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VOLUME 123, NUMBER 16 / September 24, 2012
New York • New Jersey • Connecticut • Pennsylvania Washington D.C.
A CINN Group, Inc. Publication
Since 1889
Immunity For [All] Some! BICKFORD - PAGE 6
Doing the Right Thing RUCHMAN - PAGE 12
When 100% is Just Not Good Enough LOGUERCIO - PAGE 16
PIANY Elects Skeele PAGE 22
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No matter what is on your to do list, NYIA can help. NYIA has represented the New Yor o k property and casualty industry for 130 years. The association is dedicated to making New Yor o k a better place to do business for o in insurance companies. Whether it’s fighting mounting taxes and assessments, facilitating regulatory matters, reporting on guaranty fund implications, analyzing the impact of proposed legislation and new laws or helping navigate rate and for o m filings, NYIA is working for o property and casualty insurers. To learn more about how NYIA can help your company visit www.nyia.org or call 518.432.4227.
KNO KNOW W BE BETTER T TER NEW NE W YORK YORK CONNECTIONS CONNEC TIONS www.nyia.org w w w.nyia.org
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September 24, 2012
CONTENTS
[ LETTER ] RE: Jerry Trupin’s Column Jerry: I wanted to write to you and tell you how much I enjoy your articles in the Insurance Advocate. The most recent one about properly insuring the owner interest in condos and coops was great. Also the one you did about where you reside in determining coverage for homeowners insureds’ was also timely and interesting. We are an insurance agency in East Hampton, Long Island and many of our insureds have more than one residence. These articles really hit home for us. Thank you, George Yates George Yates Dayton Ritz & Osborne President East Hampton, NY 11937
[DEPARTMENTS] Letters ..................................................................................................................3
Thanks for your note, George. I'm very happy to hear that you like my articles.With regard to the "reside" decision with regard to homeowners coverage, it was reversed on appeal and then appealed to the Court of Appeals by the insurance company. Oral arguments on the case were just heard. I'll write about the Court of Appeals decision as soon as it comes down. I hope the reversal stands. That would probably case ISO and other insurers to clarify what they mean by "reside." As it stands, it's hard to know the limits of the coverage.
Foreword............................................................................................................ 4 Insight, By Peter H. Bickford ...............................................................................6 In the Associations ...................................................................................8, 22 News .............................................................................................................8, 27 On the Level, By N. Stephen Ruchman ..........................................................12 Face to Face, By Michael Loguercio ...............................................................16 Consumers.......................................................................................................30
Jerry
Courtside, By Lawrence N. Rogak ...................................................................32
Jerome Trupin, CPCU, CLU, ChFC Trupin Insurance Services Briarcliff Manor, NY 10510
Classifieds.........................................................................................................35 Last Word, By Douglas A. Powell, Demotech, Inc. ..........................................35 Looking Back...................................................................................................36
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[ FORE WORD ]
Steve Acunto
WAHVE “Hello”
W
ork At Home Vintage Employees LLC (WAHVE) is an interesting concept. Essentially, it is a domestic remote staffing service for insurance firms. There are some firms which provide for staffing and for services outside of the U.S. In this case, WAHVE employs the services of retired, semi-retired, or outside consultants to assist organizations with the services that their clients demand increasingly in this economy. Dick Poppa has just joined WAHVE s advisory board. Dick is President and Chief Executive of the I.I.A.B.N.Y. His presence on that board may very well signal an interest in this service for independent insurance agents who are members of the group. Other board members include Martin (Mell) L. Vaughan III, former chairman and CEO of Hilb, Rogal and Hamilton Co.; Cynthia Young, former president of Encompass Insurance, a personal lines division of Allstate Insurance; Edie Weiner, president of Weiner, Edrich, Brown, Inc., a futurist consulting group; Rick Morgan, senior vice president of Aartrijk, an insurance branding firm; Sheldon Czapnik, former director of editorial services for Time. Inc. and a writer and editor developing books for publication. In all, this seems like a very reasonable prospect for agencies but as equally interesting for those who are looking to retire yet stay somewhat active. As the average age for retirement and as longevity figures change, this may be a very useful way for people to stay active in the “bullpen” without having to pitch a full game. We salute Sharon Emek, Ph.D., CEO & President and the leadership team and wish them the best of luck... Speaking of the IIABA, the group has just pushed for the modifications in the Patient Protection Affordable Care Act particularly in MLR requirements. “The Big ‘I’ and the thousands of independent agents and brokers it represents are pleased with the developments on H.R. 1206 the past two weeks,” said Charles E. Symington, Big ‘I’ senior vice president for government affairs. “However, the window of opportunity for the bill to become law this year is quickly narrowing. The Big ‘I’ commends the bill’s sponsors, Congressmen Mike Rogers and John Barrow, for their diligent work on this issue and asks Congress to build on recent momentum to pass this crucial fix.” The bipartisan H.R. 1206, sponsored by Rep. Mike Rogers (RMich.) and Rep. John Barrow (D-Ga.), would clarify that agent compensation is not part of the Medical Loss Ratios (MLRs) formula as enacted in the health care overhaul law. The Patient Protection and Affordable Care Act (PPACA) established MLR requirements for insurance carriers, which went into effect on Jan. 1, 2011. The law mandates that at least 80% (individual and small group) or 85% (Large group) of premiums collected by the carrier must be spent on claims payments or “health care quality improvement.” In other words, no more than 20% or 15% may go towards “non-claims costs” such as profits, advertising, administrative costs, etc. If a carrier does not meet these rations, rebates are due to the consumer. The PPACA did not statutorily address how to classify independent agent compensation under the MLR formula. However, through the regulatory process not only was agent compensation included in the MLR formula but it was included as a part of the “non-claims costs” category. The Rogers-Barrow bill corrects this by specifically excluding agent compensation from the MLF formula, since this compensation is a pass-through payment from the consumer to the agent. “If the MLR calculation is not quickly corrected to exclude agent compensation, consumers are at risk of losing the professional, licensed guidance of insurance agents during this time of great change in the health insurance market,” says Ryan Young, Big “I” senior director of federal government affairs. “This erroneous regulation has already had an incredibly harmful impact on our industry and consumers.” Since the MLR rules went into effect they have created problematic disruptions in the marketplace. The effect on agents and brokers in particular has been damaging as many insurance carriers have significantly cut their agent compensation in an effort to comply with these new regulations. This has in turn reduced consumer access to agents and brokers, leading to a detrimental effect on essential services provided by producers such as guidance in claims processing and tailoring health plans to fit the needs of individuals and businesses.... On a final note, we congratulate the new leadership of the PIANY which continues to get excellent service from its volunteers and staff and look to a successful year ahead.[IA] 4 September 24, 2012 / INSURANCE ADVOCATE
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VOLUME 123, NUMBER 16 SEPTEMBER 24, 2012
EDITOR & PUBLISHER Steve Acunto, 914-966-3180, x110 sa@cinn.com CONTRIBUTING EDITOR Peter Molinaro CONTRIBUTORS Peter H. Bickford Jamie Deapo Michael Loguercio Sari Gabay-Rafiy Lawrence N. Rogak N. Stephen Ruchman Jerome Trupin, CPCU PRODUCTION & DESIGN ADVERTISING COORDINATOR Creative Director Gina Marie Balog, 914-966-3180, x113 g@cinn.com SUBSCRIPTIONS P.O. Box 9001, Mt. Vernon, NY 10552 914-966-3180, x126 circulation@cinn.com PUBLISHED BY CINN Group, Inc. P.O. Box 9001, Mt. Vernon, NY 10552 (914) 966-3180 | Fax: (914) 966-3264 President and CEO Steve Acunto
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[ INSIGHT ]
By Peter H. Bickford
Immunity For [All] Some!
