 14

[ IN THE ASSOCIATIONS ]

TriCounty Independent Insurance Agents Association Installs Officers and Directors for the 2014 – 2015 term Awards and scholarship announcements accompanied the evening’s activities

LBERTSON, N.Y.—New officers and directors took the helm on June 5 during the Long Islandbased TriCounty Independent Insurance Agents Association annual installation dinner and awards ceremony. The gathering, held at the Fox Hollow in Woodbury, NY, set the TriCounty IIAA leadership for the 2014 through 2015 term. About 180 agents, company representatives, vendors and other members of the insurance community joined the festivities of this special occasion starting with a beautiful outdoor cocktail reception. Frank Elorza of Club Agency Insurance Brokerage, LLC in Garden City, NY was installed as president of TriCounty IIAA by his mentor and long-time friend Stephen J. Folan of The Folan Agency. Additional officers and directors were installed by James D. Sutton, CPCU, AAI, CIC, Chair of the Board of the Independent Insurance Agents & Brokers of New York, Inc. (IIABNY). Those officers included Peter Phillips of Phillips Brokerage, Inc. in Astoria, who will assume the position of Vice President; Adam P. Erickson of Carlstan North Hills Agency, Inc., who was installed as Treasurer; and James G. Bastian of Advantage Partners, Inc., based in Astoria, will be the group’s Secretary for the new term. The TriCounty IIAA also installed the following directors: • Dean Aloia, Aloia McKinnon Insurance Brokerage, Brooklyn; • Ron Brunell, CIC, B&B Coverage, Ltd., Valley Stream; • Andrew Chong, HD Underwriting Agency, Inc.; • Alex Giraldo, Club Agency Insurance Brokerage, LLC Garden City; • Neil Levy, CPA, CFP of CBS Coverage Group; • Christopher Wukovits of AAA of New York Insurance Services, Inc. In addition, awards were presented that evening. • The Bob Morris Award – presented for commitment to the association and furthering industry professionalism – 14 June 23, 2014 / INSURANCE ADVOCATE

THE 2014-15 TRICOUNTY BOARD OF DIRECTORS (L-R) NEIL LEVY, ALEX GIRALDO, CHRIS WUKOVITZ, DEAN ALOIA, RON BRUNELL, BOB MACKOUL, FRANK ELORZA, PETER PHILLIPS, ADAM ERICKSON, JAMES BASTIAN, ANDREW CHONG.

was awarded to Robert E. Mackoul, CLU who has served on the TriCounty Board of Directors for many years, including the position of the association’s president this past year. • The Bob Morris Award – presented for commitment to the association and furthering industry professionalism – was awarded to Kathleen Lawler, AAI, CIC, Assistant Vice President for Education and Local Association Manager for IIABNY, whose office is located in Syracuse, NY. The association announced awards totaling $7,500 in scholarships this year. A $2,500 award went to Michael Beneventano an exceptional student at St. John’s School of Risk Management, for surpassing specified criteria, including insurance related study and a minimum cumulative GPA of 3.0. The 2014 St. John’s Education Scholarship Program was again sponsored by Safeco Insurance and the award was presented by Safeco’s Downstate Territory Manager Ryan L. Brown. Winners of two other $2,500 scholarships were announced and certificates were presented at their school’s awards ceremonies. Chelsea Hroch a graduate of Farmingdale High School was the Joel S.

FRANK ELORZA WAS SWORN IN AS THE ASSOCIATION’S PRESIDENT BY STEVE FOLAN

Pollack Memorial Scholarship Award winner for her essay on ‘recommended penalties for texting and driving’. Chelsea was chosen from a large number of submissions from high school seniors in the boroughs of Nassau, Queens and Brooklyn. The Stephen T. Dooley Community Service Award scholarship went to Lindsey Haynes a graduate from South Side High school in Rockville Centre, NY for outstanding community service during her high school years. Checks will be mailed to their chosen colleges and be applied to tuition and allied expenses.[IA]

INA 6-23-14_INA 6-23-14 6/27/14 2:11 PM Page 15

INA 6-23-14_INA 6-23-14 6/27/14 2:11 PM Page 16

[ COVER ]

NYIA Annual Conference Superintendent Benjamin Lawsky, Wharton Professor Howard Kunreuther and Gubernatorial Candidate Rob Astorino among featured speakers at this year’s event The New York Insurance Association (NYIA) prides itself in offering the premier property and casualty insurance event in New York, and attendees say 2014 was no exception. More than 225 people joined NYIA this year at the Sagamore Resort in Bolton Landing, New York, May 28–30. New York State Department of Financial Services Superintendent Benjamin Lawsky was the keynote speaker and formally opened the event on Thursday, May 29. His address touched on a number of key issues including usage-based insurance, ride sharing services, his continued interest in finding new SUPERINTENDENT ways to fight auto insurance fraud, and the need LAWSKY for the Terrorism Risk Insurance Act to be ADDRESSES THE AUDIENCE renewed in a meaningful way—ideally permanently and as close to its current form as possible. The Superintendent seemed committed to encouraging innovation in the state with his enthusiasm for usage-based insurance products being just the tip of the iceberg. 16 June 23, 2014 / INSURANCE ADVOCATE

“New York is not yet open for business when it comes to property and casualty insurance,” NYIA President Ellen Melchionni said. “I am encouraged by Superintendent Lawsky’s focus on innovation and enabling insurance companies to bring products to market that address the needs of today’s consumers. NYIA looks forward to working with the Superintendent and his team to identify other areas that can be addressed to make our state a better place for business and ultimately create a more robust marketplace for consumers.” Thursday morning included several other sessions that encouraged discussion on a myriad of key New York issues. The panel presentation immediately following the keynote, No Need to Go Undercover: Identifying New York coverage trends, was an in-depth discussion on a number of important coverage issues, including flood, cyber risk and hydrofracking. The panel was moderated by NYIA Chair Bernard Turi, senior vice president, general counsel and director of risk and reinsurance, Utica National Insurance Group. Panelists included Kimberly Davis, general counsel, Underwriters Rating Board; John Kadous, vice president of personal lines, American Association of Insurance Services; and Jan Scites, CEO and president, MSO, Inc. Howard Kunreuther, professor and co-director

INA 6-23-14_INA 6-23-14 6/27/14 2:11 PM Page 17

[ COVER ]

ce Packs Pols and Punch

NYIA PRESIDENT ELLEN MELCHIONNI WITH GUBERNATORIAL CANDIDATE ROB ASTORINO

COVERAGE EXPERTS JOHN KADOUS OF AAIS, JAN SCITES OF MSO, KIMBERLY DAVIS OF URB POSE WITH NYIA CHAIR AND PANEL MODERATOR BERNARD TURI OF UTICA NATIONAL INSURANCE GROUP

of the Risk Management and Decision Processes Center at Wharton next gave his take on Why Insurance is the Most Misunderstood Industry. He used flood insurance as a prime example and engaged the audience in a spirited debate about how we can increase understanding as an industry. The conclusion of Thursday’s general session was Ready, Set, Go!: Insurance snapshot. This session included a number of reinsurance representatives who had 10 minutes and two slides to present three key takeaways on one important issue. Speakers included John DeMartini, executive vice president, JLT Towers Re; Diane Hyland, vice president, treaty account executive, General Reinsurance Corporation; Scott Rubenstein, senior vice president, Willis Re Inc.; Dirk Smith, vice president of engineering, Mutual Boiler Re; and Edouard Vieux, senior vice president, Swiss Re America. The group covered significant ground in one hour and provided great information about extreme weather, the changing weather models, the impact of emerging issues, solar power and usage-based insurance. Westchester County Executive and gubernatorial candidate Rob Astorino was the special guest speaker during NYIA’s Members’ Meeting and Luncheon. Astorino provided his vision for New York and shared his commitment to improving New York’s business climate. The Thursday evening banquet was a celebration for two important individuals at NYIA. Thomas White, president of Community Mutual Insurance continued on page 18

