Insurance Advocate June 26, 2017 by C Acunto

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

NYIA’s “Annual” Brings Leaders to Buffalo Vol. 128 No. 12 | June 26, 2017

PICTURED: NYIA PRESIDENT ELLEN MELCHIONNI WITH KEYNOTE SPEAKER NYDFS EXECUTIVE DEPUTY SUPERINTENDENT SCOTT FISHER ON THURSDAY, JUNE 1

PIANJ/PIANY 2017 Joint Conference PAGE 16

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Contents

12 NYIA’s “Annual” Brings Leaders to Buffalo

June 26, 2017 | Volume 128 Number 12

On the Level: Headline N. Stephen Ruchman

Courtside: No Liability for Dog That Ran Down Street Trailing Loose Bike Rack Behind Lawrence Rogak

On My Radar: FBI Finds Insurance Frauds Barry Zalma

Looking Back: April, 1992

Classiﬁeds

[ A D F E ATUR E S ] IFC

NYIA: Chair’s Distinguished Service Award

B&G Group: We Want You!

ShelterPoint: Paid Family Leave NY

[F EAT URE S ] 4

Foreword: Complexities Bespeak Confusion Steve Acunto, Publisher

Guest Article: Millennials: Plan for Retirement Now or Pay the Price Later David Rosell

News Notes: Educational Programming on Autonomous Vehicles The Knowledge Center

Serving New York, New Jersey, Pennsylvania and Connecticut Since 1889

News Notes: Commercial Insurance Prices “Nearly Flat”

FOR ADVERTISING OR SUBSCRIPTION INFORMATION

In Focus: Selling Insurance Kelly Donahue-Piro

In the Associations: PIANJ/PIANY Joint Annual Conference

Call 914-966-3180 | email g@cinn.com

info@insurance-advocate.com www.insurance-advocate.com INSURANCE ADVOCATE / June 26, 2017 3

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[ FOREWORD ]

STEVE ACUNTO

Complexities Bespeak Confusion uJust came across a list of new communications jobs out in the marketplace

(no, I am not seeking employment—I am already married!). The list gave me pause, as it reflects the growth of uber specialization and redefinition that is going on before our very eyes. Yet, I am quite sure that these are new wrappers on old candies, with some added labels (“organic,” “low fat,” “sugar free,” et cetera). Here are a few of the best: • CSR/ Corporate Affairs Executive • Head of PR / HR / Investor Relations • PR and Communication Manager • Media Relations / Branding Manager • Market Research / Online Reputation Manager • Communications Strategy Development Manager • Crisis Development / Fundraising / Investor Relations • HR / Benefits Communication Manager • Digital and Social Media Strategist • Social Media / Digital Marketing Specialist • Marketing Superintendent • Entrepreneurial PR and IR Senior Executives • In-House PR Management Consultant • Crisis / Issue Management / Cause Branding Not sure that we have improved communicating, but the titles would have you believe so, a fact that I can state as your Word Arrangement and Presence Practitioner and Readership Concierge…. Speaking of the role of Concierge, you WILL be able to get a table at the best restaurants in Hartford now that Aetna is leaving…or thinking about it conspicuously. Imagine Hartford without Aetna. It would be like moving the pyramids from Egypt, the Yankees from the Bronx, or the casinos from Las Vegas. Or you pick the simile. Point is, the deafness of State officials and their impossible regulatory and taxation agendas could drive the pyramids across the Nile. The principle is simple: it’s like the new “overhead tolls” that will forever increase in price with no pain, since politicos can appropriate funds and then raise tolls largely out of sight or interest until it is too late. That happened in Connecticut, long the answer to New York’s wild taxation and regulation environment. Too bad, but the toll just got higher and higher until suddenly someone noticed. Sad day for Hartford and all that it stood for these many years. “Check please, waiter…” or is that “Tray Conveyance Strategist”?… H.W. Kaufman Financial Group’s Chairman, President, and CEO, Alan Jay Kaufman, has joined the School of Risk Management (SRM), Insurance and Actuarial Science Board of Overseers at the St. John’s University Peter J. Tobin College of Business in New York. Mr. Kaufman’s and the group’s longstanding dedication to insurance education includes programs inside the company and in academia. One result: Kaufman Financial Group has reduced the average age of its more than 1,700-person employee base to 40.3 years—compared to the industry average of 54 years. Read that again, please. Congratulations, Alan.[IA] 4 June 26, 2017 / INSURANCE ADVOCATE

VOLUME 128 NUMBER 12 JUNE 26, 2017

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

CINN MEDIA, INC.

INSURANCE ADVOCATE® (ISSN 0020-4587) is published bi-monthly, 20 times a year, and once a month in July, August, September and December by CINN ESR, Inc., 1030 Lake Street, Greenwich CT, 06831. Periodical postage paid at Greenwich, CT and additional mailing ofﬁces. POSTMASTER Send address changes to Insurance Advocate®, P.O. Box 9001, Mt. Vernon, NY 10552. Allow four weeks for completion of changes. SUBSCRIPTION RATES $59.00 US, Canada $65.00, International $135.00. TO ORDER Call 914-966-3180, fax 914-613-1595, write Insurance Advocate® PO Box 9001, Mt. Vernon, NY 10552 or visit www.Insurance-Advocate.com. INSURANCE ADVOCATE® is a registered trademark of CINN ESR, Inc. and is copyrighted 2017. All rights reserved. No part of this magazine may be reproduced in any form without consent. Trademark registered U.S. Patent and Trademark Ofﬁce.

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

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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

8864 Developmental Organizations 8865 Residential Care Facility Hotel/Motel 9052 Hotels NOC 9058 Restaurants in Hotels

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

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[ G UEST AR T I C L E ]

B Y D AV I D R O S E L L

Millennials: Plan for Retirement Now or Pay the Price Later uMillennials are a stressed out generation. A study by the American Psychological Association reported that the group of Americans in their early 20s to late 30s came in at a 5.4 stress level on a scale of 1-10, higher than the American average of 4.9. Among the things keeping them up at night are predictions of being the first generation that will be less well-off than their parents—and that includes retirements that potentially will be less secure. No longer do millennials have the pensions to look forward to in retirement like their parents and grandparents before them, and no longer do they have the confidence that Social Security will help at least supplement some of their retirement income. “Every generation has had its own set of trials and adversaries to conquer,” says David Rosell, financial professional and author of Keep Climbing: A Millennial’s Guide to Financial Planning (www.DavidRosell.com). “However, today’s generation of young adults faces a uniquely challenging environment. And saving mon-

6 June 26, 2017 / INSURANCE ADVOCATE

ey for retirement is a luxury that many just can’t afford.” Rosell goes on to say that sometimes millennials have to struggle for a while in order to acquire a sound financial foundation for the future. He offers some tips to millennials for improving the odds their retirement will be a little more stress-free: • Start saving and investing early. If it’s true that the early bird catches the worm, it’s certainly true that the early investor catches a sound retirement. If you start investing $2,000 a year for seven years in an IRA (Individual Retirement Account) at the age of 19, you could be a millionaire by age 65. While it might not be practical for most 19-year-olds to invest $2,000 a year, Rosell says, the point is that making sacrifices and saving or investing money early makes life much easier down the road. • Be patient, it’s a long road ahead. Patience isn’t always the word that comes to mind when we think about