L
et’s have a little chat about immunity. No, not immunity from retribution for squealing on Aunt Bea and her high stakes Saturday night poker game, or for giving state’s evidence against the mob before disappearing into witness protection. And no, not immunity for blowing the
the issue of granting judicial immunity to receivers of companies in liquidation or rehabilitation is a well-settled and appropriate action. However, that conclusion might be a bit too broad, or at least should be subject to some scrutiny and discussion. Many people are of the view that a pub-
The NY insurance law is silent on whether the receiver acts as a fiduciary, but if the Liquidation Bureau believes it acts as a fiduciary, it would seem to be raising its own bar of conduct and provide even more reason for the receiver and his agents to be held responsible for their actions. Peter H. Bickford
whistle on your employer, or for acting badly as a diplomat. I would like to discuss whom if anyone should be entitled to immunity for acting poorly as the manager or operator of a business. If you screw up, you cannot be held liable. Absent outright fraud, your customers, suppliers, shareholders, investors, regulators or anybody else cannot sue you. You are given a free pass – immunity! I can see everyone nodding favorably for that benefit. Sure, who wouldn’t want that deal? Just think of the savings on aspirin and liability premiums. Well, if that is your goal, you may want to consider a career at the New York Liquidation Bureau. In his Courtside column in the August 20th issue, Lawrence Rogak reported on a NY Court’s grant of judicial immunity to the liquidator and his representatives, including the Liquidation Bureau, in approving the liquidator’s report in the US Capital Insurance Company matter. This grant of judicial immunity is but the latest in a string of orders over the past few years – mostly uncontested – that include a judicial immunity provision as requested by the NY superintendent of financial services (formerly the superintendent of insurance) in his non-regulatory role as liquidator or rehabilitator. Looking solely at this recent string of orders one might get the impression that 6 September 24, 2012 / INSURANCE ADVOCATE
lic servant deserves to be protected for fulfilling a public service, and would find nothing remarkable about the receiver’s request or the court’s grant of this protection. However, whether or not receivers and their agents are acting as “public servants” or are simply private contractors appointed by the court for a limited purpose, like a court appointed guardian, is not all that clear. In New York, for example, the courts have determined that the Liquidation Bureau is not a state agency and hence is not part of the regulatory insurance department (what, then, is it a bureau of?). Further, the Liquidation Bureau often states that it is a fiduciary for policyholders of a company in receivership. The NY insurance law is silent on whether the receiver acts as a fiduciary, but if the Liquidation Bureau believes it acts as a fiduciary, it would seem to be raising its own bar of conduct and provide even more reason for the receiver and his agents to be held responsible for their actions. Likewise, if the Bureau believes it is a fiduciary, its requests for immunity are a clear contradiction. Either way, what is so special about the job of receiver – managing assets, approving claims, etc. – to warrant immunity for screwing up? A good example of the issue is presented by the recent order approving the liquidation of Executive Life Insurance
Company of New York (ELNY) and the receiver’s plan to restructure ELNY’s annuity contracts (see my Insight column in the June 4, 2012 issue, “A billion here, a billion there . . .”). In the order the court included a provision requested by the rehabilitator granting him and his agents, including the Bureau, judicial immunity from “any cause of action of any nature against them, individually or jointly, for any action or omission by any one or more of them when acting in good faith, in accordance with this order, or in the performance of their duties pursuant to [the insurance law] . . .” This is the same broad language appearing in the U.S. Capital order and other recent orders. The ELNY court’s action in providing judicial immunity, however, shines a bright light on the issue of the appropriateness of the grant because of the history of ELNY. ELNY was not insolvent when taken into rehabilitation in 1991, and after 20+ years of rehabilitation it is now admittedly insolvent to the tune of more than $1.6 billion. In approving the rehabilitator’s plan, the court specifically recognized that the hearing on the plan “was limited by the Insurance Law and could not include inquiries into why the insurer failed in the first instance, its investment and operation prior to failure, how the Superintendent and his agents supervised the affairs of the insurer, or why a settlement was not reached or this order to show cause brought before the Court sooner.” If the court believed these matters to be outside the issue before him, why grant blanket immunity to those who may have been responsible for them? An equally important consideration is whether the court should grant judicial immunity where the statute does not. The receivership process in most states is a statutory process carried out by the insurance commissioner (the superintendent of financial services in New York) under the supervision of the state courts. The rules and guidelines for the process are detailed in each state’s statute, including specific injunctive authority to protect the estates in receivership. In all but a few states there continued on page 8
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[ INSIGHT ] continued from page 6
is no statutory grant of immunity for the receiver or his or her agents (the New York and New Jersey statutes have no immunity provision and the Connecticut statute provides limited immunity for the receiver and employees, but not for professionals or other independent contractors engaged by the receiver). While a court has broad supervisory authority over an estate before it, the court is still bound by the confines and restrictions of the statute. Is it appropriate, therefore, for the court to go beyond the receivership statutes in granting judicial immunity to the receiver and his or her agents? Several years ago the National Association of Insurance Commissioners adopted the current Insurance Receivers Model Act, which included optional immunity provisions for receivers and their agents. However, the immunity provisions were quite controversial and only a few states adopted an immunity option. But appropriate or not, shouldn’t the issue be one for legislative consideration and action rather than judicial fiat on a caseby-case basis? Isn’t there a significant difference between a statutory policy determination that immunity is appropriate for all members of a particular group, and a court granting judicial immunity on a piecemeal basis simply because it is requested by the receiver? If immunity should be applied on a case-by-case basis by the receivership court, shouldn’t the court have to apply some minimal objective standards rather than to simply provide immunity upon request? Immunity is often a touchy and controversial subject, and many observers question the logic in exempting receivers and their agents from responsibility for their actions, particularly for their gross mismanagement or worse. What do you think? [IA]
[ IN T H E ASSOCIATIONS ]
Big “I” Presents Company Partners Best Practices Awards
A
LEXANDRIA, V.a.—The Independent Insurance Agents & Brokers of America (IIABA or the Big “I”) presented insurance carriers Central Insurance, Erie Insurance Group, Harleysville Insurance, Liberty Mutual Insurance, Progressive Insurance and Travelers with the prestigious Best Practices Award of Excellence at the recent education convocation held in conjunction with the Big “I” Leadership Conference this weekend in Atlanta. The awards recognize those companies that have made imaginative, outstanding and unique contributions in advocating Best Practices philosophies that enhance the independent agency system. The Big “I” Best Practices program provides performance benchmarks and business strategies that serve as a guide to improving agency performance. Central Insurance Companies, a Trusted Choice® and CAP company, launched their support for the Best Practices program as agents requested help from their company partner to grow their personal lines books of business. Central used the Best Practices studies to develop and implement a Best Practices plan. Central communicates the value of the resources through agent education and business consulting, its website and monthly agency newsletters and other outlets. Central uses Best Practices in their agent workshops and meetings to help them grow their book of business, regularly publish articles on Best Practices topics for their agents, actively participates in the Council for Best Practices and promotes the program on their website. Central has actively nominated agencies to participate in Best Practices studies.
The awards recognize those companies that have made imaginative, outstanding and unique contributions in advocating Best Practices philosophies that enhance the independent agency system. The Big “I” Best Practices program provides performance benchmarks and business strategies that serve as a guide to improving agency performance.
“Through numerous professional development, online and company-wide efforts, Central Insurance Companies promotes the philosophies of the Best Practices through materials in agent education, business consulting and numerous innovative efforts,” continued Rusbuldt. “We applaud Central’s ongoing leadership and cutting edge efforts.” Since Best Practices was launched in 2001, Travelers, a Trusted Choice® company, has been recognized each year and their support of the program continues to grow stronger. Travelers is committed to communicating the value of the resources and working with agents to help them grow their agencies. Working with thousands of agencies, presenting keynote ses-
The Consumer Brand of the Independent Agent. www.iiabny.org/TrustedChoice 8 September 24, 2012 / INSURANCE ADVOCATE
continued on page 10
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Koles M & Associates LLC Kornreich NIA Organization Krugman & Krugman, Inc. Lashomb Insurance Agency Latremores Ins. Agency Lawley Genesee, LLC Lawley Richwood Insurance Lawley Services, Inc. Lawley-Andolina Verdi LLC Lebaum Company, Inc. Levitt- Fuirst Associate LTD. Lexsan Risk Management Corp. Liscio Insurance Agency, Inc. Livingston Ins. Agency, Inc. LKF Partners, Ltd. Lloyd’s Planning Services LLC Lockwood Agency, Inc. LoPinto Insurance Agency,Ltd Louis Koch Ins. Agency Loveman, Kornreich & Steers LRMP, Inc. Luce, Smith & Scott, Inc. M J Comas Co. Inc. M&T Insurance Agency, Inc. M. L. Bruenn Co.,Inc. M. B. I. A. LLC Madison Avenue Brokers Malpigli & Salvaggio Ins. Mang Insurance Agency Maran Corporate Risk Assoc.Inc Marc Spiro & Company Marchetti & Sabatelli Assoc. Marino Coverage Group, Inc. Market Alternatives, LLC Marshall & Sterling Masters Coverage Corp. Matthew Wallingford Max Fitelson & Son Mayfair Organization, Inc. McLaughlin-Kehoe Assoc., Inc. Member Brokerage Services MetzWood Harder, Inc. Michael A. Lasorsa Ins. Mid Valley Insurance Agency Mike Preis, Inc. Milbrandt & Co Inc Miles B. Marshall Inc. Millennium Alliance Grp,LLC Miller & Miller Ins Agcy Inc Miller Agency of New York Inc MJM Global Services, Inc. Montana Agency, Inc. Moses Insurance Group, Inc. MRW Group Inc. Murray, Schoen & Homer, Inc. National Ins. Brokers of N.Y. National Programs Insurance National P & C Services Newbridge Coverage Corp. NFP P & C Srvc NGL Insurance Group Niagara Montauk Insurance Niagara National, Inc. North Country Estates, Inc. North Shore Risk Mgmt, Inc. Northern Insuring Agency, Inc Northtown Insurance Agcy Northwin Agency LLC Omni Risk Management Oswego Valley Ins. Agencies Owens Group Insurance Ltd. Paris Kirwan Associates Inc Paston Group, LLC Pastorelle Agency, Inc. Patrick J Cavallo Agency Patrick Maguire Agency, Inc Perry & Carroll, Inc. Petrocelli Group, Inc. Phelps Agency, Inc Platinum Resources, Inc. Porpora Associates, Inc,.
Premier Risk LLC Prince Associates, Inc. Prodromou L.M. Advisors LLC Professional Insurance Assoc. Progressive Risk Management Qendro Sparks Agency, Inc. R. Marcil Associates, Inc. R. G. Wright Agency, Inc. R. J. Battaglia Agency R. J. Fregenti Associates, Inc R. M. Hollander Insurance Svcs RAL Services, Inc. Ralph Parnes Associates, Inc. Rampart Brokerage Corp. RBL Associates, Inc. Reardon, Rapley,Lindner Restaurant Support, Inc. Richard H. Leenhouts Richards Insurance Agency Richardson & Stout Insurance RISC One, Inc. Risk Stratagies Co. RMI Consulting, Inc. Robert A. Sweeney Agency, Inc Robert E. Snyder, Inc. Robert J. Los Agency, Inc. Roe Agency, Inc. Ron Reiter Rose & Kiernan, Inc. Rose Shea Associates Rosen Co Inc Roy H. Reeve Agency, Inc. RPG Insurance Agency LLC Rutecki Agency Ryan & Ryan Ins. Brokers, Inc S & M Klein Co Inc Sachs Walsh Insurance t/a Salenger & Hayward Ins. Agcy Salerno Brokerage Corporation Samuel Weisman & Sons, Inc. Sano Brokerage Co. Inc. Saperstein Agency, Inc. Savitch Agency, Inc. Scarsdale Agency, Inc. Schaefer Enterprises, Inc. Schenectady Insuring Agency Schizzano Insurance Agcy,Inc Schmutter, Strull,Fleisch Inc Scirocco Financial Group, Inc Scott Danahy Naylon Co.,Inc. Scovotti & Company, Inc. SCS Agency, Inc. Seaway Insurance Assoc. Secur-All Agency, Inc. Seely & Durland, Inc. Selmyn Kaufman Sentz-Carlson Agency, Inc. Serres, Visone & Rice, Inc. Seth Jonas dba S. Jonas Ins. Shepard, Maxwell & Hale, Inc Shopiro Agency, Inc. Sidney Salters SKCG Group, Inc. Slapin-Lieb & Co Slocum-Lauder Agency, Inc. Sluiter Agency Inc. Smerlock & Unger, Inc. Sobel Affiliates Spataro Insurance Agency, Inc Spectrum Insurance Brokerage SRJV Risk Services Stack Insurance Agency Stanley Schusterman, Inc. Starkweather & Shepley Ins. Steinfeld Insurance Agency Sterling & Sterling, Inc. Steven G. Barretta Steven T. Dukoff Agency Stiepleman Coverage Corp. Stratford Insurance Agency