INSURANCE ADVOCATE / June 23, 2014 17

INA 6-23-14_INA 6-23-14 6/27/14 2:11 PM Page 18

[ COVER ] continued from page 17

Company—a Union Mutual affiliate, was honored with the NYIA 2014 Chair’s Distinguished Service Award. White is a longstanding NYIA member with more than three decades of service to the industry and the association. It is a real privilege for NYIA to recognize him with this much-deserved award. NYIA’s office manager of 39 years, Barbara Lynch, was also recognized during the banquet. Barbara is retiring at the end of September. She will be greatly missed by the NYIA staff and membership. The morning of Friday, May 30 featured several more education sessions. The first was a legislative Town Hall Meeting moderated by William Melchionni, senior state relations officer – New York & New England for American International Group, Inc. NYIA was joined by Senator Neil Breslin, Assemblyman Will Barclay and Senate Insurance Committee Director Allison Cooper for this session. The panelists provided great insight on the legislative outlook for end of session and answered a variety of questions on state taxes and fees, auto insurance fraud, tort reform, and the Scaffold Law specifically—to name just a few. Scott Storm, partner at Mura & Storm, PLLC next presented Oops: Ethics in claim handling and underwriting. He provided an informative and entertaining presentation on the ethical issues that arise in the investigation, evaluation and settlement of claims as well as ethical dilemmas that can come about during the underwriting process and result in litigation. The conference concluded with a yearly staple, the Small Company Roundtable. Steven Coffey, president and CEO of Broome Co-operative Insurance Company moderated this year’s discussion. NYIA members say that the Annual Conference is an event that is not to be missed! Mark your calendar now so you don’t miss next year’s conference—May 27–29 at the Saratoga Hilton in Saratoga Springs, New York. [IA] 18 June 23, 2014 / INSURANCE ADVOCATE

NYIA’S OFFICERS: FIRST VICE CHAIR STEVEN COFFEY, TREASURER MARLENE BENTONSHERWOOD, SECOND VICE CHAIR ELIZABETH HECK AND CHAIR BERNARD TURI

SPEAKERS FROM THE INSURANCE SNAPSHOT SESSION: EDOUARD VIEUX, SWISS RE AMERICA; DIANE HYLAND, GENERAL REINSURANCE CORPORATION; DIRK SMITH, MUTUAL BOILER RE; AND SCOTT RUBENSTEIN, WILLIS RE

NYIA CHAIR BERNARD TURI AND PRESIDENT ELLEN MELCHIONNI WITH NYIA’S OFFICE MANAGER, BARBARA LYNCH WHO WAS HONORED FOR HER 39 YEARS OF SERVICE TO NYIA, AND FORMER NYIA PRESIDENT, BERNARD BOURDEAU

INA 6-23-14_INA 6-23-14 6/27/14 2:11 PM Page 19

MEMORANDUM To:

New York Agents and Brokers

From: Physicians’ Reciprocal Insurers Re:

Placing Hospital, Medical Facilities and Physicians Professional Liability

Dear Colleagues, We continue to underwrite medical facilities, hospitals and particularly, physicians who are leaving RRG’s. The distinction between admitted insurers and Risk Retention Groups is clear. PRI, for more than 31 years, is a successful insurance company regulated by the New York State Department of Financial Services. We offer excellent claims defense, fair pricing and exceptional service your clients expect and deserve. We are pleased to continue to serve New York’s agent and broker community. Thank you.

The Professionals at PRI

1800 NORTHERN BOULEVARD | ROSLYN, NEW YORK 11576 (800) 632-6040 | INFO@PRI.COM | WWW.PRI.COM

INA 6-23-14_INA 6-23-14 6/27/14 2:11 PM Page 20

[ IN THE ASSOCIATIONS ]

IIABSC Installs Officers and Directors for the New Term of 2014 - 2015

ADING RIVER, N.Y.—The Independent Insurance Agents & Brokers of Suffolk County, Inc. installed new officers and directors for the 2014 through 2015 term. Over 90 IIABSC members and guests attended the May 29 event which took place at the East Wind Conference center, Wading River, NY. Richard A. Poppa, President & CEO of the Independent Insurance Agents & Brokers of New York, Inc. performed the installation ceremony along with Michael Bentivegna, husband of the newly installed president. Joanne Bentivegna, CIC, CRM, of JB Consulting was re-elected as the organization’s president. Rich de la Sota, MRW Group, Huntington, will serve as vice president. Paulette Katz, CIC, Maurice B. Cunningham, Inc., in Southampton will remain as the association’s treasurer and Eric Keiffert, CPCU, Hometown Insurance Agency, Bohemia will assume the position of secretary. IIABSC also installed the following directors: • Christopher G. Allenger, Bay Harbour Group, Patchogue; • David H. Borg, CISR, Borg & Borg, Inc. Huntington; • John J. Glennon of John J. Glennon, Inc., Hauppauge; • Joseph Gundermann, AAI, Gundermann & Gundermann, Inc., Huntington; • Laura Senn, CIC, People’s United Insurance Agency, Smithtown; • Aaron Stein, CPCU, CFP, Norton & Siegel, Inc., Babylon; • Stephen H. Testa, CPCU, ARM, Testa Brothers, Ltd, Northport. Since 1993, the Ferdinand Coste Award recognizes individuals who demonstate unselfish dedication and commitment to the association, and to furthering the ideals of his fellow independent insurance agent. This year the award was presented to Earl P. Eaton, CPCU, CLU, of Eaton Insurance, Amityville, NY. Earl has served as president of CPCU, IIABSC and Downstate Insurance Associations Council.[IA] 20 June 23, 2014 / INSURANCE ADVOCATE

MICHAEL BENTIVEGNA PRESENTED HIS WIFE JOANNE WITH A CONGRATULATIONS BOUQUET OF FLOWERS AFTER INSTALLING HER AS THE GROUP’S PRESIDENT.

(L-R) DICK POPPA, IIABNY PRESIDENT & CEO, JIM SUTTON, IIABNY’S CHAIR OF THE BOARD AND KEVIN CROSSLEY, IIABNY’S REGIONAL DIRECTOR.

EARL EATON, RECIPIENT OF THE 2014 FERDINAND COSTE AWARD FLANKED BY JIM SUTTON AND JOANNE BENTIVEGNA.

THE 2014-15 IIABSC BOARD OF DIRECTORS (L-R) DAVID M. BORG, PAULETTE KATZ, ERIC KEIFFERT, RICH DE LA SOTA, JOANNE BENTIVEGNA, LAURA SENN, DAVID H. BORG, AARON STEIN, CHRIS ALLENGER, STEVE TESTA.

INA 6-23-14_INA 6-23-14 6/27/14 2:11 PM Page 21

ADVERTORIAL

Dealing With Identity Theft IDENTITY THEFT can happen to anyone at any time, and can be devastating, both emotionally and financially. Helping clients understand how to deal with identity theft is another valueadded service of the professional insurance agent. According to the Bureau of Justice Statistics, in 2012, over 16.7 million U.S. residents aged 16 and over (7% of that population) were victims of identity theft. Existing bank accounts and credit cards were the most targeted sources of the fraud. Identity theft costs individuals more than all other types of theft combined - over $24.7 billion in 2012. The average direct financial loss is $9,650. More important than the direct loss can be the damage to credit scores and reputation, which could result in being denied credit, or paying higher insurance rates. Resolving an identity theft problem can be time consuming. 29% of victims spent a month or more trying to restore their identity. (www.bjs.gov) Credit reports should be checked regularly. Each of the three nationwide credit companies (Equifax, Experian and Transunion) offer one free check per year. It is a good idea to stagger requests throughout the year, and not get all three reports at once. When identity theft is suspected, an initial fraud report should be filed with one of the three companies. They will notify the other two. Once this is done, the victim is entitled to a free report from each of the credit companies, even if they have already had their free report for the year. Each credit company should be asked to place a fraud alert in the victim’s file. This will provide added protection should someone try to uses the victim’s identity again. The fraud alert is good for 90 days, but can be renewed. The Federal Trade Commission offers an online complaint report. (www.ftccomplaintassistant.gov.) The report can be used when filing a police report, or dealing with debt collectors or other companies who may have extended credit to the thief. It can also be

