March 31, 2015 by C Acunto

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VOLUME 126, NUMBER 6 / March 31, 2015

A CINN Group, Inc. Publication

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

Springing into Spring.

POTHOLES COST INDUSTRY DEEPLY Trusted Choice速 survey shows about 50% of U.S. car owners report vehicle pothole damage.

GREG SERIO ON THE INDEPENDENT AGENT

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Contents [COVER STORY ] 16

Foreword: REG. 60 Steve Acunto, Publisher

Insight: Start Up, New York! Peter H. Bickford

On the Level: Signs N. Stephen Ruchman, CPIA

In the News: PRI Cites Mercy Medical Center, Rockville Centre, for Risk Management and Patient Safety “Best Practices” Award

On My Radar: Duty to Defend Not Effected by Denial of Motion for Summary Judgement Barry Zalma

Looking Back: March, 1990

Courtside: Where MVAIC Claimant Indicates he was on a Motorcycle, Burden is on Claimant to Prove he is a Qualiﬁed Person Lawrence N. Rogak

Classiﬁeds

Springing into Spring. Potholes Cost Industry Deeply

[FEATURES]

March 31, 2015 | volume 126 number 6

The Social Notebook: Google is on the Move Chris Paradiso NewsNotes: CMSV Announces Fishlinger Center or Public Policy Research

[ AD FEATURES] 9

NYIA: 2015 Conference

PIA: Annual 2015 Joint Conference

EzLynx: What would you do with more free time?

FWA: Networking & Cocktail Reception

Bing to Lead Wilson Elser’s NYC Gov’t Affairs Practice National Fire Adjustment Co., Inc. Names LeBlanc V.P. 24

Guest Opinion: What Will Happen if Supreme Court Cuts ObamaCare Subsidies? Janet M. Orient, M.D.

Guest Article: Writing Off Insurance Agents, Again, is not a Safe Bet Gregory V. Serio

Like us on Facebook… The Insurance Advocate Magazine INSURANCE ADVOCATE / March 31, 2015 3

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[ FORE WORD ]

Steve Acunto

REG. 60

VOLUME 126, NUMBER 6 MARCH 31, 2015

“T

he winter of our discontent” was how King Richard III described his plight in Shakespeare’s play of the same name. In fact the errant king was just reinterred in England after his miscreant bones were discovered. And what timing, near the end of the worst winter in memory. Who would have thought that potholes would grace the first cover of Spring. Springs, shocks, tires – all the losses are a legacy of poor road construction / drainage and patchwork filling at a fast pace. We elect officials to keep order, care for the public space and ensure safety. They of course assume their mandates to be much more abstract and hang their reputations largely on issues that generate votes, like gender, wealth disparity, race, and sociological aims. If only the Giuliani approach were to receive wider coinage, the cover might feature an a smooth road surface.… Yet, there is a fair road ahead on the regulatory front. Thanks to the New York Association of the National Association of Insurance and Financial Advisors (NAIFA-NYS) changes to Insurance Regulation 60, which pertains to the replacement of life insurance policies and annuity contracts, was adopted by the State Department of Financial Services (DFS) effective April 21. “Reg. 60” was implemented in 1998, and required a comparison of products before a sale could be transacted. “Amendment 3 to Regulation 60,” which resulted from NAIFA-NYS’s efforts, was pushed hard by its President Lawrence J. Holzberg, LUTCF. According to Mr. Holzberg, the association has long been on record in supporting the principles of Reg. 60, the main goals of which are transparency and an informed consumer. “In theory, Reg. 60 helped protect consumers from unnecessary or even fraudulent transfers of life insurance policies,” Holzberg stated. “However, instead of providing transparency or additional information for the consumer, in practice the regulation resulted in lengthy, unnecessary, and unproductive delays in the timely completion of transactions. It has had the unintended consequences of being harmful to consumers’ best interests.” Holzberg reports that earlier this year, NAIFA-NYS asked the Department to revise Reg. 60 to expedite the commencement of underwriting and allow an insurance producer to bind coverage (i.e., conditional receipt) even when a replacement is involved, while still maintaining the Disclosure Statement requirement. In filing the proposed amendment for public comment, the Department stated: “Amendment 3 changes the time in which a completed Disclosure Statement must be presented or delivered to an applicant from ‘no later than at the time the applicant signs the application’ to ‘prior to the delivery of the replacement policy,’ achieving the NAIFA-NYS’s stated goals and gaining the life insurance industry’s support while still retaining the current regulation’s significant consumer protections. In addition, this amendment will benefit insureds, insurance producers and insurers by: • Allowing an insurance producer to bind coverage for a consumer more quickly, subject to an insurer’s underwriting requirements, because the insurance producer will be able to accept the consumer’s application immediately without waiting for a completed Disclosure Statement; • Enabling the underwriting process to proceed immediately, thereby expediting the policy issuance process. Applicants who are determined to replace their existing coverage are, reportedly, oftentimes aggravated or upset that they must wait several weeks to apply for new coverage. Some applicants seek a quick exit from their current policies to avoid market losses (such as with variable annuities), but must wait several weeks before a new application can be completed; • Reducing the number of “revised” Disclosure Statements that are currently necessary to account for changes that occurred between the time the application was taken and the date that the policy is ultimately issued. The issuance of multiple disclosure continued on page 23

4 March 31, 2015 / INSURANCE ADVOCATE

EDITOR & PUBLISHER Steve Acunto 914-966-3180, x110 sa@cinn.com CONTRIBUTORS Peter H. Bickford Jamie Deapo Sari Gabay-Raﬁ Michael Loguercio Christopher Paradiso Lawrence N. Rogak N. Stephen Ruchman Jerome Trupin, CPCU Barry Zalma PRODUCTION & DESIGN ADVERTISING COORDINATOR Creative Director Gina Marie Balog 914-966-3180, x113 g@cinn.com PROOF READER Maria Vano mariavano9@gmail.com SUBSCRIPTIONS P.O. Box 9001, Mt. Vernon, NY 10552 914-966-3180, x117 circulation@cinn.com PUBLISHED BY CINN Group P.O. Box 9001, Mt. Vernon, NY 10552 (914) 966-3180 | Fax: (914) 966-3264 www.cinn.com | info@cinn.com President and CEO Steve Acunto

CINN G R O U P, I N C .

INSURANCE ADVOCATE® (ISSN 0020-4587) is published bi-monthly, 20 times a year, and once a month in July, August, September and December by CINN ESR, Inc., 131 Alta Avenue, Yonkers, NY 10705. Periodical postage paid at Yonkers, NY and additional mailing ofﬁces. POSTMASTER Send address changes to Insurance Advocate®, P.O. Box 9001, Mt. Vernon, NY 10552. Allow four weeks for completion of changes. SUBSCRIPTION RATES $59.00 US, Canada $65.00, International $110.00. TO ORDER Call 914-966-3180, fax 914-966-3264, write Insurance Advocate® PO Box 9001, Mt. Vernon, NY 10552 or visit www.Insurance-Advocate.com. INSURANCE ADVOCATE® is a registered trademark of CINN ESR, Inc. and is copyrighted 2015. All rights reserved. No part of this magazine may be reproduced in any form without consent. Trademark registered U.S. Patent and Trademark Ofﬁce.