Sullivan, Shugree & Lucie Sutton & Tarantino Sykes Milla Assoc. T & D Aloia Inc. T. D. Insurance Inc. Takach & Associates, Inc. Tanenbaum-Harbor Co., Inc. Tate M. Heuer Insurance Broker Terranova Insurance Services The Amerisc Corp. The Associated Agencies, Inc. The Byrne Insurance Agency,Inc The Deuink Agency The Excelsior Group, Inc. The Guion Agency, Inc. The Halland Companies The Insurance Market Agcy Inc. The Jackson Agency, Inc. The Keller Group, Inc. The Ketchum Agency, Inc. The Mogil Organization The Naccarato Ins. Agency, Inc The NIA Group LLC The Northwoods Corporation The Partners Insurance & The RIA Group, Inc. The Rollins Agency, Inc. The Rowan Group, Inc. The Savage Agency, Inc. The Signature Group, LLC The Snedeker-Jenkins Agency The Spain Agency The Stuhlweissenburg Agency The Treiber Group, LLC The Valley Group, Inc. The Vanner Group, Inc. The Vozza Agency, Inc. The Whitmore Group Ltd. The Winfield Group Thomas M. Neppell & Sons, Inc. Tompkins Insurance Agencies Total Management Corp. Treiber-Roberts, Inc. Triple Crown Ins. Bkge. Inc Tri-Town Agency, Inc. Ulster Insurance Services Inc Unilite Insurance Agency, Inc United Brokerage Services United Insurance Agency Inc. United Insurance Consultants Upstate Agency LLC Urbanski Insurance Agency USI Insurance Services LLC USI Northeast Inc. Van Parys Assoc of Palmyra Inc Vincent Cirasole W B Payne Co., Inc. W. Joseph McPhillips, Inc. W. L. Putnam Agency, Inc. Wallace & Berry Associates Wallace Brokerage Corp. Wallberg Program Products Walsdorf Agency, Inc. Wells Fargo Insurance Wertheim Brothers, Inc. Wharton B. Allen Agency, Inc. Wilbert Wenner Insurance Wilkins Insurance Agency William A. Smith & Son, Inc. William Coppola Agency, Inc. William F. Carroll Agency,Inc William J. Chabina Co., Inc. William M. Zagarino Williams & Williams, Inc. Willis of New York, Inc. Willis of Pennsylvania, Inc. Yale Brokerage Corp. York International Agency Inc
Thank you for putting your clients first r edlander
Gain and Retain Clients
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[ IN THE ASSOCIATIONS ]
[ NEWS ]
continued from page 8
sions that incorporate Best Practices topics and resources, dedicating a monthly article in the company newsletter and presenting “Lunch and Learns” are just some of the many ways Travelers has nominated numerous agencies to participate in the Best Practices program. Travelers also provides materials for select agencies and dedicates staff time and resources through participation on the IIABA Council for Best Practices. Over the last few years, the company has nominated hundreds of agencies for participation in the Best Practices program, helping select the very best agencies for this critical industry resource. “We are proud to announce that for the eleventh year in a row, we are pleased to present Travelers with a special award recognizing their support for Best Practices,” said Rusbuldt. “Through numerous efforts, Travelers continues to demonstrate their commitment to Best Practices by working directly with agents to help them reach their goals.” Progressive, a Trusted Choice® company, is a new member to the Council for Best Practices and actively promotes Best Practices on their Facebook page, and markets and promotes the program through webinars to all their agents. Progressive also publishes articles highlighting Best Practices topics in agent newsletters and online publications. “As a new member of the Council for Best Practices, Progressive has quickly and effectively integrated Best Practices in relatively short period of time,” says Rusbuldt. “We are honored to recognize Progressive for their hard work and dedication.” Harleysville, a Trusted Choice® company, markets and promotes Best Practices webinars to all their agents and actively participate in the Council for Best Practices. The carrier regularly publishes articles on Best Practices topics in their agent newsletters and online publications. Harleysville has trained its field staff on the Best Practices tools and initiatives, and promotes the programs with e-mail blasts. “We are proud to present Harleysville with a Best Practices award for their commitment to the program,” says Rusbuldt. “We applaud their effective use of technology to promote Best Practices.” Erie regularly uses the Best Practices 10 September 24, 2012 / INSURANCE ADVOCATE
“Erie’s commitment to enhancing its training programs with Best Practices has resulted in better communication and they are seeing results”
tools to train agents, the Erie sales teams and for agent peer training. It has integrated Best Practices tool into its program to help agents better communicate with their clients and uses the tools to gauge sales behaviors of potential agents and producers. “Erie’s commitment to enhancing its training programs with Best Practices has resulted in better communication and they are seeing results,” says Rusbuldt. “We applaud innovation and dedication to continuing education for all the professionals involved in providing excellent customer service.” Liberty Mutual Insurance, a Trusted Choice® and CAP company, has promoted Best Practices using numerous avenues including: Actively participating in the Council for Best Practices, continually using and promoting Best Practices to its agents to help them retain their value and grow their sales, training company sales teams on the Best Practices tools and promoting Best Practices on its employee websites and agent portals. “Liberty Mutual Insurance has led by example and demonstrated excellent promotion and use of the Best Practices programs,” said Robert Rusbuldt, Big “I” president & CEO. “We are honored to recognize Liberty Mutual Insurance for their hard work and dedication.” [IA] Founded in 1896, the Big “I” is the nation’s oldest and largest national association of independent insurance agents and brokers, representing a network of approximately a quarter of a million agents, brokers and their employees nationally. Its members are businesses that offer customers a choice of policies from a variety of insurance companies. Independent agents and brokers offer all lines of insurance—property, casualty, life, and health—as well as employee benefit plans and retirement products. Web address: www.independentagent.com.
Mary Lopatto to Cozen O’Connor
M
ary A. Lopatto has joined the Global Insurance Group in the Washington, D.C., Mary has more than 25 years of experience in insurance and reinsurance dispute resolution, including representing clients on both the ceding and assuming side in numerous U.S. and international arbitrations. She joins Cozen O’Connor from Chadbourne & Parke LLP, where she served as the managing partner of the Washington, D.C., office. Mary has extensive expertise in complex and large-scale international arbitrations of disputes under the Bermuda form and subject to the Bermuda International Conciliation and Arbitration Act 1993. She has handled major arbitrations involving the reinsurance of Bermuda captives with respect to professional liability and product liability issues, as well as Bermuda arbitrations involving environmental liability, reinsurance allocation disputes, and employment class actions. Mary also served as a former chairman of the AIDA Reinsurance and Insurance Arbitration Society (ARIAS•U.S.), the leading association for the insurance and reinsurance arbitration community. She is a graduate of Princeton University, B.A., 1976, and Catholic University of America, Columbus School of Law, J.D. [IA]
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[ ON TH E LEVEL ]
By N. Stephen Ruchman
Doing The Right Thing
R
eaders of this column may recall my affinity for locally owned book stores. I love shopping at and spending time in them; of course I love the products and the service and it makes me very happy to know that I am supporting a local merchant. Even as I’ve become a reader of digital books on my tablet, I still seek out those stores and patronize them
to compete with large national direct writers at a huge disadvantage. Just like the small, local bookstores, independent agents can’t compete with billion-dollar advertising budgets on a level playing field. The situation gets much worse when state agencies are involved. It looks as if the state is endorsing these businesses. New York’s endorsement
I believe there are limits to how the state can or should fulfill its mismanaged budget. It should not be at the expense of an industry that supports New York State through taxes and agents who are upstanding members of their communities.
N. Stephen Ruchman
as often as I can. Big box stores that move into communities don’t have the same character, nor do they care about the neighborhoods in which they are located. They just come in, put the local merchants out of business and never contribute to the community once they’re there. We hear from politicians over and over how small businesses are so important to our economy. But, when it comes time to take action to protect them, that supportive rhetoric can suddenly disappear. Such is the case with legislation PIANY has been advocating for several years now. In a few cases, however, both the New York State Senate and Assembly did the right thing this past session—for example, they both passed a bill (S.6285-A/A.9034B) that would have prohibited state agencies from disseminating ads to the public for products or services related to the authority of the state agency. This bill would have prevented big insurance carriers (such as GEICO or State Farm) or any entity with an inappropriate relationship to the industry from putting advertisements alongside vehicle registration renewals. This practice puts small businesses in New York trying 12 September 24, 2012 / INSURANCE ADVOCATE
should not be for sale. In a state that has compulsory auto insurance, if you receive a flier in the same envelope as your renewal for auto registration from the DMV, it looks like the state is endorsing the insurance company. But, for the second year in a row, Gov. Cuomo vetoed the bill (S.6285A/A.9034B). I believe there are limits to how the state can or should fulfill its mismanaged budget. It should not be at the expense of an industry that supports New York State through taxes and agents who are upstanding members of their communities. GEICO and State Farm are not even domiciled in New York! This is ludicrous—the state’s endorsement shouldn’t be for sale. Any practice that implies the public should purchase a product from a particular source in order to register their website is just wrong—and the state isn’t just allowing it, they’re endorsing it! If you’re feeling angry, stop reading, because you are in for more disappointment. There’s another consumer-conscious bill awaiting the governor’s signature, but as I write this column, it is rumored to face a similar fate.
This bill, A.10784/S.7787, would increase supplementary insurance limits and require all auto policies to have supplementary uninsured/underinsured motorists coverage in the same amount as the bodily injury limits on the policy, unless the policyholder rejects the coverage. As members of the insurance industry, it’s beyond me why any of us would not support this bill. Supplementary Uninsured/ Underinsured Motorists coverage pays what you would have been able to collect from the motorist(s) responsible for the injuries you suffer in an automobile accident. Higher SUM gives motorists better financial security and will pay damages that exceed the amount received from atfault motorists and/or their insurance companies. This is important when the driver that hits you only has the minimum coverage of $25,000, if he doesn’t have coverage or flees the scene. Let’s assume you purchased a person SUM limit of $100,000 on your policy, and you were injured by a motorist having a minimum-limit liability policy, making $25,000 the most you could collect for your injuries. If your damages are $60,000, then you could collect $25,000 from the motorist at fault and $35,000 under SUM coverage from your insurance company. If the negligent motorist had no insurance, then your SUM coverage would pay all $60,000 in damages. Had your damages been higher, an additional $40,000 would have been available before using up your entire SUM limit. If the bill is signed, consumers will automatically receive SUM protection in the same amount they choose for their own bodily injury coverage. If a consumer purchases bodily injury coverage of $100,000 to protect them if sued for negligence, that consumer will receive the same $100,000 coverage if they are injured in a motor vehicle accident. And, the consumer can always opt out of this coverage if they choose, as well. In my early years, when SUM coverage had first became available, the son of the owner of one of my business accounts had just graduated from law school. He was still on his mother’s policy and she had 250/500 to qualify for an umbrella. The continued on page 14
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[ ON THE LEVEL ] continued from page 12
son was rear-ended by someone with 1020-5 and because we had not slated the SUM coverage to increase until the policy renewed, we were almost sued. While my story may not be compelling to the governor, stories from papers around the state should. These have recounted how accident victims, through no fault of their own, have been left penniless because they were
hit by a motorist with inadequate coverage. I hope the governor has seen these articles and does the right thing this time around. I hear sometimes from producers who say they are glad PIA and other associations are taking up these issues. Their work is important—because they continue to fight on our behalf on issues like these, despite repeated vetoes and other hurdles. But it’s frustrating to hear an agent or broker say they appreciate the work of our associa-
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While my story may not be compelling to the governor, stories from papers around the state should. These have recounted how accident victims, through no fault of their own, have been left penniless because they were hit by a motorist with inadequate coverage. I hope the governor has seen these articles and does the right thing this time around.