According to the Bureau of Justice Statistics, in 2012, over 16.7 million U.S. residents aged 16 and over (7% of that population) were victims of identity theft. Existing bank accounts and credit cards were the most targeted sources of the fraud. used to place an extended fraud alert with the credit reporting agencies. Any time fraudulent charges are found on credit reports or on bank or credit card statements, the companies involved should be notified immediately. When dealing with identity theft, it is important to keep records of correspondence and phone calls. Letters should be sent via certified mail. Unfortunately, the burden of proof of innocence is usually on the victim. There are different types of identity

theft. The less intrusive type is when someone uses existing accounts, such as a bank account or credit card, to purchase items fraudulently. The second, more damaging type, is when a person‘s identity is used to set up new accounts and apply for credit or a mortgage. Each year there are numerous cases of people filing fraudulent tax returns using others’ identities. (www.irs.gov) Assistance in correcting and restoring credit is available to victims. Many companies offer identity theft recovery services. A major benefit of some of these programs is that they will perform the time consuming legwork involved. Many insurers offer coverage as an option on a homeowners or tenants policy. Identity theft services coverage is also available on a standalone basis. Identity theft is a scary and stressful event. Helping clients navigate the road to recovery 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 / June 23, 2014 21

INA 6-23-14_INA 6-23-14 6/27/14 2:11 PM Page 22

[ FACE TO FACE ]

By Michael Loguercio

Bring It On!

o a while back I wrote a piece on BYOD (Bring Your Own Device), and spoke about what exactly the benefits are to employers, businesses, and employees. However, along with all of those benefits are a plethora of risks and dangers that are associated with BYOD.

or establishing a BYOD policy and allow employees to use their own smartphones or tablets in the work environment. In addition, an employer also loses the ability to maintain a watchful eye over whether an employee is texting for personal or business use when the boss witnesses a worker

Before allowing employees to not only BYOD but to actually use it during the normal course of a business day, and for a business only purpose, the employer must address a number of issues.

Michael Loguercio

First off, let’s begin with the definition of BYOD, which is: “the use of employeeowned mobile devices such as smartphones and tablets to access business enterprise content or networks.” Sounds simple, right? NOT! When exercising a BYOD environment, a business enjoys many benefits, such as improved employee self and job satisfaction, increased workflow and efficiency, and even the ability for employees to work flex schedules, or even from home. It even becomes a huge advantage for the IT department of the business as the costs normally associated with hardware purchases are minimized, since the devices are mostly purchased and owned by the employee. However, when a business does allow employees to use their own devices, when they do access company information it opens up the issue of whether or not the company is now fully subscribing to its own data protection policy. Reason being is simply because the employee owns and supports the device, therefore affording the company with little or no control of how and when it is utilized, versus a device that is owned by the company and loaned to the employee while in their employ. This is a major issue that the company must analyze and address before allowing 22 June 23, 2014 / INSURANCE ADVOCATE

on their phone. This may be counterproductive to my statement above, regarding employees and finding BYOD as a way to be more productive and efficient. Before allowing employees to not only BYOD but to actually use it during the normal course of a business day, and for a business only purpose, the employer must address a number of issues. For example, the company needs to make certain that the business information of the company will not be merged in any way, shape or form with the employee’s personal data. Furthermore, the employer needs to ascertain that in the event the employee loses the device, it may be rendered unusable and wiped clean: remotely and immediately. What is recommended, among other things, is that when an employer makes the business decision to permit BYOD and enable their employees to partake in this practice, the company establishes security measures, and implements a regularly scheduled audit of all devices accessing the network. In addition, the company should also establish a method of protecting data that is accessed by the device, by obtaining one of the few products that are now becoming available on the market for the management of data transferred across cellular and Wi-Fi networks, and over to a

personal handheld device in order to maintain that level of data security and integrity. This is known as “Ring-fencing data” and “Sandboxing”. This method and process maintains data within a secured app, so that in the event the device is lost the data may not be accessible and is easily retrieved via a backup maintained by the company and stored in the cloud. Although there are a number of processes that an employer may put in place in order to maintain the security of data, all of these procedures are worthless if the employee doesn’t understand, enact, and respect the fact that this is not something to be taken lightly, and that these policies must be followed perfectly and religiously. The worker must also understand that the use of BYOD is a privilege that the employer bestows upon the employee, with the hope that this will assist the worker in doing their job more easily and efficiently. What is also recommended is that the employer limits what type of data is to be processed on the personal device, and can that data be encrypted. Also, how long should data be allowed to remain resident on the device, and how should the data then be transferred from the employee to the corporate server. Antivirus software should also be installed on the personal device and the employee must also be made aware of the fact that they must adhere to company acceptable use policies, in order to not place the data or company in jeopardy. A monitoring system should also be set in place, in order to determine if the employee is placing the company at risk due to their own personal habits and entertainment choices by places that they visit on the internet. Other suggested best practices of a BYOD policy may also include a method of tracking the device such as via GPS, but it must maintain a level of protecting the privacy of the individual as well. Another risk posed to the employer is how does an employee now dispose of a device that it owns? Some cellular providers offer a “trade-in discount” and since the employee owns the device it is their prerogative on how they wish to dis-

INA 6-23-14_INA 6-23-14 6/27/14 2:11 PM Page 23

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

EMPIRE SAFETY COUNCIL

· PARTNERSHIP IN EDUCATION PROGRAM As a Human Resource for business to raise funds for schools, libraries, ﬁre departments, churches, and non-proﬁts. · TURN KEY OPERATION Empire supplies you with marke ng tools no extra cost to you. If you want to gain partners in educa on, we have unique agency proposals.

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. Addionally , 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 cerfic ate. 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.

Call DANIELLE PHILP at

631-360-2160

www.empiresafetycouncil.com

INA 6-23-14_INA 6-23-14 6/27/14 2:11 PM Page 24

[ FACE TO FACE ] continued from page 22

pose of it. However, what about the intellectual property that is stored on the device that belongs to the employer? Does this fall under the purview of “an employee not having the right to destroy any company owned software or information” that is typically written in every employee handbook? An added potential issue is “Repetitive Stress Syndrome,” or more commonly known as “Blackberry thumbs” What happens if the employee claims that due to the BYOD policy of the company, the employee developed this injury and is now claiming a workers compensation claim? Where is the burden of proof falling, on the employee who needs to prove that the injury was from their work at the office, or from their evening texting and Facebook visits? Or does it fall on the employer, who now has to prove that the injury was not work related. One more risk a company faces is whether or not their Cyber Liability policy will respond to a loss incurred by the negligence of an employee who fails to protect data and suffers a breach on their personally owned device. Some carriers are saying that this would not be a covered loss since the device is not the property of the employer, however others are taking the position that it would be a covered loss because the data belongs to the insured company. Either way, it is its policy thoroughly and discuss this with its carrier in order to determine whether or not coverage exists before a claim is filed, so that if it is not covered you can secure the proper forms ahead of time. Certain businesses are even more susceptible to these types of losses, not only because of a cyber-breach, but also due to the necessity of maintaining detailed and accurate records and documentation of conversations that transpire between the company and its clients. The insurance business is certainly no stranger to this professional requirement. For instance, let’s take a simple, hypothetical situation that may easily occur in an everyday life of the typical insurance agent. An insured texts a member of your staff at the office, on your employee’s phone, and states to the CSR that they just purchased a brand new car, and that since 24 June 23, 2014 / INSURANCE ADVOCATE

One more risk a company faces is whether or not their Cyber Liability policy will respond to a loss incurred by the negligence of an employee who fails to protect data and suffers a breach on their personally owned device.