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

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[ INSIGHT ]

By Peter H. Bickford

Start Up, New York!

t is hard to miss the ads all over the airwaves and print media extolling the virtues of New York State as a great place to do business. Offering tax breaks, access to human and natural resources, friendly regulations, minimal red tape, the State spends tens of millions – yours and my tax dollars at work – to lure businesses.

support ideas and projects to enhance the growth and development of the insurance industry with little or no downside to the State, and it has failed to take full advantage of any of them. Let’s take a look at a few of these circumstances – in no particular order of importance – that DFS has passed over,

The DFS has been presented with a number of chances to support ideas and projects to enhance the growth and development of the insurance industry with little or no downside to the State, and it has failed to take full advantage of any of them. Peter H. Bickford

The centerpiece of the campaign – STARTUP NY – urges businesses to “start, expand or relocate your qualified business to a taxfree zone in New York State.” What an exciting place to plant commercial roots! Unless, of course, you are seeking to conduct an insurance business here. Over the past several years, since the establishment of the new Department of Financial Services, insurance regulators in New York have had numerous occasions to demonstrate their commitment to the very first enumerated mandate in the DFS statutory charge: “To encourage, promote and assist banking, insurance and other ﬁnancial services institutions to effectively and productively locate, operate, employ, grow, remain, and expand in New York state . . .” (Yes, that is really what the law states. You can look it up!) Unfortunately, the DFS has not shown any significant inclination to do so, choosing instead to focus primarily on its enforcement authority. While the emphasis on enforcement has produced numerous headlines for the DFS and one-off revenue for the State, it has done little to “encourage, promote and assist” the growth and expansion of the business of insurance. But it is not for the lack of opportunity. The DFS has been presented with a number of chances to

ignored or impeded these past few years! One of the first opportunities was handed to DFS as a result of the 2010 Dodd-Frank legislation expanding the possibilities for the Free Zone through a new category of permissible placements to large commercial insureds with expert risk management capability – a class of business often lost to foreign or alien insurers and excess carriers. While following the definitions in the Dodd-Frank legislation, the New York regulation also added unnecessary restrictions and requirements making the use of the new category almost meaningless for domestic insurers, as has been borne out by DFS’s own reported statistics. As with the long standing efforts at reducing regulatory excesses for commercial insurers and their customers, the regulators seem reluctant or incapable of fully adopting recognizably important changes without imposing restrictions that largely undo or diminish the changes. Another example is the industry effort to allow for the creation of domestic surplus lines companies similar to what has been done successfully in a number of other states. With annual E&S written premiums of close to $3 billion in New York, the modest proposal would have the potential for domestic companies to com-

pete to keep more of that business in-state. Even though the proponents addressed regulators’ concerns for specific financial and security issues in the proposed legislation, the DFS has not provided support for the legislation, resulting in its languishment in the Legislature for the past few years. Another loss for the domestic market and its customers! Then there is the DFS attack on private equity and other non-traditional capital investment in the domestic insurance market. Rather than encouraging investment in insurance and insurance-related enterprises, New York’s regulators imposed increased capital requirements and scrutiny on certain acquisitions by private equity firms of certain life insurance companies, and then followed up with new rulings incorporating these requirements as ongoing standards. These additional requirements were imposed out of fear that private equity firms are more short-term focused when insurance is essentially a long-term business. This truism, of course, is nothing new and is why the insurance laws of every state provide for regulatory control over investments, reserves, dividends and transfers of interest. But rather than working with new investors within the historic insurance regulatory framework, New York’s regulators have created a two-tiered system with different requirements for one class of investors over others. Unfortunately this fear of private capital spawned by New York has also taken hold at the National level as well, which is likely to add to the decades old flight of capital from the New York and US insurance markets to offshore and alternative markets. This fear of innovative capital is also a likely explanation for the lack of support by the DFS for industry efforts to re-establish a syndicated insurance underwriting market in New York. First raised by Superintendent of Insurance Eric Dinallo back in 2007, and actively pursued by his successor, James Wrynn, establishing a new risk insurance exchange on a financially secure, technologically advanced

Re Co

2 2 2 3 s

continued on page 8

6 March 31, 2015 / INSURANCE ADVOCATE

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[ INSIGHT ] continued from page 6

platform was highlighted as a goal in former Governor Patterson’s State of the State speech in 2010. A broad-based industry working group established by Superintendent Wrynn produced recommendations for an exchange in June 2010, and a plan to implement these recommendations was prepared the following year. Then along came the DFS. Although industry and investor interest in a domestic syndicated underwriting

facility continues to exist, DFS has shown no interest or support, and has failed to even allow release of the plan prepared under the auspices of the exchange working group. At first the excuse was that the administration was absorbed by the merger of the banking and insurance departments. In time, however, it was clear to insurance risk exchange proponents that the administration had no interest in any meaningful dialogue on the topic. Unfortunately this attitude is not unexpected considering the DFS’s seeming sus-

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picion of any industry initiative. None of the examples in this column would be a financial burden to the State, nor would they pose any significant risk to regulatory control over financial services. There is, in fact, no significant downside to regulators’ support for any of these initiatives. Quite the contrary. In each of these industry initiatives the upside includes increased revenue for the State, job creation, flexibility of product for consumers and growth of the industry. These are actually good things! It is time for the DFS to make good on its statutory charge to “encourage, promote and assist” our industry. It is time for the administration and the DFS to live up to their own PR campaign and support some positive industry initiatives. It is time for Start-Up NY to stand up for the insurance industry.[IA] Peter Bickford has over four decades of experience in the insurance and reinsurance business, with particular focus on regulatory, solvency, agency, alternative market and dispute resolution issues. In addition to his experience as a practicing attorney, he has been an executive officer of both a life insurance company and of a property/casualty insurance and reinsurance facility. A complete biography for Mr. Bickford may be accessed at www.pbnylaw.com.

www.insurance-advocate.com 8 March 31, 2015 / INSURANCE ADVOCATE

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[ ON TH E LEVEL ]

By N. Stephen Ruchman, CPIA

Signs

’m often asked how I come up with ideas to write my column. Many ideas come from friends and fellow agents who share stories in casual conversation, or an agent will reach out to me because they have an idea that they think others would be interested in reading about. As the time between each article passes, I

are bombarded by ads that make promises of cheap coverage. It’s easy to see these, get frustrated and complain about them, but it would be more effective for us to spend our time developing our own advertising and marketing strategies. Over the years, I’ve found most insurance advertising is boring and institutional. Our industry is

Another benefit professional independent agents have is our creativity. We are natural sales and marketing types. And, we know how to reach customers.