End Note N. Stephen Ruchman, CPIA, is a retired partner of B&B Coverage LLC. 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 SRuchman@aol.com .
Craig Spiegel President Licensed in NY and NJ 2125 Utica Ave., Suite 2R Brooklyn, NY 11234 Cell 917-822-0200 | Fax 347-492-6591
www.insurance-advocate.com 14 September 24, 2012 / INSURANCE ADVOCATE
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[ FACE TO FACE ]
By Michael Loguercio
When a Hundred Percent is Just Not Good Enough
S
o all your life you have been striving to do everything you can to ultimately achieve the 100% level, correct? Well that’s certainly an admirable goal…unless you’re an insurance company! Years ago when interest rates were at record highs, and carriers could invest in funds that brought double digit returns, being at a 100% combined loss ratio wasn’t that terrible. However, that’s not necessarily true anymore. According to the Insurance Information Institute Inc., with interest rates at lows that some in this thing of ours have never experienced, carriers are havMichael Loguercio ing to place a much greater emphasis on underwriting, in order to have a much more favorable bottom line. President Robert P. Hartwig explained during the sixth annual Entrepreneurial Insurance Symposium in Dallas, TX. The symposium, established by electronic insurance exchange MarketScout in 2007, was created to profile innovation in the insurance industry. Mr. Hartwig said that “…no current insurance management team in the world has ever operated in an environment where interest rates are as low as they are now. Not only are interest rates low, they will remain so, forcing insurers to make up for investment income through underwriting and pricing discipline.” Mr. Hartwig went on to say, “That's particularly true for workers compensation. Workers comp needs to turn hard and needs to remain hard. We saw comp premiums written fall off a cliff in 2006 due in part to a soft market. Now the workers comp exposure is “higher than it was before the plunge.” For property/casualty insurance in general, pricing is all moving in a positive direction. In addition, tort costs have leveled off and tort reforms of the prior decade have had a positive effect and helped make the United States more competitive in the global marketplace.” In addition, Mr. Hartwig said that 16 September 24, 2012 / INSURANCE ADVOCATE
industries that will need insurance solutions in the next 10 years include health care, health sciences and energy, both traditional and alternative. For the economy in general, “…things aren't as much of a disaster in the United States as we might think,” he added. “Consumer sentiment is up, and there has been a dramatic reduction in business bankruptcy filings. However, during a question-and-answer period after his presentation, Mr. Hartwig said that “…consumers are mending their household balance sheets, and that it will probably be the middle of the decade before people feel better. That's a lost decade.” He continued on saying, “The best way to reduce government debt is for the economy to grow while spending holds steady. But holding the line on spending is one of the tests for any administration.”Mr. Hartwig also shared his thoughts on presidential politics and its effect on the property and casualty insurance industry's return on equity, and whether the industry will be better off under a Democrat or Republican president. According to Mr. Hartwig, “The president's party affiliation has a marginal bearing on the profitability on the property casualty industry.” He then added, “Hurricanes and earthquakes don't care who is in the Oval Office.” So true, Mr. Hartwig…maybe we need to have a conversation with a hurricane via an empty chair.☺ For quite some time we have been chatting in this column about the pros and cons of offering live quotes via an agency website. Also for quite some time, there was a strong sentiment from many agents that they “… did not want that type of business”, which prompted me to write many a column on agency “NIMBYS”, and why agents who were of that opinion were leaving quite a few dollars on the table. I’m certain that many of you who have followed this column for the past four and a half years remember these conversations, and maybe you were one of those who were hit by a stone that I threw! I hope it did the trick! Well, for those of you who have opted to include consumer rating on your agency website and Facebook page, congratulations! I am sure that it has proven to be a successful project for you and your business,
and please continue to offer it, as now there are some other exciting options being offered through a leading insurance technology provider that will prove to assist agents and enhance what you have already begun as you continue to battle the direct writers. EZLynx, (with whom as you most likely know I am intimately familiar with), has recently announced its release of the Carrier Consumer Portal (CCP) to a number of leading insurance carriers who distribution channel is the independent agent, enhancing the ability of the independent agent to compete with the captive and direct writers. The premise behind it is simple: armed with the knowledge that 80% of those consumers who are interested in buying a personal lines insurance policy will shop for insurance via the internet, and that only 20% of that same cohort will actually purchase a policy over the internet, CCP is a tool that a carrier may implement from their consumer facing website, allowing a prospective insured the ability to securely enter their personal lines risk information directly into the carrier site. The risk is then underwritten by the carrier adherent to their specific guidelines, and immediately returns a real-time quote indication to the prospect. What makes this program so appealing to all three parties: the carrier, consumer, and independent agent, is that CCP will then immediately and electronically pass the prospect information along to one of the carrier’s independent agents based on a predetermined set of specific criteria (and programmed within the CCP system) that may include demographic information such as zip code location, line of business, or other carrier devised rules. The goal of this program is twofold: facilitate those consumers who prefer to research the cost of, and coverage available, at their convenience 24/7/365; and second, to provide the prospective insured with the experience, knowledge and expertise of a licensed professional independent insurance agent who is familiar with their geographic location and other demographics pertinent continued on page 18
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ADVERTORIAL
Disaster Preparedness… THE TIME TO PLAN IS NOW DISASTERS, such as earthquakes, floods, hurricanes and tornadoes, can occur anywhere and often without warning. In 2011, 203 disasters resulted in $366 billion in damages and 29,782 deaths worldwide (United Nations International Strategy for Disaster Reduction “UNISDR”). The United States was subjected to 10 weather disasters – drought, tornado outbreaks in 21 states, floods, blizzards in October, and Hurricane Irene, that resulted in over $1 billion in damage. (huffingtonpost.com) This is in addition to damage caused by earthquakes and wildfires. Helping clients be prepared in the event of a disaster is another valued added service of the professional insurance agent. According to the American Red Cross “Tornadoes cause an average of 70 fatalities and 1,500 injuries in the U.S. each year. They are capable of completely destroying well-made structures, uprooting trees and hurling objects through the air like deadly missiles. Forty-five states and territories in the United States are at moderate to very high risk of earthquakes, and they are located in every region of the country." Floods and flash floods occur in all 50 states. (www.floodsmart.gov) A disaster can be devastating, which makes having the proper insurance so important. This alleviates the stress of wondering if you will be able to recover or rebuild, but it is only part of the solution. Depending on the magnitude of the disaster, it may take weeks or months for claims to be settled. How will your business or family manage in the meantime? In addition, some things are irreplaceable. Mitigating or preventing loss with proper planning is essential. Find out if your community sends instant messages or text alerts when there are weather emergencies, road closings or other emergency situations. Prepare for a disaster before it is necessary. It is important to know that text messages can often be sent and received even when the phone network is experiencing prob-
lems. This may be a way to communicate with family members. For occasions when you are unable to leave your home, prepare an emergency kit containing nonperishable food, water (1 gallon per person per day, for at least 3 days), flashlights and extra batteries, and a first aid kit. Don’t forget a can opener! Know how to shut off gas, water and electricity. Important tools include a wrench to shut off gas, and an ax to remove debris. Families with school age children should find out what the school’s emergency plan is. How will parents be notified? Where will the children be taken? Each member of the family should carry a contact card, including emergency contact and medical information. Since disasters can impact a wide area, an out of town emergency contact may be easier to contact than someone local. Be sure to let the emergency contact know that they have been so designated. If you do need to evacuate, you may have to do so at a moment’s notice. Proper planning can help to ensure that you take the necessary documents. At a minimum this should include passports, birth certificates, house deed, school and medical records, medications, and banking and insurance information. What other items will you take? Family heirlooms? Photo albums? A few changes of clothing? If you have pets, how will they be transported?
For businesses, especially insurance agencies and companies, there is the added burden of being accessible to your clients in their time of need. If your agency is in the disaster area, how will you continue your operations? How will you reach your employees? Your office may be inaccessible for an extended time period. Are you set up for remote operations? During the disaster, adjusters and restoration companies will be swamped with work. Do you have prearranged agreements with them? FEMA (Federal Emergency Management Association) has designated September as National Preparedness Month. They offer a monthly preparedness tip text message service. There are numerous other resources available on their website: www.ready.gov. Disaster preparedness should be part of the planning for every business and family. Helping clients understand the need for disaster preparedness and how to implement a plan is the mark of the true insurance professional.
139 Harristown Road Glen Rock, NJ 07452, Suite 100 (800) 935-6900 www.msonet.com INSURANCE ADVOCATE / September 24, 2012 17
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[ FACE TO FACE ] continued from page 16
to the risk. In other words, the insured, carrier, and agent all reap the benefits of “the best of both worlds.” With CCP constructed to emulate the carrier site with its branding, colors and logo, the consumer has the comfort of knowing that they are always interacting directly with the carrier they prefer…and ultimately with a licensed professional insurance agent with whom they can trust. From a business standpoint, carriers who implement CCP within their organization take advantage of a proven, accurate realtime rating system, and when combined with the economies of scale by not having to construct and maintain their own internal consumer facing program, may now offer what many consumers have come to expect - their insurance products to the general public via an electronic (and cost saving) mechanism. Further, implementing CCP across their personal lines product offerings allows the carrier to minimize distribution expenses without sacrificing the value of a true, independent insurance agent that the consumer has an educated expectation and understanding of. If you would like any additional information on this product, or how consumer quoting via your agency website may be of help to your agency, give me a call. Around the neighborhoods, The Big I has installed a new national leadership team. Robert “Bobby” Bramlett has been inaugurated as the new chairman of the Independent Insurance Agents & Brokers of America (IIABA or the Big “I”), with Tom Minkler as chairman-elect, David Walker as vice chairman and Vaughn Graham as an at-large executive committee member. The new officers began their terms at the conclusion of the board meeting held in conjunction with the Big “I” Fall Leadership Conference this past weekend in Atlanta, GA. “The Big ‘I’ is excited that such distinguished professionals will be among its leaders,” says Robert Rusbuldt, Big “I” president & CEO. “Bobby Bramlett, Tom Minkler, David Walker and Vaughn Graham, along with the rest of the executive committee and officers, are a remarkable team of industry leaders, and we are positioned well for a productive year.” Bobby Bramlett is president & CEO of 18 September 24, 2012 / INSURANCE ADVOCATE
NY PIA PAST PRESIDENT RICH SAVINO
PIANY NEWLY ELECTED PRESIDENT MIKE SKEELE
PIANY VICE PRESIDENTS ALAN PLAFKER, MEMBER BROKERAGE SERVICES LLC; JOHN PARSONS, OF PARSONS & ASSOCIATES, RICH SAVINO OF WRG, JEFFERY GREENFIELD, NGL GROUP LLC.; N. STEPHEN RUCHMAN, B&B COVERAGE
the Bramlett Agency in Ardmore, Okla. Tom Minkler is president of the ClarkMortenson Agency in Keene, N.H. Mr. Minkler is a past chairman of the New Hampshire Association of Insurance Agents, past New Hampshire director on the Big “I” national board and past president of the Massachusetts Association of Insurance Agents. David Walker, CIC, AAI, LIC, is president of Hartland Insurance Agency in Hartland, Mich. Vaughn Graham is president of Rich & Cartmill, Inc. headquartered in Tulsa, Okla. He is a past chairman of the IIAO and has served on the Big “I” national board of directors. The 2011-2012 Big “I” chairman, Mike Donohoe, who will serve on the committee as immediate past chair for one year, is principal of the James R. Weir Insurance Agency in Mankato, Minn.