they paid cash for it (why would anyone do that in the first place) they do not want comp and collision. The CSR then proceeds to add the vehicle for liability only, texts back to the insured that “it’s covered as requested” and the insured is happily on his way home from the car dealer with their new car…only to text his friend (while driving) about his new car, and not paying attention to the road proceeds to drive directly into the nearest 7-11 store… literally, right through the front plate glass window. Now of course the insured is looking for coverage for collision, and your CSR vividly recalls the text messages that clearly state that the insured did not want collision coverage. However, the employee dropped the phone in the sink while visiting the restroom after taking the text message from the insured, rendering it inoperable and unable to retrieve the text message. Nice Errors & Omissions claim you have there, don’t, you?!?! So how can that have been prevented? Well, with the right agency management system, this E&O claim would not be an E&O claim at all. For instance, EZLynx has recently released an enhancement to its agency management system that includes the ability to text with an insured. The way it works is this: an agency is assigned its own personal texting telephone number, which is then distributed to its clientele. The insured has the ability to text a message directly to the agency which is recorded in its entirety in the client file of the EZLynx agency management system, time stamped and dated, and is uneditable. The agency employee who

receives the text may respond to the insured directly through the EZLynx agency management system which, once again, is documented in the same fashion in the client’s file, and the message is immediately transmitted directly to the insured’s cellphone. In our example case above, if this agent was using an EZLynx management system, the only other entry in the text message would have been from the agent to the insured, asking them to “make mine a cappuccino!” Until next time, have a wonderful, safe, and healthy summer! Ciao for now![IA] Michael Loguercio has been 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 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. 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 and 2014. 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 and Central Brookhaven Lion’s Club. He also served two terms on his Church’s vestry, and in 2013 he was awarded the SCOPE “Community Service” award for his dedication to the public. Michael is a regular Contributor to the Insurance Advocate since 2008, and may be contacted at 631-345-9359 or michael.loguercio@ezlynx.com.You may also follow him on Twitter @MLoguercioJr; and on Facebook @ Michael Anthony Loguercio Jr.

INA 6-23-14_INA 6-23-14 6/27/14 2:11 PM Page 25

AGOSTINO& ASSOCIATES 106 Swiss banks are disclosing American taxpayer information to the IRS.

U.S. taxpayers with undisclosed foreign accounts may face civil penalties and criminal liability.

Our firm is experienced in handling large and small offshore voluntary disclosures. Contact our office for a consultation on your matter.

WWW.AGOSTINOLAW.COM (201) 488-5400

14 WASHINGTON PLACE, NEW JERSEY 07601

INSURANCE ADVOCATE / June 23, 2014 25

INA 6-23-14_INA 6-23-14 6/27/14 2:11 PM Page 26

[ IN THE ASSOCIATIONS ]

PIANJ/PIANY Joint Annual Conference Marked by Milestones and Records Two thousand agents and insurance industry professionals made history at the PIANJ/PIANY Joint Annual Conference and 75th anniversary celebration at the Trump Taj Mahal in Atlantic City, N.J. June 8-10. The event surpassed all previous records for attendance as the industry flooded the boardwalk, networking and honoring industry stars at gala banquets, and packing an expansive trade show and cutting-edge educational seminars with a host of topics important to agents, including a mock trial with standing room only.

26 June 23, 2014 / INSURANCE ADVOCATE

INA 6-23-14_INA 6-23-14 6/27/14 2:11 PM Page 27

[ IN THE ASSOCIATIONS ] A Diamond anniversary; parties galore An opening reception kicked off the festivities with stations and libations sponsored by Jimcor Agencies and Sunday evening concluded with one of the conference’s most popular events: the NJYIP/NYYIP Nitecap reception, which took place in a new location: The Hard Rock Café, closed down for PIA guests only, enjoying VIP rock-star treatment. Hundreds of well-dressed stars crossed the red carpet on Monday night at the gala anniversary dinner. A photo booth offered the opportunity to commemorate the event, and speeches were punctuated with a celebratory serenade of bagpipes by PIANJ immediate past President Stephen Tague and son Dan Tague with drums by Michael Monacelli.

Anniversary wishes from friends of PIA New Jersey State Senator and threetime mayor of Atlantic City State Senator James Whelan welcomed PIA attendees and congratulated the association for its 75 years of supporting producers, their employees and the communities they serve. Throughout the gala diamond anniversary dinner, political friends of PIANJ and PIANY sent well wishes to the associations.

TIMOTHY MADDEN, OF STANDARD SECURITY LIFE INSURANCE CO., ACCEPTS THE NY-YIP VOLUNTEER OF THE YEAR AWARD, WITH PIANY’S NY-YIP PRESIDENT GINO N. ORRINO CPIA, ON STAGE.

DANIEL TAGUE, RECIPIENT OF THE PIANJ YOUNG INSURANCE PROFESSIONAL OF THE YEAR AWARD.

PIA recognizes shining stars PIANY past President N. Stephen Ruchman received the Community Service Award from PIANY. “I continue to ask myself, ‘Why me?’ when there are so many dedicated and qualified people working with and at PIA … Community Service is something I enjoy and find fulfilling, but every professional agent here knows it also is just good business sense. You can tell from looking around this room: The most successful among us—regardless of how you define success—are also the busiest and community oriented among us.” Listing myriad examples of fellow volunteers and their work, Ruchman shared his recognition with all of them. “I accept this award on behalf of all of the PIA board members and volunteers who devote so much of their time to our association in continued on page 28

PIA NJ-YIP PRESIDENT CASEY YARGER, CIC, WITH MARY JO CONLEY OF G&G UNDERWRITERS LLC, RECIPIENT OF THE NJ-YIP DISTINGUISHED PRESIDENTIAL SERVICE AWARD.

JAMES P. AYERS, CPCU, OF FMI, RECIPIENT OF PIANJ’S COMPANY PERSON OF THE YEAR AWARD (CENTER) FLANKED BY NEWLY ELECTED PIANJ PRESIDENT GLENN TIPPY, CPCU, CLU (LEFT), AND STEPHEN P. TAGUE, CPIA, PIANJ IMMEDIATE PAST PRESIDENT (RIGHT) INSURANCE ADVOCATE / June 23, 2014 27

INA 6-23-14_INA 6-23-14 6/27/14 2:11 PM Page 28

[ IN THE ASSOCIATIONS ] continued from page 27

addition to the countless other hours of community service they’ve put in,” Ruchman said. Newly elected PIANJ President Glenn Tippy joined Tague on stage to present the Company Person of the Year Award to James P. Ayers, President of Franklin Mutual Insurance Co. PIANJ Legislative Representative Leon Zimmerman joined Steve Tague on stage to present the PIANJ Distinguished Services award to former DOBI Chief of Market Regulation Anne Marie Narcini, who currently works as regulatory consultant for the Interstate Insurance Product Regulation Commission. Two PIA staff also received awards at the gala dinner. Char Gaylord, government affairs coordinator, who will retire this month, and Conferences Manager Kim Zielinski, who manages the PIANJ/PIANY Joint Annual Conference and all events hosted by PIA in both states received presidential citations and special recognition, respectively. Maria N. Escalona, CPIA, of Jimcor Agencies Inc., and Leslie C. Rogoff, of Madison Avenue Brokerage Corp., both received awards for Director of the Year from PIANJ and PIANY, respectively, during the associations’ board meetings.

ABOVE: PRESIDENT ALAN PLAFKER, CPIA WITH N. STEPHEN RUCHMAN, CPIA, PIANY’S COMMUNITY SERVICE AWARD WINNER - SEE STEVE’S COLUMN IN THIS ISSUE.

ABOVE RIGHT: N. STEPHEN RUCHMAN, CPIA, PRESENTED A “SHORT SPEECH” AS HE ACCEPTED THE COMMUNITY SERVICE AWARD FROM PIANY

Young Insurance Pros recognized During Monday’s YIP Award luncheon, the New Jersey Young Insurance Professionals recognized several honorees: • New Jersey YIP of the Year, Dan Tague of the Travelers Cos.; • New Jersey Distinguished Service Awardee Mary Joe Conley of G&G Underwriters LLC; • New York YIP Insurance Professional of the Year Jay Levy of Morstan General Agency; and • New York YIP Volunteer of the Year, Timothy Madden of Standard Security Life.

Inaugural address and change of administration in New Jersey Monday’s dinner also featured the inaugural address of newly elected President Glenn Tippy, CPCU, CLU, dis28 June 23, 2014 / INSURANCE ADVOCATE

ANNE MARIE NARCINI, FORMER DOBI CHIEF OF MARKET RELATIONS, RECIPIENT OF THE PIANJ DISTINGUISHED INSURANCE SERVICE AWARD

NEWLY ELECTED PIANJ PRESIDENT GLENN TIPPY, CPCU, CLU, OF GERRITY, BAKER, WILLIAMS INC., FLANDERS, N.J. PRESENTS HIS INAUGURAL ADDRESS MONDAY EVENING.