N. Stephen Ruchman

make notes on items and issues that strike me. I keep them in a file, and when it’s time to write, I review the thoughts I’ve collected and put them to paper. My notes now comprise nearly 200 pages. This past month, my wife and I spent several weeks in Florida. As I reviewed my recent notes, a common theme emerged: signs. It’s obvious that one sign we sought through February and March was a sign of spring. That sign has been particularly elusive this year, but the robins here in my yard in the Northeast and our return from Florida are sure signs of the inevitable return to good weather. Back to my Florida trip: We took our time and drove down Interstate 95 this year. As we made our way through Florida, the billboards became more frequent and some of them were pretty attention grabbing. One memorable example was from an air conditioning company. This sign had giant words that said: “Your wife is hot” followed by the phone number and address of the company on it. I thought it was pretty clever and it got me thinking about advertising at my own agency. We professional independent agents have an uphill battle when it comes to advertising. Certain direct writers have huge budgets and we (and our insureds) 10 March 31, 2015 / INSURANCE ADVOCATE

subject to heavy advertising regulation and fierce competition, and so it requires creativity to work within these circumstances. What we have going for us, though, are a few benefits. First and foremost, we know our customers. Perhaps not as intimately as the air conditioning company implies, but we live in the same regions and towns as our families, friends and neighbors and we understand their unique situations. This is a benefit the direct writers envy and our carrier partners recognize. It’s a primary reason they chose the independent distribution system to reach our clients. Another benefit professional independent agents have is our creativity. We are natural sales and marketing types. And, we know how to reach customers. Many years ago, I worked with a local advertising agency (which also happened to be a client) to develop a cartoon campaign. One ad in particular sticks in my mind because I liked it a lot. It had a person with his hair standing on end—each clump of hair signified auto, homeowners, long-term care. He had the look of a madman and the caption read: “Is this how you feel about insurance or the agent that represents you? If it does, contact Ruchman Associates.” Another ad I ran was a similar caricature depicting a golfer standing and wait-

ing to tee off. It said: “The only thing that will drop at 55 and older will be your insurance program. Looking for drivers over the age of 55.” These ads were pretty effective and in fact, I won awards for the advertising program. But these days, with expenses at insurance offices and the cost of buying the media, many of us just don’t have the money it requires to hire an advertising agency. As time went by, I began using PIA’s Creative Services and found them to be just as creative and just as professional (if not better) than the high-priced advertising agency I had hired in previous decades. PIA also has prepackaged ads, featuring the main-street agent theme, which can be individualized and used in various media. It’s easy to let all the other things we must do to run our business distract us from the importance of developing and actually implementing a strategic advertising and marketing plan. But it’s important to establish an image and brand your business. While we can’t fight the direct writers that spend half a billion dollars a year to inundate us with animated lizards, we can be creative. And importantly, we can think more locally than direct writers. We don’t have to be boring to look professional. In fact, we need to be creative to stand out. We can use guerilla-style marketing and we can remind our neighbors that we are here; that they know us; and they trust us. In my early years, I sent every one of my insureds a birthday card—even the young, future drivers in the household received one so that they would remember me when they got their own coverage. I used PIA’s newsletters and had Creative Services send them to all of my clients every quarter. Inexpensive, easy reminders that helped me retain clients and build future business. (I also had Creative Services develop my letterhead and agency brochures, which made me look legitimate and professional as I reached out to commercial clients too.) There are lots of businesses that use creative ways to reach customers. But, the simplest and most effective outreach is continued on page 14

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[ IN THE NEWS ]

PRI Cites Mercy Medical Center, Rockville Centre, for Risk Management and Patient Safety “Best Practices” Award Terence Cardinal Cooke Health Care Center Earns Honorable Mention “We are proponents of creative, aggressive approaches to achieving excellence in patient care. The Patient Safety Award gives us the opportunity to publicly acknowledge some of the best practices taking place in the field and gives others an opportunity to learn more by facilitating the exchange of information. We are proud to be associated with these well-run institutions.” - Mr. Anthony J. Bonomo, CEO of the Company, PRI

oslyn, N.Y.— Physicians’ Reciprocal Insurers (PRI) presented Mercy Medical Center, Rockville Centre, New York its Risk Management and Patient Safety Best Practices Award for 2015. Terence Cardinal Cooke Health Care Center won Honorable Mention. PRI, New York’s second largest medical professional liability insurer, established the awards in 2011 to promote the knowledge and adoption of best practices to benefit the healthcare industry as a whole. The awards were made during a ceremony held today at the company’s Roslyn, New York headquarters attended by medical professionals from many segments of the field. According to Mr. Anthony J. Bonomo, CEO of the Company, PRI seeks to encourage the health care community to adapt creative, proactive innovations in the delivery of quality care. “We are proponents of creative, aggressive approaches to achieving excellence in patient care. The Patient Safety Award gives us the opportunity to publicly acknowledge some of the best practices taking place in the field and gives others an opportunity to learn more by facilitating the exchange of information. We are proud to be associated with these well-run institutions,” Mr. Bonomo stated. First place honors went to Mercy Medical Center, a member of Catholic Health Services of Long Island for their “Code STEMI” project, an initiative that significantly decreased the amount of time it takes the emergency room to diagnose, treat and transfer patients with chest pain. The award, presented by Jeanne Braun, Executive Vice President of Hospitals and Special Programs, PRI, was accepted by Kurt Dischner, MD, Assistant Director of Emergency Services Mercy Hospital. Honorable Mention was accorded to Anthony Lechich, MD, Chief Medical Officer, ArchCare at Terence Cardinal Cooke Health Care Center. The winning entry, “The ArchCare Hospitalist/ Nursing Home Attending Physician Collaboration” displayed promising strategies for minimizing patient readmissions from the nursing home setting. PRI, through its hospital risk management program, led by 12 March 31, 2015 / INSURANCE ADVOCATE

FIRST PLACE – MERCY MEDICAL CENTER, CODE STEMI L TO R – BETH VLAHAVAS, VICE PRESIDENT, CHIEF NURSING OFFICER, MERCY MEDICAL CENTER, JEANNE BRAUN, EXECUTIVE VICE PRESIDENT, HOSPITALS & SPECIAL PROGRAMS, PRI, KURT DISCHNER, M.D., ASSISTANT DIRECTOR, EMERGENCY DEPARTMENT, MERCY MEDICAL CENTER, NENAD GRLIC, DO, DIRECTOR OF EMERGENCY MEDICINE, MERCY MEDICAL CENTER, ROSEMARIE POVINELLI, DIRECTOR OF RISK MANAGEMENT, MERCY MEDICAL CENTER, LYNN JENNINGS-TAYLOR, RN, JD, SENIOR VICE PRESIDENT RISK MANAGEMENT, PATIENT SAFETY & CHIEF PRIVACY OFFICER, CATHOLIC HEALTH SERVICES OF LONG ISLAND

Ms. Dawn Lewis, has received numerous plaudits for innovation and for the expansion and adoption of its risk management education programs. continued on page 14

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[ IN THE NEWS ]

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continued from page 12

continued from page 10

The awards for excellence encourage higher standards of risk awareness and risk management in the delivery of care, a founding principle of PRI. Physicians’ Reciprocal Insurers is a leading provider of professional liability insurance to physicians and medical facilities. As the second largest medical malpractice insurer in New York State and one of the top ten in the country, PRI is recognized as one of the most respected names in medical malpractice insurance. Founded in 1982 by doctors to serve the healthcare industry and its professionals, PRI continues to be a leader providing coverage and innovative products that anticipate the needs and further the financial goals of policyholders, and offers key services to help improve the liability environment for doctors, chiropractors, dentists and healthcare facilities. [IA]

often a sign on your building that reminds your community that you are there—and that’s something 800-carriers don’t have.