NY YIP 2012-2013 OFFICERS
Recently, PIA of NY and The NY Young Insurance Professionals elected their new officers for 2012-2013: for PIA, Mike Skeele of The Skeele Agency was elected President, and Alan Plafker of Member Brokerage Services LLC, was
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[ FAC E TO FACE ] elected President-Elect. For the YIPs, Gino Orrino of Orrino Capital Services in Corona, NY was elected President, and Jen DeCristofaro of D.C. White Agency was elected President Elect. Dina Bruno of MetLife Auto and Home was elected Vice President; Jason Bartow of Eugene A. Bartow Insurance Agency in Deer Park, N.Y. was elected treasurer; Adam Rostkowski, AAI, CPIA, of ProActive Brokerage in West Babylon, N.Y. was elected secretary; and Michael Plafker, of Member Brokerage Service LLC in Briarwood, N.Y., will serve as immediate past president. I personally am extremely proud of you all, and honored to have you as my friends. I wish you the very best in your tenure as officers of these wonderful organizations and I know you will do everything within your power to bring not only the organization but our entire industry to a higher level. Well that’s what’s been happening around town, and until next time when we will be talking about a few new events as fall sets in here in the northeast. Ciao for now! [IA] Michael Loguercio is the Regional Sales Manager for Webcetera-EZ Lynx; active Past President of the Young Insurance Professionals of New York State; current ACT/AUGIE, Professional Insurance Agents of New York State, Independent Insurance Agents and Brokers of New York State, and Council of Insurance Brokers of Greater New York committee member. In 2010 Michael was honored with the NY-YIP/PIA Insurance Professional of the Year award; and in 2012 with a NYYIP/PIA Lifetime Achievement award. In his community, Michael is President of the Longwood Central School District Board of Education on Long Island, NY; is a Director on the board of REFIT NY (Reform Educational Financing Inequities) and is a member of The Middle Island, NY, Rotary Club and Central Brookhaven Lion’s Club. He is a regular Contributor to the Insurance Advocate and may be contacted at 631-345-9359 or michael@webcetera. com.You may also follow him on Twitter @MLoguercioJr; and on Facebook @ Michael Anthony Loguercio Jr.
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[ IN TH E ASSOCIATIONS ]
PIANY Taps Skeele for 2013 President, New Board Members Elected
G
LENMONT, N.Y.—Michael Skeele, CIC, CPIA, president of Skeele Agency Inc. in DeRuyter, N.Y., was elected president of Professional Insurance Agents of New York State Inc., at a meeting of the association’s board of directors today. Skeele Agency Inc. also has offices in Manlius, Cazenovia, Chittenango and New Hartford, N.Y. Active in PIANY, Skeele served as president-elect in 2011-12 and vice president of the Government Affairs and Nominations Committees. He is a member of the New York/New Jersey Joint Annual Conference and the Executive/Budget & Finance Committees. Skeele also is chairperson of the Syracuse Advisory Council and is an ex-officio member of the Member, Benefits & Services and Education/ Conference Committees. Skeele received New York Young Insurance Professionals Volunteer of the Year award in 2006. The award is given to an individual who is strongly committed to improving the quality of events and programs of the organization by giving of their personal time so that others will benefit. NY-YIP is an organization dedicated to the professional and personal growth of newcomers to the insurance industry and is an affiliate of PIANY. Although he moved to Fayetteville recently, he has been active in his community. He served as school board vice president for 11 years, high school boys soccer coach for 27 years and treasurer of the DeRuyter Masonic Lodge. Skeele also was a trustee for the Village of DeRuyter for 28 years and was a director on the board of DeRuyter Farm and Garden Cooperative. He also was a volunteer fireman for more than 29 years. Skeele also has been active in various church and community groups and recently served as president of the Greater Manlius Chamber of Commerce. Joining Skeele are the following individuals elected to serve for three-year terms, ending in 2015: • Richard Andrews, LUTCF, of Freeville, N.Y. Andrews is owner of The Andrews Agency in Ithaca, N.Y. As an active member of PIANY, Andrews is a member of the Southern Tier Advisory Council. He also is a member of the Industry & Company Relations and Education & Conference Committees. • Michael Cracco of Massepequa, N.Y. Cracco is president and owner of Completely Covered Insurance Agency Inc., in Massapequa. Active in the association, Cracco is chairperson of the Government Affairs Committee and the Long Island Regional Awareness Program. He is a member of the Company/Industry Relations Committee and is past president of the New York Young Insurance Professionals, an organization dedicated to the professional and personal growth of newcomers to the insurance industry and an affiliate of PIANY. 22 September 24, 2012 / INSURANCE ADVOCATE
NEWLY ELECTED PIANY PRESIDENT MICHAEL SKEELE, CIC, CPIA, CEREMONIOUSLY ACCEPTS THE GAVEL FROM IMMEDIATE PAST PRESIDENT RICHARD SAVINO, CIC, CPIA
• Anthony Kammas of Brooklyn. Kammas is president and owner of Skyline Risk Management, in Flushing, N.Y. Active in PIANY, Kammas serves on the New York City Advisory Council and is a member of the Member Benefits & Services Committee. He also is a member of the Education & Conference Committee. • Leslie Rogoff of New York. Rogoff is the marketing manager for Madison Avenue Brokerage Corp. in New York. Active in PIANY, Rogoff is chairperson of the Education/Conference Committee and also is chairperson of the New York City Advisory Council. • Eugene Sandy, CIC, of Stony Brook, N.Y. Sandy is the director of marketing for the Millennium Alliance Group LLC, in Syosset, N.Y. An active member of PIANY, Sandy served as vice president in 2011-12 and as secretary in 2009-10. He currently serves as vice president of the Education/Conference Committee and the Long Island and Hudson Valley Regional Awareness Programs. Sandy also is a member of the Company/Industry Relations and continued on page 24
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ADVERTORIAL
By Michael Fliegelman, CLU, ChFC, AEP, RFC
W
Whole Life Insurance: An Overlooked Foundation of Business Succession Planning?
hole Life Insurance is often overlooked as the Foundation of Business Succession Planning. I would like to share with you some important information about Whole Life Insurance that is provided by Massachusetts Mutual Life Insurance Company (MassMutual). Many business owners realize that they will be forced to deal with issues such as business succession at some point, which is why they want to have a plan that’s guaranteed to be there when they need it. The versatility, guarantees, and permanence of whole life insurance can help solve some of these inevitable challenges. Whole life insurance can, for example: • Protect a business or business owner from financial loss – including the loss of control of a part of the business – as a result of the death of a partner or coowner. As part of a buy-sell agreement, the policy’s death benefit can be used to help purchase the deceased partner’s shares from his or her estate. • Protect a business from loss as a result of the death of a key employee. The policy’s death benefit can provide a cushion that enables the company to continue operating while seeking a replacement. • Be used as a highly valued employee benefit for key personnel whose loved ones can benefit from permanent, guaranteed coverage in the event of the employee’s death. In addition, the employee may be able to draw upon the policy’s cash value through loans to help supplement income in retirement.*
Financial flexibility Another factor to consider is Financial Flexibility. As long as the policy is kept in force, the cash value of a whole life insurance policy can give businesses the flexibility to manage through the ups and downs of the business life cycle by providing funds to respond to expected and unexpected challenges and opportunities. A whole life insurance policy’s cash value can be used as: • A source of cash when credit is tight for circumstantial or external reasons. • A source of emergency funds to pay for replacement or temporary talent if a key employee leaves, becomes disabled or retires. • A “bookable” asset on the company’s balance sheet. Finally, it’s not an all-or-nothing decision. Many smaller or younger businesses may opt for quality, convertible term life insurance, so that as they grow and ad-
ditional cash becomes available, they’re able to bridge to the broader benefits of whole life insurance. Specific Mass Mutual Product Information The whole life series (WL-2007 and WL-NC-2007) are level-premium, participating, permanent life insurance policies issued by Massachusetts Mutual Life Insurance Company, Springfield, MA 01111-0001. * Distributions under the policy (including cash dividends and partial/full surrenders) are not subject to taxation up to the amount paid into the policy (cost basis). If the policy is a Modified Endowment Contract, policy loans and/or distributions are taxable to the extent of gain and are subject to a 10% tax penalty. While the policy allows for loans, you should know that there may be little to no cash value available for loans in the policy's early years. Access to cash values through borrowing or partial surrenders will reduce the policy's cash value and death benefit, increase the chance the policy will lapse, and may result in a tax liability if the policy terminates before the death of the insured. For more information on how whole life insurance can help business owners, visit www.massmutual.com/customervoices/business or contact me directly. My job is to help educate you and your clients so you can help them make good decisions about whole life insurance for their business succession planning needs. As always, your questions and feedback is very important to me. Please email me at michael@michaelfliegelman.com or call me at: 631-262-9254, to discuss how we can be of help to you and your agency. Michael Fliegelman, CLU, ChFC, RFC, AEP®, Michael is a Mass Mutual brokerage director and the CEO and founder of SWAN Strategic Wealth Advisors Network www.swanwealth.com Michael is a leading authority on estate and business succession planning and has extensive experience in analyzing life, disability and long-term care insurance policies. He has a special talent for helping clients and insurance professionals to do their financial planning in a holistic and comprehensive manner. He has been a featured commentator on Fox News and in Newsday. INSURANCE ADVOCATE / September 24, 2012 23
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[ IN THE ASSOCIATIONS ] continued from page 22
Executive/Budget & Finance Committees and is chairperson of the Long Island Advisory Council. • Frances Scott of Campbell Hall, N.Y. Scott is principal of the F.A. Scott Insurance Agency in Goshen, N.Y. Active in the association, Scott is chairperson of the Company/Industry Relations Committee. She also is a member of the Education/ Conference Committee and the Hudson Valley Regional Awareness Committee. The following individual was elected to serve for a two-year term, ending in 2014: • Robert Shapiro of Bellmore, N.Y. Shapiro is president of Global Facilities Inc. in Lynbrook, N.Y. Active in PIANY, Shapiro is a member of the Member, Benefits & Services Committee. He also is a member of the Education & Conference Committee and the Long Island Regional Awareness Program. Shapiro also is an ex-officio member of the Long Island Advisory Council.