David Rosell (www.DavidRosell.com), author of Keep Climbing: A Millennial’s Guide to Financial Planning, and Failure is NOT an Option, is a soughtafter speaker who has addressed international audiences including the Million Dollar Round Table. He is a recipient of the Retirement Distribution Certificate from the University of Pennsylvania’s Wharton School of Business, and has been featured on NPR and FOX Business News. His company, Rosell Wealth Management, was a select finalist in 2008 for the management of the $500 million Oregon 529 College Fund. He is the past chairman of the Bend, Ore. Chamber of Commerce, the City Club of Central Oregon, and his Toastmasters chapter. With a current tally of more than 65 countries on four different continents, Rosell has a love of extreme travel and adventure.

millennials. However, if you are working your first or second fulltime job, and beginning to put money into investment accounts, you need to remember that retirement is a long way down the road. “The current stock market volatility can be a very emotional time for investors,” Rosell says. “But the worst move one can make in the middle of such turbulence is to bail. Many investors abandon long-term strategies for the presumed safety of cash. But millennials have time on their side to be patient with their investments.” • Don’t be your own worst enemy. Obtaining guidance from a financial advisor can help millennials live the life they imagined during their working years and once they retire. The economy will go through ups and downs during your lifetime, but having a financial professional to guide you can improve your financial future and keep you from making some common, costly mistakes. “There is no greater value than peace of mind when it comes to your investments,” Rosell says. “The time for millennials to start thinking long term is now, before they get too far along in their career and realize they are going to have to start playing catch-up.”[IA]

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[ NEWS NOTES ]

Educational Programming on Autonomous Vehicles uMALVERN, Pa.—The Institutes Griffith Insurance Education Foundation is collaborating with The Council of State Governments, or CSG, to provide policymakers with non-advocative, nonpartisan educational programming that examines insurance issues surrounding autonomous vehicles, including the potential shift in liability from drivers to auto and tech companies, which is just one of the issues that policymakers may face as self-driving car technology evolves. On June 13, a select group of the nation’s transportation policymakers will attend two sessions organized by CSG and The Griffith Foundation, highlighting the insurance and liability issues associated with autonomous vehicles. The sessions will take place during the 2017 CSG Autonomous & Connected Vehicles Policy Academy in Detroit on June 12-14, and will feature a Griffith-selected academic, legal scholar Robert Peterson of Santa Clara University. “Both The Griffith Foundation and CSG are excited to work together on providing education that examines the impact of autonomous vehicles on insurance,” said Frank Paul Tomasello, program director at The Griffith Foundation. “Our commitment to delivering nonpartisan, nonadvocative programming for the benefit of public policymakers is at the core of our organizations’ relationship.” On May 23, CSG and The Griffith Foundation presented a webinar that highlighted innovations in the automobile industry and its implications for insurance. The two organizations also recently collaborated on four on-site sessions this spring: March 22 in Denver, Colorado; March 28 in Olympia, Washington; April 19 in Hartford, Connecticut; and April 26 in Montgomery, Alabama. At these sessions, speakers addressed insurance and policy concerns of automakers in each locale as well as local perspectives on autonomous vehicle activities from state departments of transportation, research universities and planning organizations. “CSG and The Griffith Foundation

“The Griffith Foundation has been a great partner in bringing these essential conversations to CSG members, and the policy academy will be a great continuation of that partnership and those conversations.”

share a belief that the future of insurance will be a key nut to crack for states as autonomous vehicle policy is debated in the years ahead,” said Sean Slone, director of transportation and infrastructure policy at CSG. “The Griffith Foundation has been

a great partner in bringing these essential conversations to CSG members, and the policy academy will be a great continuation of that partnership and those conversations.” The Institutes Griffith Insurance Education Foundation is a 501(c)(3) notfor-profit, non-advocative educational organization dedicated to providing unbiased information about risk management and insurance through educational programs targeting students and public policymakers. The Griffith Foundation is affiliated with The Institutes, the leader in delivering proven knowledge solutions that drive powerful business results for the risk management and property-casualty insurance industry. For more information, visit GriffithFoundation.org. Founded in 1933, The Council of State Governments is our nation’s only organization serving all three branches of state government. CSG is a region-based forum that fosters the exchange of insights and ideas to help state officials shape public policy. This offers unparalleled regional, national and international opportunities to network, develop leaders, collaborate and create problem-solving partnerships. For more information, visit www.csg.org.[IA]

The Knowledge Center uMALVERN, Pa.— The Institutes CPCU Society, a community of credentialed property-casualty insurance professionals who promote excellence through ethical behavior and continuing education, has announced its newest member benefit, The Institutes CPCU Society Knowledge Center. The Knowledge Center, which officially launched in late 2016, offers CPCU Society members convenient, online access to carefully curated and cutting-edge educational resources that will help members advance in their career and meet the changing demands of the risk management and insurance industry. More than 180 educational resources are currently housed in The Knowledge Center, including webinars, articles and other materials—and new resources are continually added. “We are excited to present this benefit to our valuable members,” said Michael Koscielny, CPCU, CIC, ARE, president and

More than 180 educational resources are currently housed in The Knowledge Center, including webinars, articles and other materials…

chair of the CPCU Society Leadership Council. “In our rapidly changing industry, new issues regularly arise that require professionals to quickly learn and adapt in order to succeed. We’re pleased to offer Society members professional development opportunities through The Knowledge Center that will help them address these challenges.” CONTINUED ON PAGE 8

INSURANCE ADVOCATE / June 26, 2017 7

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[ NEWS NOTES ] CONTINUED FROM PAGE 7

The Knowledge Center houses content on timely, relevant topics, such as cyber risk management and leadership strategies. All content on the platform is categorized by career stage and interest to allow for a highly personalized learning experience, and it is regularly refreshed to ensure that members are continually engaged in industry trends. “Engaging members in lifelong learning is a core focus of the CPCU Society,” Koscielny said. “The Knowledge Center provides an easy and convenient way to stay well-informed about the industry and to continue professional development efforts. In the short amount of time that The Knowledge Center has launched, we have already seen many of our members actively using the platform, and we are thrilled with the feedback we’ve received so far.” All content consumed through The Knowledge Center is automatically reported for program credit through The Institutes Continuing Education (CE) for CPCUs program. For more information on the CE for CPCUs program, go to CEforCPCU.TheInstitutes.org/[IA]

Looking to buy, sell or hire, merge, sublesse, or simply promote an agency or product?

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EFFECTIVE IN MORE WAYS THAN ONE! For more information, call Gina Marie Balog at 914.966.3180, x113

gmb@cinn.com www.insurance-advocate.com 8 June 26, 2017 / INSURANCE ADVOCATE

Commercial Insurance Prices “Nearly Flat” uARLINGTON, VA—Commercial insurance prices in the U.S. were nearly flat during the first quarter of 2017, according to leading global advisory, broking and solutions company Willis Towers Watson’s (NASDAQ: WLTW) most recent Commercial Lines Insurance Pricing Survey (CLIPS). The survey compared prices charged on policies written during the first quarter of 2017 to those charged for the same coverage during the equivalent quarter in 2016. Price changes reported by carriers averaged less than one percent for the sixth consecutive quarter, following a moderating trend in price increases that began in the first quarter of 2013. Price changes in the first quarter for most lines of business were fairly consistent with changes reported in the fourth quarter. Four lines (workers’ compensation, commercial property, directors and officers, and surety) indicated modest price decreases. The outlier in the results continues to be commercial auto, where meaningful price increases were again reported. For most other lines, price changes fell in the low single digits. Price changes were fairly similar across segments, though slightly positive for small accounts, and flat for mid-market, large and specialty accounts. “Despite ample capital and benign claim cost inflation trends, the commercial P&C insurance market has exercised considerable discipline as a whole over the past couple of years,” said Serhat Guven, Americas Property & Casualty sales practice leader, Willis Towers Watson. “Insurers have held the line on trading profitability for volume, while still responding as needed to emerging trends, e.g., commercial auto on the high end, and workers’ compensation on the low end.” CLIPS data are based on both new and renewal business figures obtained directly from carriers underwriting the business. CLIPS participants represent a cross-section of U.S. property and casualty insurers that includes many of the top-10 commercial lines companies and the top-25 insurance groups in the U.S. This particular survey