INA 6-23-14_INA 6-23-14 6/27/14 2:12 PM Page 29

[ IN THE ASSOCIATIONS ] cussed attributes that make the professional, independent agency system the best distribution method for insurers and clients, as well as the issues the industry must attend to in order to insure its own future. His observations were made during his inaugural address at the association’s Diamond Anniversary Gala Banquet, which was part of the PIANJ/PIANY Joint Annual Conference earlier this week in Atlantic City. During his address, Tippy discussed the strengths of independent insurance professionals and that which sets them apart from online insurance providers and other direct-sales organizations. He shared that preparing for his inaugural speech, he thought it might be the most important speech he’s ever given. But, on further reflection, he knew that he and fellow professional agents in local communities everywhere already had given the most important speech repeatedly during their careers as professional, independent insurance agents. “You know what that speech is?” he asked the crowd. “It goes like this: ‘You’ll be OK, you bought what you needed for this, we prepared for this, and we’ll help you get back on your feet.’” “We have personal knowledge about our clients. We care about them. We live side-by-side with them,” he said. “This personal relationship, combined with professional drive, made evident and strengthened by our attendance and participation in our association, the information we obtain from PIA—the superior education and networking that keeps us current and connected—are the hallmark of professional, independent insurance agents.” The value of insurance does not come from a simple transaction. Tippy said that professional, independent insurance agents offer thoughtful advice and have unique knowledge of an insured, which is something that can’t be provided by a machine. Tippy also discussed the importance of a strong agent-carrier relationship, noting the relationship works because of strong, vigilant partners. “Successful carriers recognize that professional, local, agents are the most knowledgeable risk assessors of each unique community and because they are the best marketing tool. Professional agents offer consumers a face and a name they trust,” he said. “So, professional, independent insur-

Tippy also discussed the importance of a strong agent-carrier relationship, noting the relationship works because of strong, vigilant partners.

ance agents are going to be around for a long time, and with the help of each other, our partners and our association, we can look forward to a prosperous future,” said Tippy. “But, that’s not to say we don’t have to be concerned. Just as we tell our customers, we need to be vigilant, plan and work to make sure we’ll be OK, that we are prepared and we’ll stay on our feet.” With a nod to his predecessor and board, Tippy said the insurance industry and PIANJ must continue to address important necessities to secure the professional agents’ future: 1) bring young people into the business and encourage them to join the PIA Young Insurance Professionals; 2) support women in the industry; and 3) encourage people with diverse backgrounds to join the industry. To illustrate his point, Tippy said that PIA’s Women’s Business Forum has continued to grow and the association’s inaugural Diversity Advisory Council was a huge success this past year. “We do those things and growth will take care of itself,” said Tippy. “Perpetuation will take care of itself. Victory for ourselves and our system is assured. Reach out a hand and let’s lift each other. It’s what professional, independent agents do.”

New leaders recognized Both PIANJ and New Jersey Young Insurance Professionals installed 2014-15 officers and directors. PIANJ officers: • President Glenn Tippy, CPCU, CLU, president of Gerrity, Baker, Williams Inc., in Flanders, N.J. • Vice President Donald F. LaPenna, Jr., president of Donald F. LaPenna Associates in Clark, N.J. • Charles Caruso, CIC, CPIA, of Herbert L. Jamison & Co. LLC/

Jamison Insurance Group in West Orange, N.J. • Vice President Kacy Campion Renna, CIC, of Wall Township, N.J., president/owner of Connelly-CampionWright in Belmar, N.J. • Treasurer Lloyd H. “Rip” Bush Jr., producer for Keer & Heyer in Point Pleasant Beach, N.J. • Secretary Bruce Blum of Blum & Walsh Group Inc., a division of T.E. Freuler Agency in Somerset, N.J. In addition, the association elected professionals to its board of directors. For a three-year term, expiring in 2017: • Salvatore Abate, CPIA, of Anderson Jackson Metts in Mount Laurel, N.J. • Bruce Blum of Blum & Walsh Group Inc., a division of T.E. Freuler Agency in Somerset, N.J. • Maria Escalona of Jimcor Agencies in Montville, N.J. • Connie Mahoney of Mark Anthony Associates in Mountainside, N.J. • William McMahon, CIC, of McMahon Agency in Ocean City, N.J. • Michael Merwin, CIC, CRM, CPCU, CRIS, MBA, of the Merwin & Paolazzi Insurance Agency in Lyndhurst, N.J. • Kristen M. Scott, CPIA, of Chamber Insurance Agency Services in West Orange, N.J.

2013-14 NJYIP officers: • President Casey Yarger, CIC, of Robert Petri & Daughter Insurance Agency in Milltown, N.J. • Vice President Natalie Bruno, CPIA, of D’Agostino Agency in Hammonton, N.J. • Treasurer and Secretary Aaron Levine of LG Insurance Group in Long Branch, N.J. • Immediate past President Thomas Wilkens of Professional Risk Placements LLC in Red Bank, N.J.

Education that puts the ‘Professional’ in PIA Participants had the opportunity to take up to 12 credits through exciting courses offered at the conference and, for New York licencees, earn an additional 12 credits with a self-study course and on-site continued on page 30

INSURANCE ADVOCATE / June 23, 2014 29

INA 6-23-14_INA 6-23-14 6/27/14 2:12 PM Page 30

LIC

[ IN THE ASSOCIATIONS ] continued from page 29

proctored exam for bridge credits, entitled Advertising, Rebating and Referrals: Staying Compliant When Designing Your Marketing Plans. The conference opened Sunday, June 8, with a wildly popular mock trial “Jury ... Have You Reached a Verdict?” for the first of two E&O education courses. Throughout the weekend, professionals had several opportunities to earn valuable education that they can use for their business. Monday morning offered a choice of Getting Back to Basics-Practicing Insurance Fundamentals, taught by Rita Hollada, CPCU, CIC, CPIA; Strategies for Client Benefits in a Changing World, taught by Gary Slavin; or Nasty Stuff You Don't Want on Your Policy, featuring Steve Lyon, CPCU, CIC, CRM, AAI, ARM, AIS, CRIS. That afternoon packed in even more, with Good Stuff-Endorsements You Want on your Policy, with Lyon; What Flood Insurance is Not, taught by Hollada; and Contractors: Insuring the Liability Exposures by Cathy Trischan, CPCU, CIC, CRM, AU, AAI, ARM, CRIS, MLIS. Education closed the conference as well, with Steve Lyon presenting Don't Get Burnt-25 Potential E&O Issues.

PIANJ’S NJYIP FUN RUN FOR SPECIAL OLYMPICS CELEBRATED ITS 30TH ANNIVERSARY BY RAISING AN UNPRECEDENTED $153,000 WITH 175 RUNNERS PARTICIPATING IN THE NJYIP 5K FUN RUN ON THE BOARDWALK TUESDAY MORNING. PIANJ AND NJYIP HAVE RAISED NEARLY $3.3 MILLION FOR THE SPECIAL OLYMPIANS AND THE EVENTS IN WHICH THEY PARTICIPATE.