HONORABLE MENTION – TERENCE CARDINAL COOKE HEALTH CARE CENTER, THE ARCHCARE HOSPITALIST/NURSING HOME ATTENDING PHYSICIAN COLLABORATION L TO R - ELY JACOBS, MANAGER QUALITY INITIATIVES, HOSPITALS & SPECIAL PROGRAMS, PRI, DAWN LEWIS, DIRECTOR HOSPITAL RISK PROGRAMS, HOSPITALS & SPECIAL PROGRAMS, PRI, ANTHONY LECHICH, M.D., CHIEF MEDICAL OFFICER, TERENCE CARDINAL COOKE HEALTH CARE CENTER / ARCHCARE AND JEANNE BRAUN, EXECUTIVE VICE PRESIDENT, HOSPITALS & SPECIAL PROGRAMS, PRI

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

14 March 31, 2015 / INSURANCE ADVOCATE

Now, I don’t hand out awards, but this business deserves an award for chutzpah.

Although some signs, while attentiongrabbing, may send the wrong message. Since my return from Florida, I was driving in Long Island past a series of body shops. One of them had an electronic sign that said “deductible discount.” Now, I don’t hand out awards, but this business deserves an award for chutzpah. It may be inadvertent, but I’m pretty sure it’s against the law for a body shop to cover a deductible. The idea may be creative, but that doesn’t make it legal. This same business also advertises that it “represents all insurance companies for damage appraisals.” How can a business get away with this? Are adjusters blind when they walk in or are they just plain stupid? I know that eventually unethical and illegal practices will catch up with this business. I saw many, many billboards on my Florida trip. Certain attorneys seemed shameless in their brash outreach and of course, they piqued my special sense of humor. In one case, I saw two billboards, side by side: The first showcasing a prominent slip-and-fall injury lawyer and next to it an ad for “1-800 vasectomy.” I couldn’t help smile as I thought, what do these two have in common?[IA] N. Stephen Ruchman, CPIA, is a retired independent agent and founder of Ruchman Associates, Inc. the agency he started in 1961. A past president of the Professional Insurance Agents of New York State, Inc., he is an active supporter of PIANY, and he has sat on or chaired nearly every committee including the Executive Committee and the Long Island Advisory Council and PIANY’s Political Action Committee. He can be reached via email at: nsruchman@gmail.com.

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201 2015

Schedule Sunday, June 7, 2015

JUNE 7-9, 2015

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

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

Monday, June 8, 2015

Education sessions

Neetworrking k lounge sponsorred e by:

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

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

Poolside reception

Education sessions

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

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

Tuesday, June 9, 2015

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

QUESTIONS?

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[ COVER ]

Springing into Spring.

POTHOLES COST INDUSTRY DEEPLY Drivers, Local Authorities Deal with Tough Winter’s Potholes ® Trusted Choice survey shows about 50% of U.S. car owners report vehicle pothole damage. 16 March 31, 2015 / INSURANCE ADVOCATE

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[ COVER ] “The snow, ice and freezing rain during the rough winter months left their mark on the country’s roads. Severe potholes have led to accidents which may impact insurance rates, as premiums are determined by past claims, accidents and driving violations. Potholes and poor road conditions aren’t just an inconvenience, they are an expensive and dangerous result of harsh winters.” Robert Rusbuldt, Trusted Choice® president and Big “I” president & CEO

Poor road conditions have cost consumers and the insurance industry at least $27 billion over a fiveyear period, according to a survey commissioned by Trusted Choice® and the Independent Insurance Agents & Brokers of America (IIABA). The survey also reveals that from 2009 to 2014 half of car owners experienced damage to their vehicles as a result of potholes. As millions of Americans encounter potholes as the rough winter wraps, Trusted Choice® urges agents to urge their customers to be cautious. The pothole survey found that 31% of car owners who reported pothole damage to their vehicles filed a claim with their insurance company. A surprising 65% of respondents who needed repairs said they (or a third party) paid out of pocket for the vehicle to be fixed. Only about 3% said local authorities stepped in to foot the bill. For about 40% of respondents, that bill was more than $500. “The snow, ice and freezing rain during the rough winter months left their mark on the country’s roads,” says Robert Rusbuldt, Trusted Choice® president and Big “I” president & CEO. “Severe potholes have led to accidents which may impact insurance rates, as premiums are determined by past claims, accidents and driving violations. Potholes and poor road conditions aren’t just an inconvenience, they are an expensive and dangerous result of harsh winters.” “This survey highlights how widespread the pothole problem is on our roadways and that the costs are enormous to both the insurance industry and to consumers,” says Madelyn Flannagan, Big “I” vice president of agent development, research and education. “And now, local authorities are struggling to keep up with the extensive road repairs.” While motorists in the Midwest, Northeast and North Central regions of the country reported the most pothole damage, surprisingly the numbers were not that different even in the Southern and Western regions which typically experience milder winters. “Drivers rely on their auto insurance coverage and their own pocketbooks to deal with unexpected expenses,” continues Flannagan. “A Trusted Choice® independent insurance agent can help you select the coverage that best suits you and your vehicle by helping you evaluate your insurance needs and risks.”

Trusted Choice® offers the following tips to help avoid costly damage from potholes and stay safe as they hit the roads after a tough winter:

Pothole safety tips: • Keep an eye on traffic patterns. A number of cars that slow down or move quickly to other lanes may be a sign of major potholes or road damage ahead. • Avoid the urge to swerve out of the way of a pothole at the last minute. You may swerve into the path of an oncoming vehicle. Risking damage to your car is wiser than risking the loss of your life or that of another person. • Report potholes to your state or local transportation department. Some states and localities have pothole hotlines. Motorists who think their state or local government will pay for damage to their cars may be out of luck. Laws in this area vary by jurisdiction and, even where such remedies are available, conditions may apply such as a requirement that the jurisdiction had notice of the pothole. • If you hit a pothole and suspect damage, pull over as soon as it is safe. If you notice damage, record details and specific damage—just as you would in the event of a collision with another motorist—in case you need to file an insurance claim. • Check in at least annually with your independent insurance agent to ensure that you have the right coverage. The pothole survey was conducted for Trusted Choice® and the Big “I” by MFour Mobile Research, Inc. using MFour’s Surveys on the Go® Smartphone Application Panel which includes Apple and Android mobile device users. MFour is an independent research company headquartered in Costa Mesa, California. Interviews of a nationally representative sample of 2,565 U.S. car owners were conducted in June 2014 and weighted by age and gender to represent the general U.S. population over age 18. More information about MFour can be obtained at www.mfour.com.