Price changes in the first quarter for most lines of business were fairly consistent with changes reported in the fourth quarter. Four lines (workers compensation, commercial property, directors and officers, and surety) indicated modest price decreases.

compared prices charged on policies written during the first quarter of 2017 to the prices charged for the same coverage during the same quarter of 2016. For the most recent survey, data were contributed by 39 participating insurers representing approximately 20% of the U.S. commercial insurance market (excluding state workers’ compensation funds).[IA]

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[ IN FOCUS ]

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

Selling Insurance uSelling insurance. It’s what we do every day, right? For some agencies, yes— for others it seems like taking out the trash and selling insurance are at about the same level. Why do so many agencies put sales to the back burner? In our experience, there are several reasons why sales may be second to everything else under the sun but the main driver is the agency’s leadership. When agency leaders never mention sales, good or bad, the team goes about servicing accounts as the priority. Now, service is incredibly important especially if it’s strategically designed to drive referrals, account rounds, upsells and new opportunities. But changing a vehicle without reviewing the need for additional coverage…well, that is simply completing a transaction but not delivering a customer experience. So if you are an agency owner feeling like you need a little tap on the bum to get sales reinvigorated in your agency, where do you start? Where you always need to start—with yourself. Take a look at where you have been spending your time. Is it sales and marketing? If it’s not, then let’s be honest and focus on what agency leadership actually focuses on. You have to turn over a new leaf and dedicate time yourself on agency sales. Now this may be different than what you’re used to. If you are an agency owner with a high sales drive, you most likely have been focused on sales for yourself. If the agency’s biggest investment every month is payroll, imagine if you can get your team to sell even two, three or four policies more per month. You now have the power of scale. You want to start by pulling production. Yes, this means opening the good old management system and finding out for the past six months how much revenue, premium and policies were sold, as well as who sold them. Every management system has a new business report. Don’t be shy, embrace it. Now set a goal for the next six months. Can you do 10% more, 15% or 20% more? Be reasonable, you can always increase the goal if you are doing too well. Next, start talking to your crew. You will inevitably hear a whole lot of excuses. Here are a few of our favorites: 10 June 26, 2017 / INSURANCE ADVOCATE

• I’m too busy • No one ever sends me their dec pages • Quotes are on average three-to-five business days out • I email the quote and never hear back • I’m not a sales person What people are sharing with you is twofold. First, many people in America hate the S word: sales. They think it’s slimy, arrogant and persuasive and are totally uncomfortable being labeled a salesperson. Let’s be honest. When someone calls in to get a quote, that’s not true sales, that’s inbound lead generation. We need to share with them a better way to approach new business mentally. Next, what you will most likely also hear is a lack of true processes and procedures. In no agency in America should a standard personal lines quote not be completed same-day. Too often the team lacks the right processes and priorities, so they chase their tails following up on cancellation paperwork for a client leaving you, rather than quoting insurance. Like a hamster on a wheel, they are taking payments, sending out ID cards and doing transactions rather than account management. In your agency, you must decide and define everyone’s roles for success. Really look at your processes to determine if they are built around a strong sales customer experience. Once you are armed with a strategy, it’s time to have bi-weekly meetings to discuss sales. I know, what will you say and do? It will be okay! We recommend the following meeting format: • Everyone shares a success • Everyone shares a lesson • Review Metrics • 10-Minute Training • Discussion on any bottlenecks • One-word close This keeps the meeting on track, positive and moving. Also, easy on you to run and not spend too much time preparing. The key to converting into a sales culture is to stay consistent. You can’t sometimes run the numbers or sometimes have meetings. This shows the team you don’t care and that they can get away with slacking. If you want your team to be committed, you have to be committed as well.

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

If this all seems too much, don’t worry—we understand. Fifty-two percent of agents have never had sales training (yikes!). We created a new APPX Six-Month Sales Program. This includes two onsite training days, Video Training, Bi-weekly Sales Training, and Tracking of Your Team’s Metrics. Learn more here: https://www.agencyperformancepartners.com/services/appxsales/. On average, clients see 44% increase in written premium in just three months![IA]

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NYIA

Cyber Risk, Insurance Fraud, and Honors Mark Annual Gathering

uThe City of Good Neighbors, better known as Buffalo, was the perfect backdrop for the New York Insurance Association (NYIA) Annual Conference— People. Purpose. Passion. Buffalo is a dynamic city that has experienced a bit of a renaissance with a bustling downtown and vibrant waterfront area. The insurance industry likes to think of itself as good neighbors. NYIA often describes insurance as the financial backbone of communities, and our industry’s volunteerism and philanthropic giving is part of our corporate culture. The conference is a perfect time for the New York property and casualty industry to gather and discuss ways we can work together for the betterment of our policyholders. More than 250 industry representatives came together this year May 31 through June 2. The event generat-

Debating Disruptors panel: Michael Cronin, Principal with Cronin Consulting; Alex Tsetsenekos, Founder of Archimedes Analytics; moderator Bernard Turi, Senior Vice President, General Counsel, General Auditor & Chief Risk Officer, Utica National Insurance Group 12 June 26, 2017 / INSURANCE ADVOCATE

The NYIA Annual Conference is always a must-attend for anyone who wants to stay apprised of the issues occurring in one of our country’s largest, and often most challenging, insurance marketplaces.

ed great discussions on a variety of topics and featured renowned industry experts as well as representatives from the New York State Department of Financial Services and legislators from the Buffalo area. One topic du jour is information security and the former head of cyber for the FBI, James Trainor, who is now senior vice president with Aon Cyber Solutions Group, kicked off the conference by sharing his keen insights on The Changing Tides of Cyber Risk. His opening talk was followed by a dynamic discussion on Fighting Fraud Together, which featured moderator Floyd Holloway, Counsel, State Farm Mutual Automobile Insurance Company, and panelists Kevin Gallagher, director field operations–Northeast Region, National Insurance Crime Bureau; Frank Orlando, director of criminal investigations–Insurance Frauds Bureau, New York State Department of Financial Services; David Rioux, vice president special investigations, Erie Insurance Group; and Candace Vogel, chief special investigations unit, Erie County District Attorney’s Office. Later that morning Scott Fischer, executive deputy superintendent of the New York State Department of Finan-