NJYIP Fun Run The PIANJ Young Insurance Professionals celebrated 30 years of raising contributions for Special Olympics New Jersey through the Fun Run on Tuesday morning, as the weather broke in time for runners to take their marks. This year, more than 175 runners and other participants shattered fundraising records, bringing in $153,000 to this single event. To date, PIANJ and NJ-YIP have raised nearly $3.3 million for the athletes and the events in which they participate. The runners with the best overall time included: Overall fastest male, Kyle Price, FMI Insurance Co. (time: 17:19.71); Overall fastest female, Tori Martin, FMI Insurance Co. (time: 23:02.11); Top Team Fundraiser, FMI Insurance Co. ($70,440); and Top Individual Fundraiser, Patrick Cusack, ARI ($6,275). Another notable moment took place as PIANY Past President Michael Loguercio accepted the ceremonial YIP team trophy. NY-YIP and NJ-YIP have 30 June 23, 2014 / INSURANCE ADVOCATE

good-heartedly challenged each other for several years to be the fastest team. This year, New York took the win, breaking New Jersey’s six-year winning streak. Marc Edenzon, president of Special Olympics New Jersey and Special Olympic Athlete, Maureen Larsen both spoke to the room, sharing the success they and their families have enjoyed with the help the industry has offered through PIANJ and NJYIP support during the post-race breakfast. NJYIP president Casey Yarger and Vice President Natalie Bruno M.C.d the

breakfast celebration, recognizing runners and fundraisers and well as introducing athletes as administrators from Special Olympics New Jersey, which will host the National games this summer. “Today’s activities would not be possible without the support of our industry partners,” Yarger said, as he recognized Franklin Mutual Insurance as the Fun Run’s event sponsor for 13 years. FMI’s Dale Martin accepted an award and challenged all participants to keep the race and its successful momentum going.[IA]

INA 6-23-14_INA 6-23-14 6/27/14 2:12 PM Page 31

ADVERTOR IAL

LICONY

Let’s Secure Financial Independence for People in Retirement

oon we will celebrate the nation’s independence. While this is a time for celebration and fire works on the 4th of July, I want to take this time to reflect on financial independence – specifically in retirement. Some may say retirement is just a dream, that Social Security uncertainty and the decline of traditional employer sponsored pensions will make it impossible to retire. Others may add that the financial pressures of today make planning for the future challenging at best. By creating and implementing a personal retirement plan, ﬁnancial independence can be a reality. The life insurance industry is well suited to assist as it provides both the financial advice needed to help people create a personal retirement plan, as well as life insurance products – such as lifetime income annuities – designed to provide an income that retirees can never outlive. But in order for more people to take action, they need access and education about retirement planning and guaranteed lifetime income products for retirement, as well as a simplified process. Are pre-retirees considering purchasing guaranteed lifetime income? Not as many as I would like. Consider that in New York: • 1.4 million pre-retirees1 (age 55 to 70) do not expect to receive enough income from Social Security and pensions to cover their basic living expenses in retirement

1.4 million pre-retirees (age 55 to 70) do not expect to receive enough income from Social Security and pensions to cover their basic living expenses in retirement • only 565,100 (approximately 40%) express interest in converting a portion of their savings into guaranteed lifetime income in order to fill the gap To help change that statistic, the life insurance industry has 75,000 knowledgeable sales agents in New York. They are meeting with the citizens of New York to understand individual needs, inform of suitable options and then set up personal retirement plans. Changes in legislation and regulation would be extremely helpful in simplifying the process for sales agents to do this important job. Another way is to expand access to retirement plans at the workplace. Nearly 80% of full-time workers have access to a workplace retirement plan, and more than 80% of workers with access participate across the U.S. according to the ACLI2. Just think how many more part time employees or those who work for small businesses could participate if such plans were offered. Let’s secure ﬁnancial independence for more people in retirement. We at the Life Insurance Council of New York and the life insurance industry are committed to working with our state government to do everything possible to make it easier for New Yorkers to secure this critically important protection. The life insurance industry

has the capacity and capability, as well as the range of products available, to meet the retirement planning needs of all New Yorkers if public policy could be simplified and better aligned with these industry capabilities. [IA] Thomas E. Workman is the President and Chief Executive Officer of the Life Insurance Council of New York, Inc. LICONY is the principal voice of the life insurance industry in New York. LICONY works to create and maintain a legislative, regulatory, and judicial environment that encourages its members to conduct and grow their life insurance businesses here in New York State. For stories about New Yorkers who have benefitted greatly from purchasing the products of life insurers, go to www.licony.org, click on “Published Articles” in the NEWSROOM box on the homepage. 1 LIMRA estimates for New York State (6.2 percent of total U.S. population in 2013). Estimates are dervied from organization’s Current Population Survey 2 Bureau of Labor Statistics, U.S. Department of Labor, National Compensation Survey, March 2013. (Note: Data have been rounded. In March 2013, 78% of full-time workers have access to a workplace retirement plan, and 83% of civilian workers with access participate).

O: (212) 986-6181 F: (212) 986-6549 551 Fifth Ave., 29th Floor, New York, NY 10176 website: www.licony.org INSURANCE ADVOCATE / June 23, 2014 31

INA 6-23-14_INA 6-23-14 6/27/14 2:12 PM Page 32

[ ON M Y RADAR ]

By Barry Zalma

Asbestos Litigation Creates Vague Notions About the Law

hen some primary insurers exhaust their policy limits, excess insurers must take over the defense and indemnity of the insured

cies that provided insurance coverage for asbestos-related liabilities. Mead has been named as a defendant or third-party defendant in numerous lawsuits or claims for

OneBeacon and the Chartis Defendants moved to dismiss Mead’s complaint against them, alleging that no justiciable issues exist because the policies could not be triggered based upon current underlying damages. Barry Zalma

as their interests appear. When there are multiple primary and excess insurers the allocation of the costs of defense and indemnity become complicated and result in litigation when the multiple parties should work together to resolve the disputes.Who pays what and when requires an interpretation of the contract terms of each policy. In MW Custom Papers LLC v. Allstate Insurance Co., 25430, 2014-Ohio-1112 (indeterminate 03/21/2014), MW Custom Papers, LLC appealed from a trial court judgment which granted the motions to dismiss for lack of justiciability filed by Associated International Insurance Company (“Associated”), Federal Insurance Company (“Federal”), Fireman’s Fund Insurance Company (“Fireman’s Fund”), Travelers Casualty and Surety Company (“Travelers”), OneBeacon American Insurance Company (“OneBeacon”), and Granite State Insurance Company, Lexington Insurance Company, and National Union Fire Insurance Company of Pittsburgh, PA (“the Chartis Defendants”)

Factual History From 1958 to 1985, The Mead Corporation purchased written primary, excess and/or umbrella general liability poli32 June 23, 2014 / INSURANCE ADVOCATE

bodily injury, personal injury, or death resulting from exposure to certain asbestoscontaining products. Mead believes that additional claims will be asserted against it in the future. According to Mead, each insurer has an indivisible duty to provide Mead with a full defense and/or indemnification of defense costs, and full indemnification of settlements or judgments “in which any part of the continuous and/or progressive injury process is alleged to have existed during any part of a policy period of the Policy or Policies issued by the [Insurers], subject only to the applicable limit of liability, if any, contained in that Insurer’s Policy or Policies.” Mead alleged that it is “entitled to select which of the triggered Policies should respond to each Asbestos Bodily Injury Claim.” Following exhaustion of primary policies Mead requested coverage for the Asbestos Bodily Injury Claims from certain of the Defendants [Insurers] under the terms of their respective umbrella and/or excess policies, and timely placed those Defendants on notice that they would be required under their respective Policies to pay for the investigation, defense and settlements or judgments in connection with the Asbestos Bodily Injury Claims.

It is a custom, practice and obligation of insurers to notify their policyholders of the alleged exhaustion of any allegedly-applicable limits of liability. This custom, practice and obligation stems from the fundamental duty of good faith and fair dealing. OneBeacon and the Chartis Defendants moved to dismiss Mead’s complaint against them, alleging that no justiciable issues exist because the policies could not be triggered based upon current underlying damages. The insurers stated that they were “high level excess insurers who issued insurance policies which cannot be triggered until at least $270 million of underlying liability is exhausted through payment of claims. There is no damage threat that is remotely near that level of liability.” Other insurers joined in the motion stating their lower limits had not yet been reached since their trigger points had not been reached by exhaustion of underlying limits by the payments of claims. The trial court granted the motions to dismiss because Mead had never presented an asbestos liability claim to the high-level excess insurers with proof of how much was owed. By settling with its primary and umbrella insurers, GenCorp had made the choice to allocate its liability as broadly as possible, which meant that it has to demonstrate that its liabilities would exceed the cumulative limits of all the primary and umbrella policies before it could trigger the excess policies.