INSURANCE ADVOCATE / March 31, 2015 17

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[ THE SOCI AL NOTEBOOK ]

By Chris Paradiso

Google is on the Move

oogle is once again tweaking its search algorithm with a new change that should have some benefits for its users. Google announced last month that it will rank mobile-optimized sites higher in search results, starting April 21, 2015. Sites that work well on a mobile device should get a “significant” boost over other sites that are not mobile-friendly, Google says. This is a good thing for users and will help Google Chris Paradiso remain king of search. The change should ensure that consumers conducting Google searches on their mobile devices arrive on easily readable sites, rather than large messy desktopbased layouts that are hard to navigate and move around on a small screen. Google has been kind enough to put out a form for you or for your agency’s developer so you can input a URL to see whether the agency’s site is. This recent news has caused several projects and programs that are specific to the insurance industry to scramble around, preparing for the April update. What scares me is that these same projects and programs are “leaders” in our industry and they’ve built websites within the last six months that were not mobilefriendly and this is why I would tell you to get out of the insurance space when it comes to hiring a website designer. Mobile-friendly platforms are not new and they’re readily available. The number of mobile searches grew in the billions over the last year, and the fact that they continue to grow is quite concerning. It shows me that those “leaders” are not as innovative as we thought. I am sure people will be upset with me for saying that, but the fact remains – if Independent Insurance Agencies are going to be around for the next 100 years, we need better consultants in our industry. This is not a cheap shot at one specific person, this is a fact that says a lot about who our agen20 March 31, 2015 / INSURANCE ADVOCATE

cies are listening to, and shows that we had better start getting our advice from outside the industry. In addition to the algorithm change, Google said late last month it will begin surfacing content hidden within apps more prominently in search results. This is one of the reasons that I personally feel that your agency needs an App and cannot wait another year without one. My agency uses a company out of North Carolina called www.goinsuranceagent.com; this App company only build Apps for the insurance industry, which is a real good thing for us agencies. If a developer has enabled App Indexing, Google’s search bots can crawl the contents of an app or your agency app just like a Web page. This is why your agency can’t afford to wait on an agency app – you need to get educated and it better happen fast. The update, which is a little more than a month away, should allow the information from the app to show up along with regular search results on Google. WOW! That’s big and I hope you and your agency don’t wait; if you do it will cost you a lot. All of these changes make total sense from the consumer’s side, and it also makes sense that Google would want to incentivize App Indexing. Google is all about the consumer and making it easier to match you up with what you’re searching for. The search giant doesn’t have quite the same reach on mobile devices as it does on the desktop because people often boot up more narrowly focused apps like Amazon for shopping or Yelp for food, instead of using Google to search the entire World Wide Web. More indexing means more valuable information that Google can present to users and serve ads against. As an agency owner I’m prepared for this in April. Ask yourself if your website is ready and if not, figure out what you are going to do about it. My advice is to contact a website designer, not an insurance consultant. Get out into the world where you hire a professional website designer and get your site updated and mobile ready. Next, look for your agency App. I did an awful lot of

research on apps for the insurance space and what I found is that we agency owners need five key aspects to our app. First, we need to make sure that our agency app doesn’t store content on our clients’ phones. Why? With data breaches and theft of information, it would not be wise to have our information stored on a phone, so make sure the app has the information stored in the cloud. Second, your app needs to be powerful enough to really service your clients. Our agency app allows my client to call in a claim 24/7 with a single touch. It also allows our clients to pay their bill. That service allows me to be like GEICO, providing service to my clients around the clock. Third, is the ability to send push notifications, which have a very high open rate. This allows me to talk with clients through the app, and is extremely powerful. Fourth, is the ability to store insurance cards. Fifth, is the ability to track. My agency app allows me to see who is downloading my agency app. There is power within the agency app. Take the time and energy to get an agency app and ask your top carrier to pay for it for you. Good luck, and contact me with any questions you may have about an agency app or about a mobile-friendly site.[IA] Christopher Paradiso, CPIA, is President of Paradiso Financial & Insurance Service. He has been acknowledged by several insurance publications as a leader in the industry for his use of digital marketing and social media to help brand his agency and promote other small businesses within his community. Chris has also been recognized for his charity work with The Connecticut Children’s Medical Center. In 2011, Chris introduced “Paradiso Presents LLC,” a social media program aimed at teaching small agencies to not only survive, but compete in today’s complex online marketing world. Chris resides in Stafford Springs, CT with his wife and two children, Mia and Gianni.

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CMSV Announces Fishlinger Center for Public Policy Research

o further its commitment to the intellectual, ethical, and personal development of its students, faculty, and the public at large, the College of Mount Saint Vincent has announced the creation of the Fishlinger Center for Public Policy Research. The development of the center, which is slated to open in late summer, opens new vistas for illuminating public opinion on social issues and engaging in research to encourage meaningful dialog and constructive action. Earlier this year, the College received an extraordinary commitment of an anticipated one million dollars from William and Joan Fishlinger to provide startup funding for the center. Mr. Fishlinger, who is the founder, chairman and chief executive officer of Gramercy Risk Holdings LLC, serves on the College’s Board of Trustees, and was honored by the College at its 2012 Scholarship Tribute Dinner. Mrs. Fishlinger has devoted her time and talents as a mentor in the College’s Mount Mentor program. The Fishlinger family is deeply rooted in philanthropy and community activism, and the couple has continuously shared with their children and their colleagues their desire to broaden students’ opportunities. “We live in a world that needs critical thinkers—people who can intelligently weigh difficult questions,” said Mr. Fishlinger. “Global issues impact all of us. There is a great need to establish a center for thoughtful, scholarly approaches to addressing the important challenges faced by people around the world, and to stimulate meaningful dialog and action. This is the right time, and the College of Mount Saint Vincent is the right place to do it.” By focusing public opinion on key public policy concerns through independent and objective research, the Fishlinger Center will serve as a vehicle for meaningful dialog and advocacy on carefully selected topics. “By enabling students, faculty, and staff to become trained, involved, and engaged in public policy, opinion, and research, the Fishlinger Center will provide a forum for discourse that can open new opportunities,” 22 March 31, 2015 / INSURANCE ADVOCATE

said Charles L. Flynn, Jr., president of the College of Mount Saint Vincent and a member of the Fishlinger Center Advisory Board. “We hope the Center will position the College as a premier source for current public opinion research and analysis. What we know is that it will enhance the reciprocal relationship between the College community—the students, faculty, administration, and alumni— and the needs of the broader community.” The new Center’s Director is Dr. James Donius, who joined the College last summer to begin working with academic departments to outline the program and to assemble an Advisory Board of individuals from academia, public service, and industry boasting a wide range of expertise. The Advisory Board, which held its first meeting on the CMSV campus on February 3, will focus on three priorities at the outset: 1) to help determine and prioritize potential topics for center-sponsored studies; 2) to review and make recommendations on survey instruments before they are finalized and deployed in the field; and 3) to identify and recruit participants for a future forum at which the community may engage with the results of the surveys and studies. Dr. Donius has extensive experience in marketing, advertising, and public opinion research. Prior to founding his own firm, Marketplace Measurement Worldwide, he held executive positions with MasterCard Worldwide, Yankelovich Partners Inc., N. W. Ayer & Son, and the Advertising Research Foundation. He received a Ph.D. in international business from the International School of Management, an M.B.A. in marketing from the State University of New York at Buffalo, and an A.B. in sociology from the University of