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Fighting Fraud Together Panel: Kevin Gallagher, National Insurance Crime Bureau; Frank Orlando, New York State Department of Financial Services; Moderator Floyd Holloway, State Farm Mutual Automobile Insurance Company; Candace Vogel, Erie County District Attorney’s Office; David Rioux, Erie Insurance Group

cial Services (DFS) delivered the keynote address outlining the agency’s various initiatives, including revamping the market conduct exam process and increased involvement in the National Association of Insurance Commissioners. He also emphasized that one of DFS’s top priorities is efforts to stop fraud. Rounding out the day was an engaging session on Debating Disruptors: Two Sides of the Same Coin? moderated by Bernard Turi, senior vice president, general counsel, general auditor and chief risk officer, Utica National Insurance Group, with panelists Michael Cronin, principal, Cronin Consulting Services, Inc., and Alex Tsetsenekos, founder, Archimedes Analytics LLC. The penultimate session of the event was the Thursday night dinner, which featured live music from Me and the Boys, a band local to Buffalo with industry veteran Thomas Wronski of United Frontier Mutual Insurance Company on bass. NYIA was also proud to honor Jay Martin of Medical Liability Mutual Insurance Company as the recipient of the Chair’s Distinguished Service Award. Jay’s contributions to both the industry and to NYIA are vast and his work on behalf of property and casualty insurance companies is commendable. A Town Hall Meeting was first up on the agenda for the final day of the conference. This year’s program, moderated by William Melchionni, deputy head, U.S. Federal and State Government Affairs, American International Group, Inc., had a local twist with Buffalo-area legislators join-

ing the association this year. NYIA was pleased to have Senator Chris Jacobs, Assemblymember Stephen Hawley, Assemblymember Crystal PeoplesStokes, and Assemblymember Raymond Walter join us and talk about their priority issues and perspectives on property and casualty legislation being considered. Harry Starrett, senior client strategist with New England Asset Management Group switched gears from New York State to the federal landscape and its impact on the investment environment. He provided astute analysis of the economic realities at play and what insurance companies may expect moving forward, in Washington’s Economic Agenda and the Outlook for Capital Markets. Always last, but never least, on the program was the annual Small Company Roundtable moderated this year by Norman Orlowski, president and CEO of Erie and Niagara Insurance Association. The roundtable is the perfect opportunity for regional companies to discuss common issues of concern and best practices. The NYIA Annual Conference is always a must-attend for anyone who wants to stay apprised of the issues occurring in one of our country’s largest, and often most challenging, insurance marketplaces. Save the date now for next year’s program that will begin on May 30 in Saratoga Springs, New York.[IA]

Harry Starrett of New England Asset Management Group delivers his presentation on Washington's Economic Agenda INSURANCE ADVOCATE / June 26, 2017 13

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This year’s Chair’s Distinguished Service award recipient Jay Martin of Medical Liability Mutual Insurance Company, with NYIA Board of Directors Chair Steven Coffey.

Mark Prechtl, Chautauqua Patrons Insurance Company; NYIA President Ellen Melchionni; James Trainor of Aon; Elizabeth Heck of Greater New York Mutual Insurance Company.

Town Hall Panel with Senator Chris Jacobs; Assemblymember Stephen Hawley; Assemblymember Crystal Peoples-Stokes; Assemblymember Raymond Walter; and moderator William Melchionni of American International Group, Inc.

14 June 26, 2017 / INSURANCE ADVOCATE

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Aree you reeady y? Aree your clients reeady?

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[ I N T H E A S S O C I AT I ON S ]

A Wave of Success…

PIANJ PIANY ANNUAL CONFERENCE

Thousands of agents and insurance industry professionals convened for three days of fun, networking, and business on the Jersey Shore at the PIANJ/PIANY Annual Conference at Harrah’s Casino Resort in Atlantic City, N.J., June 11-13. 16 June 26, 2017 / INSURANCE ADVOCATE

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This highly successful event was a place to network and be seen at exciting and fun parties each night; a tear-jerking keynote address by CBS’s Steve Hartman, host of “On the Road”; an expansive, sold-out trade show; and cutting-edge educational seminars with a host of topics important to agents for continuing education credit. Sold-out Trade Show

PIA’s Young Insurance Professionals rocked the conference, kicking off the first evening for everyone. Attendees danced at Harrah’s Eden Lounge, an exclusive bar and nightclub, that pulsated with energy. The Jeremiah Hunter band rocked the house as attendees unwound with dancing and socializing. The Nerds at PIA’s Poolside Paradise Reception

The biggest insurance exhibition in the Northeast was bursting at the seams with hundreds of vendors talking to agents and brokers who were there to check out the latest innovations, products, and markets, and enjoy the networking lounge that featured hors d’oeuvres and drinks while they made business contacts and enhanced their knowledge. Conference attendees enjoyed abundant refreshments and a hot buffet, hors d’oeuvres at the networking reception, in addition to snacks like hot dogs, pretzels and countless goodies in the trade show. Smartphone users played a game on PIA’s conference app, which encouraged everyone to share contact information and make new connections. David Johnson, senior account executive of Trust Financial Services won $100 for great participation in a pool of app game winners. Other attendees won PIA’s cash door prizes, overnight stays at Harrah’s, and countless gifts offered by exhibitors.

Renowned Jersey Shore cover band The Nerds shook the house at PIA’s Poolside Paradise reception Monday evening. Everyone had a great time meeting with old friends and making new connections, while enjoying appetizing dinner stations and dancing in Harrah’s tropical pool club!

YIP Nitecap

CONTINUED ON PAGE 18

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Education

CHRIS PARADISO, CPIA, OPENED THE CONFERENCE ON SUNDAY, TEACHING EMBRACE YOUR FUTURE AS AN INDEPENDENT AGENT , FOR THREE CREDITS.

KEYNOTE SPEAKER, STEVE HARTMAN

Steve Hartman Keynote Address PIANY President John C. Parsons II, CIC, CPIA, AAI, opened the extravagant buffet lunch as master of ceremonies. PIANJ immediate past President Donald F. LaPenna Jr. introduced the new PIANJ officers, and PIANJ President Kacy Campion Renna, CIC, welcomed the new generation of professionals, including the new NJYIP administration, before introducing Keynote Speaker Steve Hartman. Having grown up in the PIA family, Campion Renna shared her commitment to the association, invited members to get more involved and to help expand PIA membership. Thanking immediate past President LaPenna and all of PIANJ’s board and committee members, she outlined PIA’s numerous accomplishments and foretold of the association’s work this year. “Professional, independent agents have a secret weapon—our local ‘on-the-ground’ presence in New Jersey (and New York)… Imagine if everyone in this room and everyone at their offices were able to, in unison, shout out ‘Independent Agents are FREE and we can save you money!’” she said. “We CAN make that happen… Watch for our ‘Go with a Pro’ campaign this fall—so we can all speak with one important, independent and successful voice.” As she introduced Keynote Speaker Steve Hartman, Campion Renna reminded the insurance professionals in the room, “You do good things,” citing a 35-year sponsorship of Special Olympics among the many ways PIA members give to their communities. Hartman shared clips from his CBS Sunday morning show “On the Road,” sharing lessons he has learned along the way. Hartman said his biggest lesson is that people are inherently good—not nearly as bad as we are led to believe by watching the news. Hartman also shared his father’s obsession with having good insurance and admiration for his insurance agent. After putting an audience member on the spot with an impromptu interview, he explained how his grandfather’s neighbor, an insurance agent, made sure his family had coverage, saving the family after a tragic accident that would have devastated them. 18 June 26, 2017 / INSURANCE ADVOCATE

JOHN FEAR, CPIA, CISR, CPSR, PARTICIPATED IN SUNDAY’S OPENING SESSION AND TAUGHT CYBER LIABILITY–THE NEXT LEVEL OF EXPOSURE AND COVERAGE , AS WELL AS DELIVERING VALUE IN A PRICE-DRIVEN MARKETPLACE , FOR TWO CREDITS EACH ON MONDAY.

STEVEN D. LYON, CPCU, CIC, CRM, AAI, ARM, AIS, CRIS, MLIS, TAUGHT TWO CLASSES, EACH FOR THREE CREDITS: DON’T GET CAUGHT UNDER WATER! UNDERSTANDING THE NFIP , ON MONDAY; AND HE CLOSED THE CONFERENCE WITH THE RENEWAL TRAP– WHAT ARE YOU LEAVING ON THE TABLE?