NEWLY PIANY OFFICERS STAND AS THEY ARE NAMED TO THE BOARD DURING THE ANNUAL BOARD MEETING
New York Young Insurance Professionals Elects Officers at Annual Business Meeting • Gino Orrino, principal of Orrino Capital Services in Corona, N.Y., was elected president;
Let us save you time. PREMCO MAKES YOUR LIFE EASIER! PREMCO has been Financing Insurance Premiums and supporting Independent Insurance Agencies for over 22 years. Give us a call and experience why so many Independent Agencies rely on us every day. • Competitive Rates & Terms • Online Quoting • Immediate Service • Management System Integration • Free Online Payments • Credit/Debit Card Payments • Same Day Financing • Investment Programs • Rate Share Programs* *Where permitted by law
David Hofmann Northeast Regional Sales Executive (516) 668-1234 | dhofmann@go-premco.com | www.go-premco.com 24 September 24, 2012 / INSURANCE ADVOCATE
• Jennifer DeCristofaro, division manager of D.C. White Agency, in Long Beach, N.Y.; was elected presidentelect; • Dina Bruno, of MetLife Auto & Home in Wantagh, N.Y. was elected vice president; • Jason Bartow of Eugene A. Bartow Insurance Agency in Deer Park, N.Y. was elected treasurer. • Adam Rostkowski, AAI, CPIA, of ProActive Brokerage in West Babylon, N.Y. was elected secretary. • Michael Plafker, commercial lines customer service representative for Member Brokerage Service LLC in Briarwood, N.Y., will serve as immediate past president. In addition to the above, NY-YIP also elected to its board of directors: Carl Abramson of Associated Mutual Insurance Cooperative in Woodridge, N.Y.; Christina Caputo of Beazley Group in Manhattan; Sean Metzger of North Sea Insurance in Long Beach, N.Y.; Jim Smith of All Island Credit Corp. in Plainview, N.Y.; and Neil Young of Russell Bond Insurance Wholesalers in Buffalo. NY-YIP is an organization dedicated to the professional and personal growth of newcomers to the insurance industry and an affiliate of Professional Insurance Agents of New York State Inc., a trade association representing professional, independent insurance agencies, brokerages and their employees throughout the state. [IA]
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[ GUEST V I EW ]
Waxing Poetic Stan Drescher has shared his paean to the profession he loves, - he's a Public Adjustor. Stan uses poetry to teach insurance students. He says it works. It is original.
WHAT IS A PUBLIC ADJUSTER? By Stan Drescher You don’t think of insurance Until you have a loss But without assistance It’s worse than a divorce
The agent that you’ve chosen By law is on their side And so if push comes to shove With them he must abide
Take note that the adjuster Who comes to see your loss Was sent by his employer Your company, his boss continued on page 26
All policies have clauses Not easy to discern But a trained professional Will help you as you learn
ISRAEL BONDS
Florida law protects you Should you face resistance And none can deny you When you seek assistance
Announces a Luncheon Honoring
The P.A. only earns a fee On what he can collect But if that isn’t possible He’ll still earn your respect He’s certified and bonded With fingerprints on file And with knowledge he’s attained He’ll fight your denial He strives for prompt settlement By filing forms on time And with the Exactimate Will fight for every dime Even when a loss seems small It’s no less traumatic But when someone holds your hand Results can be dramatic A company cannot exploit Those who are destitute Knowing they’re unable To protest or refute Appointed by the company Your agent is their choice So it’s best if you’ve a loss To have your own voice
Insurance Division
ROGER W. CRANDALL Chairman, President & CEO, MassMutual Financial Group
AND
THE HONORABLE
BENJAMIN M. LAWSKY Superintendent of Financial Services NY State Department of Financial Services
Recipients of the
NEIL D. LEVIN MEMORIAL AWARD SAVE THE DATE THURSDAY, OCTOBER 11, 2012 THE ST. REGIS | NEW YORK CITY
Purchase Israel Bonds Online · israelbonds.com For information contact: jeffrey.strominger@israelbonds.com 212.756.6614 Development Corporation for Israel This is not an offering, which can be made only by prospectus. Read the prospectus carefully before investing to fully evaluate the risks associated with investing in Israel bonds. Issues subject to availability. Member FINRA
INSURANCE ADVOCATE / September 24, 2012 25
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[ GUEST VIE W ] continued from page 25
The “Principle of Indemnity” Says “they must make you whole” And your P.A. is obliged To guarantee that goal
Property must be maintained Don’t let it rust or fade And loss due to wear and tear Will not ever be paid
But listing inventory Can be tedious And if you’ve no one to help It’s quite laborious
P.A.s can’t void exclusions When they’re called to your loss So always have the peril Known as proximate cause
A policy condition Is your obligation Inventory must be made A standard regulation
P.A.s crawl into attics And find much on those floors Old paintings, toys and games And once, a chest of drawers In confusion the insured Can miss a whole collage In a dark dingy corner In their trash filled garage Sometimes when there’s a problem They’ll climb up on the roof And will measure every inch ‘Till they find needed proof He’ll rent a sturdy dumpster To cart away debris And find you other quarters As long as you agree Even if you’ve had a loss Within 36 months It still can be reopened But should be done at once You won’t see “An Act of God” It’s not on any form They do pay for the peril And hurricane’s a storm A TV ad perhaps will show Exclusions unrevealed And ‘tho a picture never lies Much has been concealed Even with a loss that’s tough P.A.s evaluate They weigh all the ashes And settle by the weight So don’t be a number But be realistic With your own adjuster You’re not a statistic [IA]
26 September 24, 2012 / INSURANCE ADVOCATE
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[ NEWS ]
Arbitration Forums to Give Back $6.6 Million in Fees in 2012
T
AMPA, FL.—Insurance companies and self-insured participants in Arbitration Forums, Inc. (AF) programs will save $6.6 million in filing fees and other charges over the course of 2012 in an ongoing effort to reduce arbitration system costs for the industry, W. Russ Smith, AF president and chief executive officer has communicated.
AF’s latest giveback is concrete proof of our commitment to provide the industry with the most efficient, cost-effective services to satisfy its dispute resolution needs. The latest installment of the giveback program, effective October 1, 2012, will return $1.2 million to the industry. Smith pointed out that the $1.2 million giveback represents additional savings in filing fees above the $5.4 million that AF previously committed to the insurance industry over the course of 2012. By the end of the year, the industry will have realized $17.75 million in savings since the fee modification program was initiated in 2009, a 25 percent reduction. “AF’s latest giveback is concrete proof of our commitment to provide the industry with the most efficient, cost-effective services to satisfy its dispute resolution needs,� Smith said. “It has been implemented to benefit our membership, simplify participation in our programs and reduce costs.� He also noted that AF will continue to offer the use of its Web-based E-Subro Hub electronic subrogation system at no charge. Founded by the insurance industry in 1943, AF is a membership-driven, not-forprofit organization that exists to effectively and efficiently serve its over 4,600 members’ recovery and resolution needs. [IA]
01/54-)&-5 80$3 53/$ 31/535
876543210/3.5-,,0+13210/50*5)('.1+5 &/,(%3/+65-$#(,26%,5"4-)&-!5 1 6,5 6 '6%,53/56$ 65' 5 %0 1$1/ 52765 1/*0% 3210/ 5200.,53/$50 0%2(/1216,527325 3..0 5276 5205,(++66$5 %0*6,,10/3.. 5 1/+.($1/ 6 '6%,-0/. 5462 0% 1/ 5 6/2, 6 3.5 6 %6,6/23210/5 6 1,.321 65 $326, 6 1/3%5 5 0/*6%6/+65 1,+0(/2, ,650*54-)&- ,5 1,21/ (1,76$5 0 05 -5 0 3/ 5 1,21/ 50/543 13 +0 )%0*6,,10/3.5 6%21*1+3210/5
0%535.1 126$521 6 54-)&-51,50**6%1/ 5 $1,+0(/2,527325.625 ('.1+53$#(,26%,5#01/5 325( 5205 5 6%+6/250**50*527653//(3.5%326 5 0/ 25$6.3 5 01/54-)&-520$3 53/$5 6/#0 5 %6325 6 '6%5'6/6*12,532535 *%3+210/50*52765+0,2 5 0%5 0%65$6231.,50%5 2053 . 5 1,125 /3 13 +0 50%5+3..5 - - INSURANCE ADVOCATE / September 24, 2012 27
INA 9-24-12_INA 9-24-12 9/26/12 4:23 PM Page 28
Merger & Acquisition Services, Inc. provides specialist investment, advisory and financial services specifically to participants within the insurance industry. For over 10 years, Merger & Acquisition Services has been a “pillar” in the insurance sector, helping our clients achieve their strategic and financial goals. Focused - Some boutique firms try to be all things to all people. Merger & Acquisition Services is focused solely on the insurance industry. This allows our advisors to obtain critical industry knowledge and subsequently, provide clients with the best advice. Unbiased - We do not lend or provide equity research. Our advice is based on an objective analysis of data and free of conflicts of interest. Value-Added - Our advisors have a unique blend of insurance and investment banking experience which allows us to look at the big picture while still paying attention to detail. We treat every assignment with equal importance and every transaction like it was our own.
By adhering to these principles, our goal is to become the trusted advisor of choice for your strategic and financial needs. With over 100 years of combined experience, our team of Advisor’s possesses the knowledge and skills to assist and guide our clients through M&A and corporate finance transactions. The Firm’s reach is global and our group has assisted small privately held companies, private equity backed organizations and multinational publicly traded corporations. Our blend of experience not only gives our Advisors a solid understanding of the global insurance market but also brings an entrepreneurial approach to each and every assignment.