WILLIAM AND JOAN FISHLINGER

“By enabling students, faculty, and staff to become trained, involved, and engaged in public policy, opinion, and research, the Fishlinger Center will provide a forum for discourse that can open new opportunities.” - Charles L. Flynn, Jr. President, College of Mount Saint Vincent

Notre Dame. Founded in 1847 by the Sisters of Charity, the College of Mount Saint Vincent offers nationally recognized liberal arts education and a select array of professional fields of study on a landmark campus overlooking the Hudson River. Committed to the education of the whole person, and enriched by the unparalleled cultural, educational and career opportunities of New York City, the College equips students with the knowledge, skills and experiences necessary for lives of achievement, professional accomplishment and leadership in the 21st century.[IA]

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[ FORE WORD ]

Jonathan Bing to Lead Wilson Elser’s NYC Government Affairs Practice

January 2003 through June ational law firm 2011. During his tenure, he Wilson Elser appointauthored 85 bills that passed ed Partner Jonathan L. the Assembly, 35 of which also Bing, a former New York State passed the Senate and were assemblyman and Governor signed into law by four New Cuomo appointee, to head of York governors. the New York City Government A seasoned politician and Affairs practice. an accomplished attorney, In this role, Bing will work Bing’s understanding of the closely with Albany Regional JONATHAN L. BING legislative process enables him Managing Partner Kenneth to provide the firm’s clients Shapiro and Deputy Regional with highly effective solutions. Managing Partner Lisa Bing is a prolific writer and is often Marrello, both of whom lead the firm’s New York State Government Affairs prac- invited to speak on lobbying, regulatory tice, named the state’s highest grossing by issues and government affairs. Bing has earned numerous awards and the Joint Commission on Public Ethics for distinctions throughout his career, includthe past 17 years. Bing joined Wilson Elser in 2012 after ing an honorary doctor of law degree from serving as special deputy superintendent LIM College, the Presidential Medal from in charge of the 260-employee New York Hunter College, and the NYU College of Liquidation Bureau (NYLB), appointed by Nursing Health Policy and Legislation Award, among others. Governor Andrew Cuomo. Bing earned his J.D. degree from New Prior to joining the NYLB, Bing was elected to the New York State Assembly York University School of Law (1995) and for five terms, representing the Upper East his B.A. degree from the University of Side and East Midtown Manhattan from Pennsylvania (1992).[IA]

National Fire Adjustment Co., Inc. Names David LeBlanc V.P.

avid LeBlanc has been named Vice President of the Canadian Operations for the National Fire Adjustment Co., Inc. announced NFA President Ronald Papa. National Fire Adjustment Co., Inc. is a family–owned and operated public adjusting firm which began in Buffalo, New York, U.S.A. in 1922. The National Fire Adjustment Co., Inc. is one of North America’s largest public adjusting and loss-consulting firms. NFA has expanded in the past two decades covering losses wherever disaster strikes. Having public adjusters throughout the United States and Canada allows the NFA team to be in place where the loss actually occurrs. Prior to being appointed Vice

President of the Canadian operations for the National Fire Adjustment Co., Inc. Mr. LeBlanc served as Manager of the NFA Canadian offices from 2009 through 2014. David holds a B.A. in Economics from McMaster University in Hamilton, Ontario, along with a Chartered Insurance Professional (CIP) designation. Mr. LeBlanc is an active member of the Insurance Institute of Canada, the National Association of Public Insurance Adjusters (NAPIA) and is licensed with the Financial Services Commission of Ontario, Canada to adjust property claims. NFA has had a Canadian office since 1987. David LeBlanc resides in Niagara Falls, Ontario, Canada.[IA]

continued from page 4

statements can be confusing to policyholders, and this amendment is expected to dramatically reduce the number of instances where “revised” disclosure statements are necessary; • Preserving the disclosure statement as a valuable tool for consumers to compare policies at the time of policy issuance and to review later on if they have questions about the new coverage; and • Making it easier for insurance producers and insurers to comply with the regulation. Moving the Disclosure Statement to the back-end of the process will streamline the process and eliminate many of the technical issues insurers encountered in the past.” Congrats to Larry, his colleagues and legislative team and the NYS DFS and its Life Bureau for getting this done. The State Association’s Board of Directors, notably Immediate Past President, Robert Gruber of Buffalo, received kudos from all the parties involved. Larry Holzberg told us: “This reform of the regulation will bring positive and necessary changes pertaining to replacement contracts, which in turn will allow NAIFA members to better serve our clients’ interests safely and securely. This successful effort is an example of the work the NAIFA-NYS does on behalf of its members and the consuming public.” Here, here guys.[IA]

Congrats to Larry, his colleagues and legislative team and the NYS DFS and its Life Bureau for getting this done. The State Association’s Board of Directors, notably Immediate Past President, Robert Gruber of Buffalo, received kudos from all the parties involved.

INSURANCE ADVOCATE / March 31, 2015 23

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[ GUEST OPINION ]

By Jane M. Orient, M.D.

What Will Happen if Supreme Court Cuts ObamaCare Subsidies?

he Obama Administration was apparently shocked when the U.S. Supreme Court agreed to hear the case of King v. Burwell, which challenges insurance subsidies flowing through federal Exchanges. The Affordable Care Act (ACA) clearly states that subsidies flow only through Exchanges established by States. This, according to MIT economist Jane M. Orient, MD Jonathan Gruber, was meant to be a deal the States couldn’t refuse, to “encourage” them to create an Exchange. But more than 30 of them did refuse. The Administration, however, had a ready fix: the IRS just wrote a rule that allows the subsidies to flow anyway, arguing that that must be what the law really meant. It reminds me of Gilbert and Sullivan’s operetta Iolanthe. There was a most inconvenient law on the books: “The fairy that marries a mortal dies!” It was terrible enough that the beloved Iolanthe had broken the law. But ultimately when all the fairies marry members of the House of Peers, what is the Fairy Queen to do? “I can’t slaughter the whole company!” The Lord Chancellor comes to the rescue. “The subtleties of the legal mind are equal to the emergency. The thing is really quite simple—the insertion of a single word will do it. Let it stand that every fairy shall die who doesn’t marry a mortal.” The Obama Administration is assuming that the Court will act as Lord Chancellor, or else the Republican Congress will do so, and therefore has not bothered to warn anyone of the possible loss of subsidy. Senator Ben Sasse (R-Nebraska) is concerned that patients will suddenly lose their hemodialysis or chemotherapy, and has suggested a COBRA-like patch. In fact, almost all patients with end-stage renal disease are on Medicare. And while ACA caused millions to lose a plan they liked, some while on chemotherapy, ACA plans can’t be can24 March 31, 2015 / INSURANCE ADVOCATE