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[ IN TH E A S S OC IATI ONS ] Fun Run

PIANJ Change of Administration

The annual Fun Run for Special Olympics New Jersey, a 35year tradition on the Boardwalk continued on Tuesday morning at 7 a.m. To date, PIANJ and NJYIP have raised more than $3.8 million for SONJ. Participants ran, jogged, and walked, and celebrated the fundraising and race accomplishments with Special Olympics athletes and officials during the celebratory breakfast that followed. Special Olympics Young Athlete Brooke joined Jimcor’s team (which was the highest agency fundraising winner).

PIANJ 2017-18 OFFICERS

PIANJ 2017-18 PIANJ officers: + passing of the gavel • President Kacy Campion Renna, CIC • President-elect Lloyd H. “Rip” Bush Jr., CPIA • Vice President Steven C. Radespiel • Vice President Bruce Blum • Treasurer Michael DeStasio Jr. • Secretary Tom Wilkens • PIANJ National Director Keith A. Savino, CPIA • Immediate past President Donald F. LaPenna Jr.

CHECK DONATION OF $107,000 FROM PIA’S FUN RUN TO SONJ

In all, the Fun Run raised $107,000 for the cause, with presenting sponsor FMI bringing more than $74,000. FMI’s Kyle Price won the race with an amazing time of 18:17 mins. Victoria Thaler, also of FMI, was the first female to cross the finish line, with a time of 22:03 mins.

PIA COMMITTEE MEMBER LISA GLESAIS, OF FMI ACCEPTS TWO FUNDRAISING TROPHIES ON BEHALF OF FMI, WHICH RAISED MORE THAN $74,000

IMMEDIATE PAST PRESIDENT DONALD F. LAPENNA JR., CEREMONIOUSLY PASSES THE GAVEL TO PIANJ PRESIDENT KACY CAMPION RENNA

PIANJ-YIP 2017-18 PIANJ-YIP officers • President Aaron Levine • Vice President Logan True • Vice President Brianna Gonzala • Treasurer Michael S. DeStasio • Secretary Ryan Cervasio • Immediate past President Natalie D’Agostino Meeting with the DOBI Two top officials from the Department of Banking and Insurance, Assistant Commissioners Peter Hartt and Kristine Maurer, joined PIANJ leaders during the conference to discuss PIANJ regulatory concerns, including certificates of insurance; ride hailing; and private flood insurance. “We appreciate the support and hard work of DOBI on behalf of PIA and the insurance buying public of New Jersey,” said PIANJ President Kacy Campion Renna. CONTINUED ON PAGE 20

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Awards

COMPANY PERSON OF THE YEAR KAREN MURDOCK, CHIEF MARKETING OFFICER AND VICE PRESIDENT OF MARKETING & DISTRIBUTION, PALISADES COS., PLYMOUTH ROCK ASSURANCE

DIRECTOR OF THE YEAR, CONNIE MAHONEY

COMMUNITY SERVICE PIANJ PAST PRESIDENT STEVEN A. REICHMAN, CIC

DISTINGUISHED SERVICE, WILLIAM G. RADER, DEPARTMENT OF BANKING AND INSURANCE (RETIRED)

AGENT OF THE YEAR PIANJ PAST PRESIDENT STEPHEN P. TAGUE, CPIA

DISTINGUISHED SERVICE, LEON J. ZIMMERMAN, PIANJ LEGISLATIVE REPRESENTATIVE (RETIRED)

Save the Date! Plans are already underway for an even bigger and better event next year at Harrah’s, so SAVE THE DATE: June 10-12, 2018! 20 June 26, 2017 / INSURANCE ADVOCATE

LIFETIME ACHIEVEMENT JAY S. FISHMAN, TRAVELERS INSURANCE CO. (POSTHUMOUSLY)

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[ O N T H E L E VE L ]

N. STEPHEN RUCHMAN, CPIA

PIA in Action uSeveral years ago at a PIA board The forces fighting against meeting, we began to discuss an issue insurance agents are more brought to us by a member through than formidable, and they PIANY’s bi-annual Advisory Councils. Basically, when the New York State aren’t sitting quietly while Department of Financial Services and PIA fights the good fight. Insurance transitioned its licensing requirements to an agent’s birthdate in 2012, the regulation had unintended consequences: While an agent’s license renews on his or her birthday, the agency’s corporate licenses renews on Oct. 31. who supported a bill to eliminate the need Though the move to birthdate renewal for insurance agents and brokers to take expirations was a positive one, it caused duplicate CE courses for both their indiagencies to have an even greater burden vidual and agency insurance licenses. The of continual monitoring and follow up… bill would exempt business-entity licenses Keeping track of continuing education from CE requirements when all sublicenscredits for multiple licenses for each pro- es can demonstrate they have adequate CE ducer is a big compliance headache for credits to support their individual licenses agencies, as it has become extremely in effect at the date of renewal. It is a siminvolved and confusing. Worst ple fix that the lawmakers recof all: overlapping license expiognized and we thank them. rations cause many agencies to And there’s more good have to double up on education news: The bill passed both the credits simply to comply with Assembly and Senate. It now timing rules. will be sent to Gov. Andrew M. Now, I’ve always believed in Cuomo for his consideration education—it’s important for and there’s a good chance it will all agents. But, being forced to be passed into law this year. A take additional, unnecessary lot of hard work went into this SENATOR education is a superfluous burby PIA staff and agent volunden. It certainly is not business JAMES L. SEWARD teers and we urge the governor friendly! The current rule puts to sign it into law. To all of the onus on agents that they are those who have called their guaranteeing that all sublawmakers, sent emails and licensees have met up to three contributed in other ways – different state education This is your association in requirements for the year. action. In order to resolve the I’ve been part of PIA and a problem, PIA approached the board member for decades and NYDFS back in 2012. Initially, I’m always stunned when a felwe were politely pushed aside, low agent tells me they don’t parASSEMBLYMAN though in fairness, I don’t ticipate in PIA. It is almost a KEVIN A. CAHILL believe the department really cliché to say that the most active understood the problem. But, PIA persist- PIA members get the most out of their pared and after several meetings, the associa- ticipation—but, with regard to membership, tion decided to take this to the legislative participation and other contributions, I just arena. don’t get it. Truly, one gets back more than I’m proud to say that PIA approached he or she puts into it. And believe me; I have Sen. James L. Seward, R-51, and had conversations about PIA membership Assemblyman Kevin A. Cahill, D-103, with many agents. When I ask why an agent

N. Stephen Ruchman, CPIA, is a retired independent agent 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 he has sat on or chaired nearly every committee including the Executive Committee and the Long Island Advisory Council and PIANY’s Political Action Committee. He can be reached via email at: nsruchman@gmail.com.

wouldn’t invest in their livelihood by supporting PIA, the most common answer is something to the effect of: “PIA does a great job advocating for agents, but they are going to do it whether I am in or not.” Bologna. The forces fighting against insurance agents are more than formidable, and they aren’t sitting quietly while PIA fights the good fight. The Trial Lawyers Lobby alone brings millions of dollars each year to bolster politicians in Albany who will support their cause, which almost invariably is against the insurance industry. I can point to countless ways PIA is always fighting to help independent agents and the independent agency system, including getting this CE reform bill passed through the Legislature.[IA]

Serving New York, New Jersey, Pennsylvania and Connecticut Since 1889 www.insurance-advocate.com INSURANCE ADVOCATE / June 26, 2017 21

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[ COURTSIDE ]