Justiciability of Mead’s Claims A declaratory judgment may be either affirmative or negative in form and effect, and the declaration has the effect of a final judgment or decree. With the exception of actions brought by non-insureds against insurers (which does not apply here), a contract may be construed by a declaratory judgment or decree either before or after there has been a breach of the contract. Nevertheless, it is the duty of every judicial tribunal to decide actual controversies between parties legitimately affected by specific facts and to render judgments which can be carried into effect. It has become settled judicial responsibility for courts to refrain from giving opinions on abstract propositions and to avoid the imposition by judgment of premature declarations or advice upon potential controversies.

INA 6-23-14_INA 6-23-14 6/27/14 2:12 PM Page 33

[ ON MY RADAR ] To be justiciable, a controversy must be grounded on a present dispute, not on a possible future dispute. The Declaratory Judgment Act expressly states that courts of record may refuse to render or enter a declaratory judgment or decree if the judgment or decree would not terminate the uncertainty or controversy giving rise to the action or proceeding in which the declaratory relief is sought. Here, the only evidence outside the complaint that was offered by the Dismissed Insurers was the declaration pages of their respective policies, which purportedly established the amount of underlying coverage that needed to be exhausted before their policies applied. Regardless of whether the trial court properly considered these documents, we do not find that it resolves whether Mead presented a justiciable controversy against the Dismissed Insurers. In support of its assertion that the complaint adequately alleges justiciable claims against the Dismissed Insurers, Mead focuses on its allegations that (1) the asbestos bodily injury claims are claims covered under the policies; (2) each insurer has an indivisible duty to provide Mead with a full defense and/or indemnification, subject to the policies’ applicable limits of liability; (3) Mead is entitled to select which of the triggered policies should respond to each asbestos claim; (4) the action presents justiciable controversies; and (5) each insurer disputes or has asserted a conflicting position regarding one or more of the declarations requests by Mead and/or is an indispensable party. On its face, these allegations in Mead’s complaint set forth justiciable claims against all of the insurers. Simply stated, the complaint alleges facts indicating that actual disputes exist between Mead and its insurers regarding the parties’ duties and obligations under the various Policies and/or that the insurers have been joined as indispensable parties. Construing Mead’s complaint in the light most favorable to it, Mead did not allege that it allocated its asbestos liability horizontally across the primary polices. Rather, Mead alleged that the two companies with primary policies paid certain defense and indemnification costs and that those policies are now exhausted. The complaint did not specify how Mead presented claims and exhausted its

primary policies before turning to its excess/umbrella Polices. Mead did not allege that it settled with any primary, umbrella, or excess insurers, nor has it alleged that the cost-sharing agreements between certain insurers and Mead constituted an election to allocate its liability horizontally among the various tiers of insurers. The cost-sharing agreements were not placed before the court, and it is in no position to speculate as to the nature of the agreements’ terms. The Dismissed Insurers have not filed answers agreeing or disagreeing with any or all of Mead’s interpretation of the policies at issue. Rather, at this juncture, the court merely had Mead’s allegation that the defendant-insurers dispute or have asserted conflicting positions regarding the issues for which Mead has requested a declaratory judgment. This litigation involves multi-year, multi-layered insurance policies issued by numerous insurers to Mead. The insurance dispute stems from numerous asbestos bodily injury lawsuits against Mead, for which Mead has incurred damages and will be required to expend substantial amounts of money in the future in defending current and future claims. Although no claims have been filed by Mead against the Dismissed Insurers, Mead has a real and substantial present interest in determining how the various policies are triggered, how costs are allocated among the triggered policies, how many occurrences are involved under the terms of the policies, and how and when lower-layer policies exhaust and higher-layer policies attach, among other issues. Insurance policies, let alone the litigation and judicial opinions sometimes arising from them, can generate foggy notions but under the procedural and factual circumstances of this case, the court of appeal concluded that the trial court erred in dismissing the high-level excess insurers for want of justiciability.

Zalma Opinion The insurers in this case obtained a Pyrrhic victory – they convinced the trial court but not the court of appeal. Mead’s victory is just as Pyrrhic – they can now litigate with the insurers to determine who’s on first and which of its excess and umbrella insurers must step up to defend and indem-

nify possible future asbestos suits. The wording of each policy will govern the court, faced with Mead’s request for declaratory relief, will analyze each and determine a schedule of who pays what and when. Of course Mead is dealing with professional insurers who should avoid the litigation and work up an agreement between themselves. [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. Mr. Zalma recently published the ebooks, “MOM and the Taipei Fraud;” “Zalma on Insurance Fraud – 2013 , “Zalma on California Claims Regulations – 2013 ; “Rescission of Insurance in California – 2013;” “Random Thoughts on Insurance” a collection of posts on this blog; “Zalma on Diminution in Value Damages – 2013,”“Zalma on Insurance,” “Heads I Win, Tails You Lose,” “Arson for Profit” and others that are available at www.zalma.com/zalmabooks.htm. Specialty Technical Publishers recently published Mr. Zalma’s new E-Book, “Getting the Whole Truth” which is available at http://www.stpub.com/ Getting-the-Whole-Truth_p_254.html. Specialty Technical Publishers publishes Mr. Zalma’s book, “Insurance Claims: A Comprehensive Guide” where you can get additional details on this subject by purchasing the book in print or digital format at http://www.stpub.com/insurance claims-a-comprehensive-guide-online. Mr. Zalma’s reports on World Risk and Insurance News’ web based television programing, http://wrin.tv or at the bottom of the home page of his website at http://www.zalma.com. INSURANCE ADVOCATE / June 23, 2014 33

INA 6-23-14_INA 6-23-14 6/27/14 2:12 PM Page 34

[ LOOKING BACK… Insurance Advocate, 25 years ago]

34 June 23, 2014 / INSURANCE ADVOCATE

INA 6-23-14_INA 6-23-14 6/27/14 2:12 PM Page 35

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

This Fall, look for our Commemorative Issue Celebrating 125 years of Insurance News & Industry Events! G

RATIN

CELEB

AT EMOR COMM SUE IS

IVE

. 19 5 NO

A once-in-125 years Opportunity to be part of Insurance History

12 VOL.

dustry rance In t the Insu icu cord for and Connect e of Re Jersey agazin , New 1889 rk The M Yo Since in New

For advertising opportunities, please call 914-966-3180, x113 or g@cinn.com INSURANCE ADVOCATE / June 23, 2014 35

INA 6-23-14_INA 6-23-14 6/27/14 2:12 PM Page 36

[ GUEST OPINION ]

By Janet M. Orient, M.D.

Healthcare Fixed, on to Climate Change

ow that 8 million or more have signed up on health insurance exchanges under the Affordable Care Act (ACA), the President is deploying his phone and his pen to solve another urgent problem: climate change. This will

This problem is related to our health also. As some public health authorities have declared, global warming (now called “climate change”) will bring dengue fever, malaria, and other mosquito and tickborne diseases across our borders.

We are no longer screening most entrants to the U.S., like we once did at Ellis Island, to keep human carriers of infectious diseases out.

Janet M. Orient, MD

require another transformational change that no previous President has been able to bring about, as they were unable to get around a recalcitrant Congress.