celled when you get sick. Subscribers will, however, have to start paying the entire premium—which is far less expensive than chemotherapy. The losers will be insurance companies. Remember, subsidies don’t go to sick people. They all go to the insurer. Some insurers will be stuck paying for 30 days of treatment if the subscriber defaults on premiums, and providers will be forced to give treatment without pay for the remaining 60 days of the grace period. A lot of them may simply go out of business. Healthy people will drop coverage that is unaffordable without the subsidies. Insurers who lobbied for ACA will lose their government-guaranteed business. This is the recipe for the “death spiral.” As low-risk people drop out, premiums are driven higher and higher. There will be more uninsured people. They will likely ask themselves why they should throw fistfuls of money out the window month after month for treatment they don’t need—and are increasingly less likely to get if they do need it, as supply dries up. As they lose their “insurance” card, however, people are likely to notice that they get to keep the premium money—and that it is far less expensive to buy care directly than to funnel money through the predatory, ravenous third-party system. But what about the “shared responsibility payment”? Won’t people have to pay that, in return for nothing, not even a ticket to stand in line? As premiums go up, they become more unaffordable, so more and more people are exempt from the penalty/tax. And by the way, if subsidies are unavailable in your State, businesses there are not subject to the job-killing employer mandate. Yes, King v. Burwell could bring much pain—mostly on crony capitalists. It could mark the beginning of a most beneficial medical cost deflation and correction of massive resource misallocation. Instead of having the Lord Chancellor “fix” a terribly destructive law, how about learning from history as in Iolanthe. Things would be better if “the House of Peers with-

holds/ Its legislative hand/ And noble statesmen do not itch/ To interfere with matters which/ They do not understand.” The tangled mess of mandates and regulations, by which ObamaCare makes care and insurance unaffordable, needs to be repealed. Then Congress can start on repealing other laws, especially the discriminatory tax code, which led to the mess that ACA was supposed to fix.[IA] Jane M. Orient obtained her undergraduate degrees in chemistry and mathematics from the University of Arizona in Tucson, and her M.D. from Columbia University College of Physicians and Surgeons in 1974. She completed an internal medicine residency at Parkland Memorial Hospital and University of Arizona Affiliated Hospitals and then became an Instructor at the University of Arizona College of Medicine and a staff physician at the Tucson Veterans Administration Hospital. She has been in solo private practice since 1981 and has served as Executive Director of the Association of American Physicians and Surgeons (AAPS) since 1989. She is currently president of Doctors for Disaster Preparedness. Since 1988, she has been chairman of the Public Health Committee of the Pima County (Arizona) Medical Society. She is the author of YOUR Doctor Is Not In: Healthy Skepticism about National Healthcare, and the second through fourth editions of Sapira’s Art and Science of Bedside Diagnosis, published by Lippincott, Williams & Wilkins. She authored books for schoolchildren, Professor Klugimkopf’s Old-Fashioned English Grammar and Professor Klugimkopf’s Spelling Method, published by Robinson Books, and coauthored two novels published as Kindle books, Neomorts and Moonshine. She is the editor of AAPS News, the Doctors for Disaster Preparedness Newsletter, and Civil Defense Perspectives, and is the managing editor of the Journal of American Physicians and Surgeons.

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[ GUEST ARTICLE ]

By Gregory V. Serio

Writing Off Insurance Agents, Again, is not a Safe Bet

s a young legislative staffer back in the onset of the 1980s I was given two early lessons: one had to do with attending the same meeting with a reporter, reading about it the next day,

The news of the insurance agent’s demise, to torture Shakespeare, is and has been greatly exaggerated now for decades, not that there aren’t challenges to their continued existence as they currently know

Giving the insurance-consuming public the idea that insurance is a thing, a commodity, to be bought rather than a service to retain takes the very DNA of insurance out of the corpus…

Gregory V. Serio

and wondering if I was at the same meeting; the other was to never underestimate the power of the independent insurance agent, and never believe the rumors of their imminent demise. The first lesson I remember almost every day, and the second lesson came racing back to me when I read the piece in the January 19, 2015 New York Times, “Insurance Via Internet is Squeezing Agents.”

it. But the idea that the Internet, after all sorts of other potential predator-like previous efforts at the integration of financial services (before the subsequent disintegration of financial services), would be the force that finally fells the professional insurance agent is still hard to believe. If anything, the Internet provides the agent with an opportunity to expand their market presence without leaving the office, and

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be even more competitive than before on a much wider platform. It is not the Internet, in and of itself, but rather in whose hands the Internet is placed that is the real culprit in this story. The Internet is not a demon, and many of us have come to appreciate the sheer power that modern technology has brought to our business platforms: the Internet in the hands of some technology companies, insurers and even some agents is more the problem. And it is not just a problem for the agent but for the insurance consumer themselves. The commoditizing of insurance through the Internet (or whatever the next technology portal may be) is the real danger to the market, to carriers (whether they appreciate that or not at this point in time is another story) and certainly the insurance agent. Giving the insurance-consuming public the idea that insurance is a thing, a commodity, to be bought rather than a service to retain takes the very DNA of insurance out of the corpus; to convince the insuring public that insurance is to be bought on price alone, or without regard to risk profile, or in an amount of time faster than it takes to do just about anything else (it should at least beat the time to hard-boil an egg, one would think) is to dumb down the insurance intelligence quotient even further than it has already gone within the general public. The insurance agent and broker is the connection between the consumer and the complicated world of insurance, explaining terms and coverages on the underwriting side, and guiding through the claims processes on the unfortunate side. They are the person to whom much of the public entrusts their economic security, and the person they may even turn against if it was found that their economic security was not properly protected. I have never understood the concept of entrusting things most cherished to a disembodied voice or worse, a modem. The Internet, as a tool, actually allows the insurance agent to do more, for more, thus enhancing the service aspect of the agent/consumer relationship, but it cannot ever be mistaken for the agent and the value they bring to the insurance transaction.