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

No Liability for Dog That Ran Down Street Trailing Loose Bike Rack Behind Scavetta v Wechsler Edited by Lawrence N. Rogak In this negligence case, defendant tied his dog’s leash to a bicycle rack on a Manhattan street, apparently unaware that the rack was not secured to the sidewalk. The dog began to run through the streets, dragging the rack behind him, and eventually the plaintiff tripped over the rack and was injured. The Appellate Division upheld summary judgment for defendant, ﬁnding that under prevailing New York case law, a dog owner can only be liable for injuries if the dog was known to have vicious propensities, and not for other types of negligence in their ownership of the dog that might cause injuries.—LNR Plaintiffs appeal from the order of the Supreme Court, New York County (Carol R. Edmead, J.), entered April 28, 2016, which granted defendant’s motion for summary judgment dismissing the complaint, and denied plaintiffs’ cross motion for summary judgment on the issue of liability. The primary question raised in this appeal is whether a negligence claim may be asserted against a defendant who attached a dog’s leash to an unsecured bicycle rack, which was put into motion when the dog dragged it through the streets and into the plaintiff, causing injury. We answer in the negative, on constraint of the Court of Appeals’ Bard rule that “when harm is caused by a domestic animal, its owner’s liability is determined solely by application of the rule’ . . . of strict liability for harm caused by a domestic animal whose owner knows or should have known of the animal’s vicious propensities.” Therefore, we must affirm the order of the motion court, which granted defendant’s motion for summary judgment dismissing the complaint. At the same time, we take this opportunity to acknowledge plaintiffs’ persuasive argument that the Bard rule may be neither prudent law nor prudent policy. As 22 June 26, 2017 / INSURANCE ADVOCATE

As this case illustrates, a plaintiff cannot recover for injuries caused by a dog that has not demonstrated vicious propensities, even when the injuries are proximately caused by the owner’s negligent conduct in controlling or failing to control the dog. this case illustrates, a plaintiff cannot recover for injuries caused by a dog that has not demonstrated vicious propensities, even when the injuries are proximately caused by the owner’s negligent conduct in controlling or failing to control the dog. This rule immunizes careless supervision of domestic animals by their owners and leaves those harmed in the State of New York without recourse.

Facts and Background On March 24, 2014, defendant was walking his dog on the way to meet a friend at a pizzeria on Lexington Avenue between 93rd and 94th Streets in Manhattan. Upon arriving at the restaurant, he tied the 35pound dog by its leash to a metal bicycle rack, which weighed about five pounds and had dimensions of approximately 3 feet by 3 feet by 2 feet. The rack was of the sort to which cyclists or bicycle delivery workers ordinarily lock their bicycles for security outside of buildings. Defendant did not assure himself, however, that the rack was secured to the ground or to anything else. As he reached the entrance of the pizzeria, defendant heard the rack scraping against the sidewalk and turned to see his dog running down the street, pulling the rack with its

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

leash. It appeared to defendant that the dog started to follow him as he approached the restaurant but was frightened by the noise of the rack scraping against the sidewalk and began to run. The dog was not chasing anything, but it was running “very fast” and was “panicked.” Defendant started running after his dog, but was unable to catch up to it. Meanwhile, plaintiff Gregory Scavetta was on his way to work, walking north on Lexington Avenue, and began to cross 93rd Street in the crosswalk. As he crossed the street, Scavetta heard the scraping of the rack and saw the dog running straight towards him, dragging the rack behind it. The dog ran past Scavetta and hid underneath a car. Scavetta then took one or two steps toward the dog, to see if it was injured and whether he could disconnect the rack from the leash, but the dog immediately “sprung back out from underneath the car and took off again.” The dog ran back towards Scavetta, still dragging the rack, which struck him. One of Scavetta’s legs got caught in the rack’s crossbars, and, as the dog continued to pull the rack, Scavetta was spun around so that both of his feet went up in the air and he landed on his back. CONTINUED ON PAGE 25

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[ O N M Y R A DA R ]

BA R RY Z A L M A

FBI Finds Insurance Frauds uThe FBI lists the following common insurance fraud schemes in its Insurance Fraud Report at https://www.fbi.gov/statsservices/publications/insurance-fraud: Premium Diversion • Premium diversion is the embezzlement of insurance premiums. • It is the most common type of insurance fraud. • Generally, an insurance agent fails to send premiums to the underwriter and instead keeps the money for personal use. • Another common premium diversion scheme involves selling insurance without a license, collecting premiums and then not paying claims.

“

• Asset diversion is the theft of insurance company assets. • It occurs almost exclusively in the context of an acquisition or merger of an existing insurance company.

”

workers’ compensation insurance at a reduced cost and then misappropriate premium funds without ever providing insurance.

Fee Churning • In fee churning, a series of intermediaries take commissions through reinsurance agreements. • The initial premium is reduced by repeated commissions until there is no longer money to pay claims. • The company left to pay the claims is often a business the conspirators have set up to fail. • When viewed alone, each transaction appears to be legitimate—only after the cumulative effect is considered does fraud emerge.

Massive Storm, Massive Cost • In late August 2005, Hurricane Katrina made landfall along America’s Gulf Coast. • The storm caused approximately $100 billion in economic damages. • Approximately 1.6 million insurance claims were filed, totaling $34.4 billion in insured losses. • Of the $80 billion in government funding appropriated for reconstruction, it is estimated that Insurance Fraud may have accounted for as much as $6 billion.

Asset Diversion • Asset diversion is the theft of insurance company assets. • It occurs almost exclusively in the context of an acquisition or merger of an existing insurance company. • Asset diversion often involves acquiring control of an insurance company with borrowed funds. After making the purchase, the subject uses the assets of the acquired company to pay off the debt. The remaining assets can then be diverted to the subject.

Disaster Fraud Schemes • False or exaggerated claims by policyholders. • Misclassification of flood damage as wind, fire, or theft. • Claims filed by individuals residing hundreds of miles outside the disaster zone. • Bid-rigging by contractors, falsely inflating the cost of repairs. • Contractors requiring upfront payment for services, then failing to perform the agreed-upon repairs. • Charity fraud scams designed to misappropriate funds donated for disaster relief.

Workers’ Compensation Fraud • Some entities purport to provide 24 June 26, 2017 / INSURANCE ADVOCATE

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

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[ O N M Y R A DA R ] IN THE ASSOCIATIONS The Government Response • On September 8, 2005, the Attorney General created the Hurricane Katrina Fraud Task Force (HKTF). • The HKTF was designed to deter, investigate, and prosecute disasterrelated federal crimes. • The HKTF has a zero-tolerance policy for fraud related to Hurricane Katrina. • In one Katrina-related fraud case alone, the FBI received more than 70 indictments and over 60 guilty pleas (as of March 2007). Health Care Fraud The FBI reports that health care fraud costs the country tens of billions of dollars a year. It’s a rising threat, with national health care expenditures estimated to exceed $3 trillion in 2014 and spending continuing to outpace inflation. Recent cases also show that medical professionals continue, and may be more willing, to risk patient harm in furtherance of their schemes. The FBI is the primary agency for exposing and investigating health care fraud, with jurisdiction over both federal and private insurance programs. We seek to identify and pursue investigations against the most egregious offenders involved in health care fraud through our investigative partnerships with federal, state, and local agencies, as well as our relationships with private insurance national groups, associations, and investigative units. Our field offices proactively target fraud through coordinated initiatives, task forces and strike teams, and undercover operations at https://www.fbi.gov/about-us/investigate/ white_collar/health-care-fraud. [IA]