Our services include: Mergers and Acquisitions Acquisition/Disposition of Shell Companies Capital Raising Books of Business, Programs and Fronting Valuation Services
New York Office
336 East 53rd Street, 2nd Floor New York, NY 10022 Tel (212) 750-0630
Atlanta Office 3525 Piedmont Road, Suite 300 Atlanta, GA 30305 Tel (770) 417-1141
Hartford Office 109 Pitkin Street East Hartford, CT 06108 Tel (860) 367-8720
info@maservices.com 28 September 24, 2012 / INSURANCE ADVOCATE
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Who says Summers are Slow? Merger & Acquisition Services, Inc., and its affiliates, are proud to announce our team has served as an advisor in the following transactions over the Summer of 2012
has entered into an agreement to acquire Citation Insurance Company & Physicians Insurance Company of Ohio
has sold
has acquired SCRUBS Managers LLC
Surety Life Insurance Company
&
to
EMPAC Managers, LLC
has entered into an agreement to acquire has acquired has acquired
Citadel Insurance Company
A Specialty Marine Agency
from
American General Property Insurance Company & American General Indemnity Company from
Merger & Acquisition Services
has acquired Congress Life Insurance Company from Lehman Re Bermuda
is a specialist investment, advisory and financial services Firm to the insurance and reinsurance industry, with offices in New York, Atlanta & Hartford.
Founded in 1999, the company provides investment banking and insurance services, including; merger & acquisition advisory, capital raising, valuations, program placements / fronting, and reinsurance advisory.
To learn more about Merger & Acquisition Services, please visit the company’s website at www.maservices.com Securities offered in the United States through Merger & Acquisition Capital Services, Inc., a registered broker-dealer and member FINRA / SIPC.
Merger & Acquisition Services, Inc | 336 East 53rd Street | 2nd Floor | New York, NY 10022 | Tel: (212) 750-0630 INSURANCE ADVOCATE / September 24, 2012 29
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[CONSUMERS]
Disability Carriers Launch “Defend Your Income” Effort Focuses on Educating Working Americans on Need to Protect Their Income
P
ORTLAND, M.E.—In an effort to make the often- overlooked subject of disability income planning more visible, the Council for Disability Awareness (CDA) and its member companies announced the launch of the Defend Your
Income movement. This educational program seeks to unite consumers, advisors, employers and insurers in the fight to protect the incomes of working Americans from the financial risks caused by illness or injury.
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According to the Social Security Administration, more than a quarter of today's entrants into the workforce will suffer an income-interrupting disability at some point during their working careers. However, recent CDA research shows that the majority of working Americans and many of their advisors significantly underestimate their odds of disability. Worse yet, about two-thirds of America’s workforce is not covered by private long term disability insurance. “It’s difficult to convey the risks associated with disability,” said Barry Lundquist, president of CDA.“People just avoid talking about the subject. When it comes to thinking about their health, people are optimistic by nature. But that kind of thinking has left the majority of Americans unprepared to protect their most valuable financial asset – their income. That’s why we’re taking such a new and different approach to engage working consumers and their trusted financial advisors and employers in learning about their risks and empowering them to take action.” The hub of the Defend Your Income program is a highly engaging web experience. Set in a martial arts dojo, this site invites visitors to actively learn how to defend their income. They can “meet their attackers” and learn about the top threats to their income. They can even fight off those attackers during an interactive game. Through a series of quizzes, they can also earn their “black belt” in income Defense. And they can calculate their own Earnable Income Quotient (EIQ) to see what’s at stake — their lifetime income-earning potential. “We need to change the conversation about income protection planning,” said John Roberts, President and CEO of Assurant Employee Benefits, and Chairman of CDA’s board. “This campaign presents the topic in a way that is dynamic, easy to understand and even inserts a little bit of fun into the learning process. When incomes are secure, everyone wins – employers, society, and of course the wage earners themselves.” [IA]
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NYPIUAPOINT
ADVERTORIAL
Windstorm Damage Mitigation Grant Program Announced
T
ropical Storm Irene in 2011 affected the New York City metropolitan area. While winds did not reach hurricane strength, a large number of homes in New York City and on Long Island were damaged. NYPIUA alone had almost 1,500 reported claims. What became apparent as we examined the claims was that almost a third could not be paid because there was no windstorm coverage in effect. Since the late 1980’s, NYPIUA has had special requirements for properties located on a barrier island, or other contiguous bodies of water, regardless of name, or within 1500 feet of the Atlantic Ocean, Long Island Sound, or the Great South Bay. Policyholders are required to submit an inspection report completed by a licensed architect or engineer. The inspection is based on insurability standards developed for NYPIUA to mitigate damage in the event of a hurricane. Failure to submit the inspection report or to cure any deficiencies results in the elimination of windstorm coverage. A copy of these Guidelines and Inspection Form can be printed at www.nypiua.com, “My Account”, “To Print a Form”, “11. Windstorm Inspection/Guidelines.” NYPIUA is introducing a program to help fund these inspections and any required repairs to help policyholders add windstorm coverage to their policies. This program is also available to policyholders who never applied for windstorm coverage, but now want to secure that protection. The following conditions must be met to be eligible for the Grant Program: • The applicant must be an owner of a dwelling with up to four apartments who has lived at the property for three years or more. Seasonally occupied dwellings are not eligible. • The property must have been insured by NYPIUA for the last three years or more. • The applicant must be an individual with family income less than the New York State median. (Salary, pension, Social Security, disability, rental income, and family contributions are considered.)
How Much Will NYPIUA Pay? • The amount NYPIUA will pay depends on the household income and the cost of the work. Income includes salary, Social Security, pensions, rental income, and other sources • If the household income is greater than $30,000, but less than the New York State median income, we will pay 50% of the cost up to $3,000. • If the household income is $30,000 or less, we will pay 75% of the cost up to $3,000. Grant proceeds are not a loan and the property owner is not required to repay the grant; however, grant proceeds must be reported as income on income tax returns. The Windstorm Damage Mitigation Grant Program application will be mailed to qualified property owners shortly. The application may be filed electronically at www.nypiua.com, “Windstorm Damage Mitigation Grant Application,” “Automatic Submission”; faxed to 212-3449879; or printed and mailed to NYPIUA, 100 William Street, 11th Floor, New York, NY 10038. For questions regarding the windstorm program please call 212-208-9773. For questions regarding the windstorm damage mitigation grant, please call 212-208-9853. INSURANCE ADVOCATE / September 24, 2012 31
INA 9-24-12_INA 9-24-12 9/26/12 4:23 PM Page 32
[ COURTSI DE ]
By Lawrence N. Rogak
Go Know: a Chupah is a "Structure" For Purposes of Labor Law McCoy v Kirsch Note: A "chupah" is a canopy, usually made of fabric supported by wooden posts, under which a bride and groom perform a traditional Jewish wedding ceremony. -- LNR APPEAL by the defendants, in an action to recover damages for personal injuries, as limited by their brief, from so much an order of the Supreme Court (David I. Schmidt, J.), dated April 27, 2011, and entered in Kings County as, in effect, denied that branch of their motion which was for summary judgment dismissing the cause of action pursuant to Labor Law § 240(1) and granted the plaintiff 's cross motion for summary judgment on the issue of liability on the cause of action pursuant to Labor Law § 240(1). DILLON, J.P.This appeal calls upon our Court to address the factors that should be considered in determining whether a particular item or device qualifies as a "structure" for purposes of Labor Law § 240(1) liability. The plaintiff, Samuel McCoy, was employed as a truck driver by nonparty Atlas Florists (hereinafter Atlas). On August 23, 2008, a wedding ceremony was conducted at a catering facility of the defendant Abigail Kirsch at Stage 6 (hereinafter Abigail Kirsch), which involved the use of a wedding chupah. A chupah is a canopy under which brides and grooms stand during weddings conducted in the Jewish religious tradition. In the early morning of August 24, 2008, after the wedding celebration had ended, the plaintiff was disassembling the chupah, which was owned by Atlas. The chupah was a 10-foot-high device made of pipe, wood, and a fabric canopy at its top. The chupah's frame consisted of metal pipes that were 10 feet long and 3 inches wide, assembled to each other, and its vertical supports were attached to 4 steel 32 September 24, 2012 / INSURANCE ADVOCATE
Labor Law § 240(1) imposes upon owners and general contractors a nondelegable duty to provide safety devices necessary to protect workers from risks inherent in elevated work sites.