36 June 23, 2014 / INSURANCE ADVOCATE

We do of course already have mosquitoes here. In Tucson, we also have lots of kissing bugs and packrats, the intermediate host for Chagas disease. We are not yet

reporting transmission of Chagas within the U.S., though we are screening blood donors. Bedbugs and head lice, once uncommon, are becoming rampant everywhere. We are no longer screening most entrants to the U.S., like we once did at Ellis Island, to keep human carriers of infectious diseases out. We used to have malaria in Alaska and Siberia, but it was mostly eradicated in the U.S. and Europe by mosquito control. That is, by DDT. In living memory, trucks used to go down the streets of Houston spraying DDT. Mexican migrant workers were dusted with DDT when they crossed the Rio Grande. Half a billion human lives were saved by DDT—a remarkably safe compound. J. Gordon Edwards used to eat it by the tablespoon at his lectures. Fortunately, the malaria problem was mostly solved here before William Ruckelshaus, head of Nixon’s Environmental Protection Agency, took it

INA 6-23-14_INA 6-23-14 6/27/14 2:12 PM Page 37

[ GUEST OPINION ] upon himself to ban DDT in 1974— despite a truckload of scientific evidence refuting Rachel Carson’s Silent Spring alarmism. That’s where the EPA got its power, which has increased by leaps and bounds. Malaria kills African babies by the millions, and international authorities work to prevent even indoor household spraying of DDT, far and away the best method we have. While the EPA and international health bureaucrats are mostly white guys, this is not racist or genocidal—unlike use of the “N” word now or in the remote past. It is good for population control, which is a high-priority public health goal, and reduces the potential “carbon footprint.” Obama will use—is using—the massive power of the EPA to fight climate change. Besides dengue fever, he intends to decrease asthma attacks by reducing pollution and seasonal allergies by preventing higher temperatures (with more plant growth producing more pollen). Although the predicted global warming has been stalled for about 16 years, and we had an exceptionally harsh winter, the warming (or “change,” which could even include “colding”) is in the “pipeline” (not the Keystone Pipeline). All the government-approved scientists say so, and any who rely on government grants dare not dispute them. The Great Thermostat has been shown to be carbon dioxide and other greenhouse gases—specifically those released in human activities such as burning hydrocarbon fuels, as opposed to volcanic eruptions or outgassing from the oceans. Giving the EPA the authority to regulate carbon dioxide as a “pollutant” gives it the power to control virtually everything. Of course we can’t actually “decarbonize” everything because all living things are made out of organic (carbon-based) chemicals. But we can greatly suppress human-caused emissions. The first target is the coal industry. Obama’s promise to kill the coal industry, particularly coalfired power plants, is one he is on track to keep. Oil and natural gas are next—restrictions on diesel-fueled trucks, stopping the Pipeline, denying drilling permits even in defiance of court orders, trying to kill fracking, and so on. The actual effect on global temperature would be negligible even if we could shut

The public has become unenthusiastic, but Obama is cranking up the sales efforts that work so well for Obamacare.

down the 40 percent of our electrical generating capacity that depends on coal. But it would be a “good start.” The public has become unenthusiastic, but Obama is cranking up the sales efforts that work so well for Obamacare. Electricity bills may skyrocket, but think of all the jobs we could have by replacing backhoes with shovels. More exercise, less meat, fewer calories altogether. Yes, the fight against climate change is good for our health.[IA] Jane M. Orient, M.D., Executive Director of Association of American Physicians and Surgeons, has been in solo practice of general internal medicine since 1981 and is a clinical lecturer in medicine at the University Of Arizona College Of Medicine. She received her undergraduate degrees in chemistry and mathematics from the University of Arizona, and her M.D. from Columbia University College of Physicians and Surgeons. She is the author of Sapira’s Art and Science of Bedside Diagnosis; the fourth edition has just been published by Lippincott, Williams & Wilkins. She also authored YOUR Doctor Is Not In: Healthy Skepticism about National Health Care, published by Crown. She is the executive director of the Association of American Physicians and Surgeons, a voice for patients’ and physicians’ independence since 1943. Additional information on health-related issues: http://takebackmedicine.com/ Dr. Orient’s position on Obama’s healthcare reform: “The Obama plan will increase individual health insurance costs, and if the federal government puts price controls on the premiums, the companies will simply have to go out of business. The plan will deliver higher costs, more hassles, fewer choices, less innovation, and less patient care.”

[ CLASSIFIEDS ]

Michael Leff LICENSED BROKER

914.245.4500, X12 • FAX 914.245.0461 135 EAST MAIN ST. / PO BOX 119 JEFFERSON VALLEY, NY 10535

AGENTS–WE CAN HELP WITH YOUR FLORIDA CLIENTS. WRITING PERSONAL & COMMERCIAL LINES Commissions Paid Call or Email Lisa at (561) 395-5220 lisa@allriskinsurancegroup.com

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

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

Classified Opportunities Classified advertisements must be received by MONDAY NOON prior to publication date for inclusion in that week’s issue. Rate is $38 per inch, per insertion, payable in advance of publication date. In addition, there is a $5 charge for advertisers requesting to assign box numbers forwarded via first class mail. (Response forwarding expires 30 days after publication.)

914.966.3180 g@cinn.com www.insurance-advocate.com INSURANCE ADVOCATE / June 23, 2014 37

INA 6-23-14_INA 6-23-14 6/27/14 2:14 PM Page 38

[ IN THE ASSOCIATIONS ]

White Honored by New York Insurance Association BOLTON LANDING, N.Y.—The New York Insurance Association, Inc. (NYIA) honored Thomas White with the Chair’s Distinguished Service Award at the association’s annual conference May 29 in Bolton Landing, N.Y. White is president of Community Mutual Insurance Company, an affiliate of Union Mutual of Vermont Companies. White is also regional vice president of Union Mutual, responsible for New York operations. “Tom is incredibly loyal to the industry and NYIA,” Bernard Turi, NYIA chair and Utica National Insurance Group senior vice president, general counsel and director of risk and reinsurance said. “He has dedicated 35 years to advancing the insurance profession. His steadfast commitment and unwavering conviction in promoting the industry is commendable.” White joined Community Mutual in 2003 as executive vice president. He was elected president in 2005. He started his career with Eastern Mutual Insurance Company in 1979—first serving as a field representative performing inspections and marketing. He served in a variety of roles at the company, ultimately as secretary, director and senior vice president of claims before leaving to join Community Mutual.

“Tom is incredibly loyal to the industry and NYIA. He has dedicated 35 years to advancing the insurance profession…” THOMAS WHITE

He served on the NYIA Board of Directors for many years and served as the association’s chair in 2002 and 2003. He was instrumental in the merger of the New York Insurance Alliance and the New York State Insurance Association in 1997. He has served on a variety of NYIA committees in his 35-year history with the association and currently serves on the Nominating Committee. White is active in the fire community.

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. 38 June 23, 2014 / INSURANCE ADVOCATE

- Bernard Turi, NYIA chair and Utica National Insurance Group senior vice president, general counsel and director of risk and reinsurance

He joined the East Greenbush Fire Company in 1975 and has held numerous offices including first assistant chief. He is a fire investigator for the Town of East Greenbush Fire Evidence Technician Group and is part of the Rensselaer County Fire Investigation Unit. He is a New York State level 2 fire investigator. White is a graduate of the State University of New York Institute of Technology at Utica/Rome with a degree in criminal justice. He holds the chartered insurance operations professional designation. He resides in East Greenbush, N.Y. with Colleen Masters and their daughter Shea. He also has three grown children, Kimberly, Thomas and Madeline. Community Mutual, an advance premium insurance company, writes insurance throughout New York using the independent agency system. The company traces its beginning to 1854, making it one of the oldest mutual insurance companies in New York State. Union Mutual of Vermont Companies offers insurance in New England through two companies, Union Mutual Fire Insurance Company and New England Guaranty Insurance Company, Inc. The company has two affiliates in New York, Community Mutual and Eastern Mutual Insurance Company.

INA 6-23-14_INA 6-23-14 6/27/14 2:16 PM Page 39

We’re the Company with

Underwriting Oversite, Audit Assistance, Experience Ratings

Review PRACTICAL, RISK-FREE COVERAGE FROM THE EXPERTS WITH OVER 75 YEARS OF EXPERIENCE. We have robust workers’ compensation plans which include discounts and dividends to suit your clients in these trades: • Building Metal Trades • Painters and Decorators • Cleaners • Paper Products Manufacturers • Construction • Printers • Electrical Manufacturers • Retail Lumber • Hospitals • Roofers and Sheet Metal Workers • Launderers and Cleaners • Truckers, Movers, and • Municipalities Warehouse people

Safety Pays Dividends Lovell Safety Management Co., LLC 110 William Street New York, NY 10038-3935 212-709-8600 1-800-5-LOVELL www.lovellsafety.com

INA 6-23-14_INA 6-23-14 6/27/14 2:16 PM Page 40

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. © 2 014 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 ©2014 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 n d e r U.S. U. S . Patent P a te nt No. N o . 7,908,157. 7, 9 0 8 ,15 7. plans protected under