Serving New York, New Jersey, Pennsylvania and Connecticut Since 1889

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The dog ran off toward Park Avenue. Defendant recovered the dog approximately two hours later, after his dog walker found the dog at Lexington Avenue and 86th Street. Scavetta was taken to Mt. Sinai Hospital and treated for an injury to his left leg. Scavetta and his wife commenced this action, alleging among other things that defendant was negligent or reckless in tying his dog to the unsecured bicycle rack, because he knew or should have known that the dog could pull it. Plaintiffs did not assert a cause of action sounding in strict liability, and stated in their verified bill of particulars that “the dog’s viciousness is not an element of plaintiffs’ cause of action.” Defendant moved for summary judgment dismissing the complaint, arguing among other things that New York State does not recognize negligence as a cause of action for injuries caused by domestic animals. Plaintiffs cross-moved for summary judgment on the issue of liability, noting that they “intentionally did not comment about strict liability in their Bill of Particulars,” since the action “does not involve vicious propensities of the dog.” To the contrary, plaintiffs argued, defendant is liable “for negligently creating an extremely dangerous condition and unreasonable risk of harm to others.” Plaintiffs explained that, “by attaching the dog’s eight-foot leash to an unsecured, flimsy, light metal bicycle rack that defendant knew, or should have known, the dog could easily drag through the crowded streets and sidewalks of New York City, defendant turned the otherwise innocuous metal rack into a dangerous instrumentality.” The court granted defendant’s motion for summary judgment dismissing the complaint, and denied plaintiffs’ cross motion on the issue of liability, citing Court of Appeals precedent holding that negligence is not a viable cause of action where an injury is caused by a domestic animal and that a plaintiff may only recover in strict liability based upon a showing that the owner knew or should have known that the animal had a vicious propensity. The court noted that plaintiffs did not cite any case law to support the proposition that the case was distinguishable on the ground that defendant converted the metal rack into an instrument of harm. The court concluded that it was constrained to dismiss the com-

plaint because “negligence is no longer a basis for imposing liability, and plaintiffs expressly state that they do not pursue a strict liability claim premised upon any propensities of defendant’s dog.”

Discussion The “vicious propensity” doctrine, which provides for strict liability against an owner of a domestic animal that causes harm, where the owner knows or should have known of the animal’s vicious propensities, has been the law in New York since at least 1816. The term “vicious propensity” has become a term of art, having expanded from its ordinary definition to “include the propensity to do any act that might endanger the safety of the persons and property of others in a given situation”, and even includes a nondangerous proclivity where “such proclivity results in the injury giving rise to the lawsuit.” For many years, however, the question lingered whether a plaintiff could bring a common-law negligence claim against an owner of a domestic animal that caused injury, in the event that strict liability was unavailable due to a lack of evidence regarding the animal’s propensities. The Court of Appeals addressed this question in Bard v Jahnke (6 NY3d 592 [2006], supra), where a carpenter who was working on the defendant’s farm was attacked and injured by the defendant’s breeding bull. The Court rejected the plaintiff ’s strict liability claim because there was no evidence that the bull had ever exhibited threatening behavior toward other farm animals or humans. In addition, the Court rejected the plaintiff ’s alternative argument that the defendant was negligent in failing to restrain the bull or warn the plaintiff of the bull’s presence, holding that “when harm is caused by a domestic animal, its owner’s liability is determined solely by application of the strict liability rule articulated in Collier.” The Bard rule was not established without controversy. In its analysis, the four-judge majority of the Court rejected the rule stated in Restatement (Second) of Torts § 518 permitting liability where an owner of a domestic animal is negligent in failing to prevent harm caused by the animal (or intentionally causes the animal to do harm), irrespective of whether any vicious propensity exists. CONTINUED ON PAGE 28

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

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Three judges dissented, reasoning that it would have been “wiser to follow the Restatement rule, as had almost every other state that had considered the question.”[FN1] In the dissenters’ view, the Court had left our state “with an archaic, rigid rule, contrary to fairness and common sense that will probably be eroded by ad hoc exceptions.” Despite the discord over the Bard rule, it has persisted. For example, in Petrone v Fernandez, the Court of Appeals relied on Bard and confirmed that, even where a plaintiff presents “some evidence of negligence”—e.g., the defendant’s violation of a local leash law—the evidence is irrelevant because “negligence is no longer a basis for imposing liability after Collier and Bard.” Two judges concurred in the result “on constraint of Bard,” expressing their view that “it was wrong to reject negligence altogether as a basis for the liability of an animal owner.” Thus far, the Court of Appeals has carved out only one exception to Bard’s bright-line rule. In Hastings v Sauve (21 NY3d 122[2013]), the plaintiff was driving

J U S T

The Court held “that a landowner or the owner of an animal may be liable under ordinary tort-law principles when a farm animal—i.e., a domestic animal as that term is defined in Agriculture and Markets Law § 108(7)—is negligently allowed to stray from the property on which the animal is kept.”

However, the Hastings Court declined to decide “whether the same rule applies to dogs, cats or other household pets,” adding that “that question must await a different case.” The question was answered in Doerr v Goldsmith (25 NY3d 1114 [2015], supra), in which the plaintiff was injured by a dog while riding his bicycle in Central Park. The dog’s owner called the dog from one side of the road, while her boyfriend released the dog from the other side, and the dog ran into plaintiff ’s way; plaintiff struck the dog and fell from his bike, sustaining injuries. This Court, which vacated its original decision finding for the defendants and issued a new decision in light of Hastings, held that a negligence claim could lie “because it was defendants’ actions, and not the dog’s own instinctive, volitional behavior, that most proximately caused the accident.” The case, according to this Court, was “not about the particular actions of an animal that led to a person’s injury. Rather, it was about the actions of a person that turned an animal into an instrumentality of harm.” This Court reasoned that “the dog was in the control of defendants at all times in

her van and was injured when she struck the defendants’ cow, which had wandered from the farm and onto a public road. The Court held “that a landowner or the owner of an animal may be liable under ordinary tort-law principles when a farm animal— i.e., a domestic animal as that term is defined in Agriculture and Markets Law § 108(7)— is negligently allowed to stray from the property on which the animal is kept.”[FN2]

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[ COURTSIDE ] the split second before the accident occurred. Had the one defendant not called the dog, and the other defendant not let it go, plaintiff would have ridden past them without incident.” However, a majority of the Court of Appeals reversed in a short memorandum decision, declaring that “under the circumstances of Doerr and its companion case and in light of the arguments advanced by the parties, Bard constrains us to reject plaintiffs’ negligence causes of action against defendants arising from injuries caused by defendants’ dogs.” The Court further clarified that the Hastings exception to the Bard rule is confined to cases involving “domestic farm animals subject to an owner’s duty to prevent such animals from wandering unsupervised off the farm.”[FN3] In light of this Court of Appeals precedent, we must reject plaintiffs’ negligence claim. Plaintiffs argue that the instant matter is distinguishable from Bard, Doerr, and similar cases involving harm caused by domestic animals, because this case does not involve the nature of an animal acting of its own volition, but concerns an injury that was caused by its owner’s conduct. To be sure, the majority in Doerr left open the possibility that other exceptions to the Bard rule could be recognized where a domestic animal was involved in an injury; indeed, the Court explicitly limited its holding to the particular circumstances of that case.[FN4] And, of course, there are notable factual distinctions between this case

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≥…plaintiffs argue that defendant launched an instrumentality of harm that was not the dog itself but an inanimate object that was put into motion by defendant. and Doerr: Here, plaintiffs allege that defendant caused the injury not by commanding the dog as in Doerr, but by mobilizing a dangerous object when he attached his dog’s leash to the unsecured rack. In other words, plaintiffs argue that defendant launched an instrumentality of harm that was not the dog itself but an inanimate object that was put into motion by defendant. However, the exception plaintiffs would have us recognize here - based on the defendant’s conduct, and not the dog’s, as the cause of the injury - is analogous to CONTINUED ON PAGE 30