plates on the floor. The plaintiff worked on disassembling the chupah from a sixfoot high aluminum ladder supplied by his employer, on which two feet allegedly were missing. To perform the disassembly, the plaintiff was required to use a pipe wrench, a florist knife, wire cutters, and the ladder. A few minutes into disassembly, while a coworker was holding the ladder and the plaintiff was standing on the third rung from the top of the ladder, the ladder slipped and the plaintiff fell to the floor, sustaining injuries. In February 2009, the plaintiff commenced this action against Abigail Kirsch, Abigail Kirsch at Tappan Hill, LLC, Steiner Studios NYC, LLC, Steiner NYC, LLC, Steiner Building NYC, LLC, and Steiner Studios, LLC (hereinafter collectively the defendants), alleging causes of action, inter alia, to recover damages for violation of Labor Law § 240(1). After discovery, the defendants moved for summary judgment dismissing, among other things, the Labor Law § 240(1) cause of action. At issue was whether the chupah that the plaintiff was disassembling at the time of his accident
was a "structure" within the scope and meaning of the Labor Law. The defendants argued that the chupah was not a structure, and hence, that they were entitled to judgment as a matter of law dismissing the Labor Law § 240(1) cause of action. The plaintiff opposed the motion and cross- moved for summary judgment on the Labor Law § 240(1) cause of action, arguing that the chupah was a structure and that he could recover under Labor Law § 240(1). In the order appealed from, the Supreme Court, Kings County, inter alia, denied that branch of the defendants' motion which for summary judgment dismissing the Labor Law § 240(1) cause of action and granted the plaintiff 's cross motion, finding that the chupah was a structure within the protections afforded by Labor Law § 240(1). For the reasons set forth below, we affirm. Labor Law § 240(1) imposes upon owners and general contractors a nondelegable duty to provide safety devices necessary to protect workers from risks inherent in elevated work sites (see McCarthy v Turner Constr., Inc., 17 NY3d 369, 374; Ross v Curtis-Palmer Hydro-Elec. Co., 81 NY2d 494, 500; Rocovich v Consolidated Edison Co., 78 NY2d 509, 512-513). Absolute liability is imposed upon owners and contractors who violate the statute by failing to provide or erect necessary safety devices for the protection of workers exposed to elevation-related hazards, and where such failure is a proximate cause of the accident (see Rocovich v Consolidated Edison Co., 78 NY2d at 513; Bland v Manocherian, 66 NY2d 452, 459; Zimmer v Chemung County Performing Arts, 65 NY2d 513, 521; Henry v Eleventh Ave., L.P., 87 AD3d 523, 524). The statute's provisions are expressly
INA 9-24-12_INA 9-24-12 9/26/12 4:23 PM Page 33
[ COURTS ID E ] applied "in the erection, demolition, repairing, altering, painting, cleaning or pointing of a building or structure" (Labor Law § 240[1] [emphasis added]). Over a century ago, the Court of Appeals made clear that the meaning of the word "structure," as used in the Labor Law, is not limited to houses or buildings (see Caddy v Interborough R.T. Co., 195 NY 415, 420). The court stated, in pertinent part, that "the word structure' in its broadest sense includes any production or piece of work artificially built up or composed of parts joined together in some definite manner" (id. at 420). Since the Legislature definitionally applied Labor Law § 240(1) to buildings or structures, a structure, by implication, may include constructs that are less substantial and perhaps more transitory than buildings. Indeed, courts have applied the term "structure" to several diverse items such as a utility pole with attached hardware and cables (see Lewis-Moors v Contel of N.Y., 78 NY2d 942, 943; Girty v Niagara Mohawk Power Corp., 262 AD2d 1012, 1013), a ticket booth at a convention center (see Panico v Advanstar Communications, Inc., 92 AD3d 656), a substantial freestanding Shell gasoline sign (see Smith v Shell Oil Co., 85 NY2d 1000, 1001), a shanty located within an industrial basement used for storing tools (see Henry v Eleventh Ave., L.P., 87 AD3d at 523-524), a crane used for construction (see Cun-En Lin v Holy Family Monuments, 18 AD3d 800, 801; Cornacchione v Clark Concrete Co., 278 AD2d 800, 801), a power screen being assembled at a gravel pit (see Hodges v Boland's Excavating & Topsoil, Inc., 24 AD3d 1089, 1091), a pumping station (see Cabri v ICOS Corp. of Am., 240 AD2d 456, 457), a utility van (see Moore v Shulman, 259 AD2d 975), and a window exhibit at a home improvement show (see Sinzieri v Expositions, Inc., 270 AD2d 332, 333). All of the foregoing items and devices meet the standard set forth by the Court of Appeals in Caddy that constituent parts be artificially built up or joined together in a definite, deliberate manner (see Caddy v Interborough R.T. Co., 195 NY at 420). Conversely, items that have been held to not qualify as structures include temporary decorations to a building used as a set for a
Whether an item is or is not a “structure” is fact-specific and must be determined on a case-by-case basis. television film (see Tanzer v Terzi Prods., 244 AD2d 224), a sign hung from a ceiling (see Kretschmar v New York State Urban Dev. Corp., 13 AD3d 270, 270-71), commercial dishwasher machines (see Chuchuca v Redux Realty, 303 AD2d 239, 239-240), and, of particular interest here, a decorative wooden disc suspended from a ceiling for use as a ceremonial wedding canopy (see Stanislawczyk v 2 E. 61st St. Corp., 1 AD3d 155). The characteristics of those items fall short of the Caddy definition. Whether an item is or is not a "structure" is fact-specific and must be determined on a case-by-case basis. In determining each case, courts may consider a number of relevant factors. These factors should include, but are not necessarily limited to, the item's size, purpose, design, composition, and degree of complexity; the ease or difficulty of its assembly and disassembly; the tools required to create it and dismantle it; the manner and degree of its interconnecting parts; and the amount of time the item is to exist. However, no one factor should be deemed controlling. We find that in this case and upon consideration of all relevant factors, the Supreme Court properly held that the chupah at Abigail Kirsch was a "structure" within the intended scope of Labor Law § 240(1). In this action, the chupah consisted of various interconnected pipes 10 feet long and 3 inches wide, secured to steel metal bases supporting an attached fabric canopy. A ladder plus various hand tools were required to assemble and disassemble the chupah's constituent parts in a process that would take an experienced worker more than a few minutes to complete[FN1]. The chupah here is more akin to the things and devices which the courts of this state have recognized as structures than to the
things and devices that have not been recognized as structures. This is not to say that every chupah qualifies as a structure under Labor Law § 240(1). Undoubtedly, there are wide variations of chupahs, some involving a series of durable interconnected parts, and others being much more simple and merely decorative in nature. Whether or not a chupah qualifies as a "structure" under Labor Law § 240(1) requires a consideration of more than only the purpose for which it is used. For example, the assembled pipe, wood, and fabric chupah in this matter consisted of intricate, interconnected parts, whereas, the wedding canopy in Stanislawczyk v 2 E. 61st St. Corp. (1 AD3d 155), a case upon which the defendants heavily rely, was suspended from a ceiling and was not itself assembled or interconnected with any other object. While the items here and in Stanislawczyk may have been used for the same ultimate purpose, the items themselves were, in a structural sense, vastly different from one another, one being a simple one-piece object, and the other being a collection of attached pieces of wood, metal, and fabric. Accordingly, we affirm the order insofar as appealed from. BALKIN, LEVENTHAL and CHAMBERS, JJ., concur. ORDERED that the order is affirmed insofar as appealed from, with costs.IA] 2012 NY Slip Op 06128 Decided on September 12, 2012 Appellate Division, Second Department Dillon, J. Footnotes Footnote 1:The plaintiff testified that prior to the accident, before disassembly was complete, he had worked approximately 10 minutes on the disassembly.
Serving New York, New Jersey, Pennsylvania and Connecticut Since 1889 www.insurance-advocate.com INSURANCE ADVOCATE / September 24, 2012 33
INA 9-24-12_INA 9-24-12 9/26/12 4:23 PM Page 34
[ COURTSI DE ]
By Lawrence N. Rogak
Defendant's Belated Attempt to "Appear" for EBT by Telephone Fails Allstate Ins. Co. V Rasoul
D
efendant appeals from (1) an order of the Civil Court of the City of New York, New York County (Joan M. Kenney, J.), entered July 23, 2008, which granted plaintiff 's motion to strike the answer pursuant to CPLR 3126, (2) an order (same court and Judge), entered August 6, 2008, which denied, as moot, defendant's motion for summary judgment dismissing the complaint, and (3) a judgment (same court and Judge), entered May 19, 2009, after an inquest, in favor of plaintiff and awarding it damages in the principal sum of $8,245.08. Affirmed. Defendant's demonstrated failure to comply with three separate court orders directing him to appear for deposition gave rise to an inference of willful and contumacious conduct (see Mei Yun Zhang v
34 September 24, 2012 / INSURANCE ADVOCATE
In the absence of a reasonable excuse for defendant's prolonged disobedience, the striking of his answer was a proper exercise of discretion. Santana, 52 AD3d 484 [2008];Â Duncan v Hebb, 47 AD3d 871 [2008]). In the absence of a reasonable excuse for defendant's prolonged disobedience, the striking of his answer was a proper exercise of discretion (see Figiel v Met Food, 48 AD3d 330 [2008]). We also reject defendant's claim that he appeared at the deposition. His attempt
to appear and submit to deposition by telephone was ineffective and therefore properly rejected, since there was neither a stipulation between the parties (see CPLR 3113[d]) nor a court order authorizing this procedure (see Connors, Practice Commentaries, McKinney's Cons. Laws of NY, Book 7B, CPLR C3113:8). [IA] 2012 NY Slip Op 51679(U) Decided on August 30, 2012 Appellate Term, First Department
www.insurance-advocate.com
INA 9-24-12_INA 9-24-12 9/26/12 4:23 PM Page 35
[ LAST WORD ]
By Douglas A . Powell, Demotech, Inc.
Top 25 Writers Prop Up Premium for New York Commercial Automobile
F
or the year ending December 31, 2011, Direct Premium Written (DPW) for New York commercial automobile writers remained relatively flat compared to the year ending December 31, 2010, decreasing less than one percent. This decrease to New York commercial automobile DPW represents an approximately $10 million change from the prior year. In fact, DPW has remained fairly stagnant since 2009 for commercial automobile writers in New York. In contrast, the 2011 DPW reported for New York commercial automobile writers indicated a sharp decline when compared to the level from 2007. Since 2007, DPW has decreased approximately $149 million for commercial automobile writers in New York. Joseph L. Petrelli, President, Demotech, Inc., in assessing the data states, â&#x20AC;&#x153;Although we can hope that the decrease in premium volume is related to declines in commercial automobile loss frequency, severity or enhanced law enforcement, the reality is likely softness in the pricing cycle.â&#x20AC;? The three New York commercial automobile are commercial automobile no-fault, commercial automobile physical damage and other commercial automobile liability. Of these three lines of business, other commercial automobile liability accounted for $1.36 billion, or 78 percent, of the total 2011 New York DPW. Commercial automobile physical damage accounted for 14 percent
â&#x20AC;&#x153;Although we can hope that the decrease in premium volume is related to declines in commercial automobile loss frequency, severity or enhanced law enforcement, the reality is likely softness in the pricing cycle.â&#x20AC;? - Joseph L. Petrelli President, Demotech, Inc.
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and commercial automobile no-fault accounted for 8 percent of the total 2011 New York DPW, $225 million and $160 million respectively.
Top 25 Individual Companies by 2011 Year-end DPW Growth As of December 31, 2011, the Top 25 individual New York commercial automobile insurers increased their direct premium written by nearly 25 percent, approximately $123 million, year over year. In contrast, the remainder of insurers writing New York commercial automobile report-
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continued on page 38
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[ LOOKING BACK… Insurance Advocate, 25 years ago]
36 September 24, 2012 / INSURANCE ADVOCATE
INA 9-24-12_INA 9-24-12 9/26/12 4:23 PM Page 37
[ LOOKING BACKâ&#x20AC;Ś Insurance Advocate, 25 years ago]
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INSURANCE ADVOCATE / September 24, 2012 37
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[ LAST WORD ] continued from page 35
ed a decrease in DPW of approximately 10.6 percent, or $132.5 million, year over year. As stated above, in total, direct premium written for New York commercial automobile writers decreased $9.8 million, less than one percent. Consequently, the
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Top 25â&#x20AC;&#x2122;s growth almost offset the decrease in premium experienced by the other New York commercial automobile insurers. [IA] Powell is a senior financial analyst with Demotech, Inc. and possesses extensive experience in monitoring, reviewing and assessing the financial stability of insur-
ers. He also acts as a liaison on behalf of Demotech and its clients in correspondence with various government agencies, insurance industry associations, insureds and the media. Email questions and comments to dpowell@demotech. com. You may also follow him on Twitter â&#x20AC;&#x201C; @powdoug.
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38 September 24, 2012 / INSURANCE ADVOCATE
INA 9-24-12_INA 9-24-12 9/26/12 4:24 PM Page 39
THEIR SAFETY. OUR MISSION. PRACTICAL, RISK-FREE COVERAGE FROM THE EXPERTS WITH OVER 75 YEARS OF EXPERIENCE. We have robust workers’ compensation plans to suit your clients in these trades: • Building Metal Trades • Cleaners • Construction • Electrical Manufacturers • Hospitals • Launderers and Cleaners • Municipalities
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S a fe t y Pay s D i v i d e n d s Lovell Safety Management Co., LLC 110 William Street New York, NY 10038-3935 212-709-8600 1-800-5-LOVELL www.lovellsafety.com
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