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FN1: New York has continued to be “a unique outlier in its rejection of the Restatement (Second) of Torts § 518” (Doerr v Goldsmith, 25 NY3d 1114, 1149 [2015, Fahey, J., dissenting]). FN2: This indicates that the rule is not as broad as when it was originally devised in Bard, and could be properly rephrased as follows: When harm is caused by a domestic animal, its owner’s liability is determined in accordance with the vicious propensity doctrine, unless the animal is a domestic farm animal subject to an owner’s duty to prevent it from wandering off the farm, in which case common-law negligence applies (see Doerr, 25 NY3d at 1154 [Fahey, J., dissenting]). FN3: In Doerr’s companion case, Dobinski v Lockhart, the defendants’ dogs left their farm and wandered onto a road. One of the plaintiffs, riding her bicycle, struck one of the dogs and was severely injured. The Court affirmed the Fourth Department’s grant of summary judgment dismissing the plaintiffs’ strict liability claim, because the plaintiffs failed to raise triable issues of fact with regard to defendants’ knowledge of the dogs’ “harmful proclivities.” Thus, the Court refused to apply the Hastings exception where dogs, rather than farm animals, wandered from the property on which they were kept. FN4: Additionally, as plaintiffs emphasize, the Doerr concurrence stated that, insofar as those plaintiffs had offered “no alternative theory of recovery, it neither rejected nor endorsed any other potential legal theory or exception to the Bard rule not advanced by the parties.” It may be that the concurrence was suggesting that it might have distinguished Bard under a different factual scenario (as plaintiffs would have us do here), but it seems more likely that it was alluding to the possibility that other causes of action, such as a reckless or intentional tort, could apply where a person directs a dog into another’s path.

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the one this Court accepted but the Court of Appeals rejected in Doerr.[FN5] Furthermore, it appears that, aside from the Hastings exception, Bard continues to be an absolute bar to negligence claims where domestic animals cause injury. “There is no such thing as negligence liability where harm done by domestic animals is concerned.” Accordingly, we conclude that we are constrained by Court of Appeals precedent to reject plaintiffs’ negligence claim. Were we not so constrained, however, we would, like the dissenting judges in Bard and Doerr, permit plaintiffs to pursue their negligence cause of action. To avoid the harshness of the Bard rule, the recognition of the following exception would be appropriate: A dog owner who attaches his or her dog to an unsecured, dangerous object, allowing the dog to drag the object through the streets and cause injury to others, may be held liable in negligence. In these circumstances, negligence liability would be in keeping with the principles of fundamental fairness, responsibility for one’s actions, and societal expectations—assuming a jury would deem unreasonable defendant’s failure to ensure that the rack was secured before he tied his dog to it. It is not unreasonable to expect dog owners to restrain their dogs in public unless unleashing them is safe or specifically permitted at certain times and locations, as evidenced by local leash laws (see e.g. 24 RCNY 161.05). However, the Court of Appeals has decided that local leash laws have no bearing on whether liability in negligence ought to attach (Petrone, 12 NY3d 546), undermining the declared public policy of those localities that have enacted such

…under the law of New York at present, permitting a domestic pet that has not displayed vicious propensities to run at large under any circumstances even when doing so would be clearly dangerous - would never give rise to a claim sounding in negligence.

laws. Current statement of public policy on the question (whether local law prohibiting owners from letting dogs run at large’ creates a presumption of negligence) is surely entitled to some recognition by the courts, yet none is given.” And although the Doerr concurrence reasoned that New Yorkers may expect to find unrestrained dogs in public parks, New Yorkers certainly do not expect to find those dogs running on public roads towing large metal objects behind them. A dog owner who, without observing a reasonable standard of care, attaches his or her dog to an object that could foreseeably become weaponized if the dog is able to drag the object through public areas should not be immune from liability when that conduct causes injury. Moreover, as a matter of public policy, we agree with Judge Fahey’s dissent in Doerr that New York should join the overwhelming majority of states that follow the Restatement (Second) of Torts § 518 (25 NY3d at 1149, 1157). Under the current rule articulated by the Court of Appeals, it appears that pet

owners would be permitted to act in any number of objectively unreasonable ways when supervising their nonvicious pets, because New York law does not place upon them a duty to observe any standard of care. The potential for unjust outcomes is manifest. Although “the Restatement rule . . . does not treat a domestic pet’s untrammeled wanderings as actionable negligence” in all cases, citing Restatement [Second] of Torts § 518, Comment j), the Restatement does recognize that “there may . . . be circumstances under which it would be negligent to permit an animal to run at large, even though it is of a kind that customarily is allowed to do so [e.g., a dog] and under other circumstances there would be no negligence” (Restatement [Second] of Torts § 518, Comment k). It seems, however, that under the law of New York at present, permitting a domestic pet that has not displayed vicious propensities to run at large under any circumstances - even when doing so would be clearly dangerous - would never give rise to a claim sounding in negligence. We find this to be most unsatisfactory as a matter of public policy and would recognize a cause of action for negligence in appropriate circumstances. Accordingly, the order of Supreme Court, New York County (Carol R. Edmead, J.), entered April 28, 2016, which granted defendant’s motion for summary judgment dismissing the complaint, and denied plaintiffs’ cross motion for summary judgment on the issue of liability, should be affirmed, without costs.[IA] 2017 NY Slip Op 01985 Decided on March 16, 2017 Appellate Division, First Department Acosta, J.

FN5: Of course, it is not always clear why a dog acts in a given way, whether by its own choice or pursuant to its owner’s direction and training. In Doerr, the opposing writings opined on the question of volition - whether the dog ran across the road because it was trained to come at the owner’s behest or because it made its own choice to do so — but the parties had presented no scientific evidence on the subject. Similarly, the parties in the case at bar present no such evidence. Nonetheless, while dogs may at times make their own choices, several studies suggest that modern domestic dogs have an inherent predisposition to follow human cues (e.g., pointing) and can be trained to obey their commands (e.g., instructing a dog to “come” or “sit”) (see e.g. Udell & Wynne, A Review of Domestic Dogs’ (Canis Familiaris) Human-Like Behaviors, 89 J Experimental Analysis of Behavior 247, 250-251 [2008]). Indeed, dogs have been living with humans for thousands of years, during which time they were selected for and developed those traits (see Soproni et al., Comprehension of Human Communicative Signs in Pet Dogs (Canis Familiaris), 115 J Comparative Psych 122 [2001]). This suggests that when a dog responds to its owner’s command, it is doing so as a result of instinct, training, and conditioning, not because it has made a conscious choice to do so. Had the Doerr Court been presented with such evidence, perhaps it would have decided (as this Court did in the intermediate appeal) that the Bard rule was inapposite because the defendants had control over the dog such that the owner’s command caused it to run into the plaintiff ’s path. However, the Doerr majority impliedly rejected that line of reasoning by reversing this Court (see also 25 NY3d at 1130-1132 [Abdus-Salaam, J., concurring]). Therefore, we do not think the Court of Appeals would accept that defendant’s actions solely or most proximately caused the injury, even though defendant arguably exerted complete control over the dog (overriding any volition it might have had, when he attached to the dog’s leash an unsecured metal bicycle rack that was far lighter in weight than the dog, all but guaranteeing that the dog would wreak havoc wherever it chose to wander).

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