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[ GUEST ARTICLE ] Just as the insurance agent community has largely been responsible for preventing its earlier demise by re-inventing the profession in any one of a number of ways, they now have another opportunity to seal their fate to a profitable future and satisfying career by doing double-time in their education of the general public that insurance is not a pizza or take-out Chinese or anything else you want quick and easy; that an agent provides an important—even critical—service which may cost a couple of dollars now but could mean many more dollars in appropriate coverages or effective claims processing; that insurance is not Google, not virtual and certainly does not come with a re-set button when things do in fact go bad. As for the efforts of Google and others to “Uberize” the insurance process and really drive the insurance purchasing process to one just of price and not coverage, well, we are seeing firsthand the downside of the Uber business model as it attracts justified criticism around the world for cutting corners in, ironically enough, the issue of insurance coverage, among other weaknesses. It will be up to the regulators in insurance, just as it has been the regulators in transportation, to make certain that the Internet has not fostered a series of shortcuts that actually shortchange the insuring public. Some regulators have been dazzled by new technology and have scoffed at the old laws whose best days they say are long past. There was wisdom in those laws, and many of them have withstood the test of time regardless of the trends in modern technology (remember, the telephone and the desktop were both once considered new technology that would change the world and leave many, like insurance agents, behind). The regulator should be as concerned about Google and Walmart getting into insurance as they were when financial services integration, or the creation of “financial supermarkets” as they were referred to in the early stages of that chapter in this industry’s history. Both business models are premised upon a commingling of personal information mined from multiple sources, and just as there was appropriate concern about insurance and banking being done by the same people inside a bank branch there should be similar con-

The regulator should be as concerned about Google and Walmart getting into insurance as they were when financial services integration, or the creation of “financial supermarkets” as they were referred to in the early stages of that chapter in this industry’s history. cern about buying insurance and covering risks through the likes of a Google, Facebook and even Walmart who look to or have entered the insurance business, either directly or through partners and surrogates. Issues that regulators have beaten carriers and banks over the head about for years need to be raised with those technology companies that have already achieved integration of financial services, but under the disguise of technology. The toughest part for the agents, believe it or not, will not so much be in trying to beat the competition from the technology companies like a game of technology Whac-a-Mole as it will be in taming the use of the Internet by the very customers they seek to court. Encouraging the public to work a little harder at something as important as insurance, rather than seeking the same instant gratification they achieve with a Facebook post or a car service hail via app, will not be easy or necessarily popular. In a world of stiff competition in automobile and homeowners insurance and tight insurance company margins, this message may not be received so well by the carriers either, certainly among those who have invested heavily in Internet-based marketing. Agents, for their part, will have to, again, convince the insuring public and carriers that the value proposition of selling insurance as a service which can only be provided by agents is a good proposition, that the commission add-on to the premium paid by consumers is good value, and that eliminating the agent is more deleterious than eliminating the amorphous “middle man.” Perhaps the challenges from the Googles of the world

may even bring the carriers and agents back together again to provide the one thing that Google, Walmart and others won’t ever give: good customer service. I won’t bet the mortgage in Vegas that the insurance agency force won’t decline and wither over time, and the forces against them look as formidable as any that they have confronted in the past. But I learned at the very outset of my career that the predictions of the demise of the insurance agent are even less reliable than those about the weather.[IA] GREGORY V. SERIO, lead partner in the risk and insurance practice group of Park Strategies, LLC, is a former superintendent of insurance for the State of New York.

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[ ON M Y RADAR ]

By Barry Zalma

Duty to Defend Not Effected by Denial of Motion for Summary Judgment Defense Can’t Be Avoided by Use of Limine Motions

he duty to defend owed by an insurer is very broad and requires an insurer to defend even if there is only a potential for coverage on the facts of the case and the policy wording. Usually,

In February 2009, eight McMillinrelated entities (but not McMillin) filed the underlying complaint against ASIC and 11 other insurance companies. The plaintiffs alleged that each of the defendants was an

In McMillin Companies, LLC v. American Safety Indemnity Company…the right to claim no duty to defend will still exist even after a motion for summary judgment is denied if the motion order is not dispositive of the claims made by the motion for summary judgment. Barry Zalma

an order denying a motion for summary judgment seeking an order that there is no duty to defend will usually be sufficient to reveal the potential for coverage and a requirement for defense – at least under a reservation of rights – to those insured. In McMillin Companies, LLC v. American Safety Indemnity Company, — Cal.Rptr.3d —-, 2015 WL 270034 (Cal.App. 4 Dist., 1/22/15) the right to claim no duty to defend will still exist even after a motion for summary judgment is denied if the motion order is not dispositive of the claims made by the motion for summary judgment. It also criticized the use of a motion in limine (to limit testimony allowed at trial) when it had the effect of a motion for summary judgment without the protections of a motion for summary judgment.

insurer to one or more of the subcontractors on the projects, that each of the plaintiffs was an additional insured under each of the respective policies, that each of the defendant insurers owed each of the plaintiffs a duty to defend the Baker litigation, and that by denying the tender of the defense of the Baker litigation each of the defendants breached a contract of insurance and its implied covenant of good faith and fair dealing. The Motions in Limine In October 2011, in anticipation of trial, the parties filed motions in limine. One dealt with ASIC’s alleged duty to defend. With regard to the duty to defend, the SAC plaintiffs filed a motion to exclude testimony and argument disputing that ASIC had a duty to defend the Baker litigation.

FACTS The parties cross-appeal from a final judgment of the superior court in an insurance coverage dispute between a general contractor and the commercial general liability insurer of one of its subcontractors. Issues in The Cross–Appeals The Present Insurance Coverage Litigation 28 March 31, 2015 / INSURANCE ADVOCATE

Duty to Defend Relying on Horace Mann Ins. Co. v. Barbara B. (1993) 4 Cal.4th 1076, 1078, 17 Cal.Rptr.2d 210, 846 P.2d 792 (Horace Mann), and Montrose Chemical Corp. v. Superior Court (1993) 6 Cal.4th 287, 301, 24 Cal.Rptr.2d 467, 861 P.2d 1153 (Montrose), McMillin argued that the denial of ASIC’s motion for summary

judgment established, as a matter of law, that ASIC had a duty to defend them in the Baker litigation. Opposing the motion, ASIC disputed the legal effect of the denial of its summary judgment motion, contending that because the court did not deny the motion by expressly finding a disputed factual issue, the effect of the ruling did not establish the duty to defend as a matter of law. In denying summary judgment, the court had ruled that, with regard to four allegedly undisputed issues, “ASIC has not met its initial burden of proof.” During the in limine proceedings, ASIC argued that the court could not consider the denial of the summary judgment, relying in part on Judge Nevitt’s following comments at the conclusion of the hearing in which he denied ASIC’s motion: “However, I remind counsel that this ruling is of no evidentiary value later. I don’t know what other evidence may be presented to the Court when these issues are next presented. Whether foundations may have been laid for things, not laid here, and so forth. And so should this issue come before the Court again under different circumstances and with potentially different evidence, you should not necessarily count on the same result.”

DISCUSSION The trial court erred in granting McMillin’s motion in limine to preclude evidence or argument that disputed ASIC’s duty to defend; the trial court erred in granting ASIC’s motion in limine to preclude McMillin from presenting evidence or argument either that the Settlement proceeds are not an offset to McMillin’s Baker fees or that the Settlement proceeds are allocated to Brandt fees; and we are unable to affirm that portion of the judgment in favor of ASIC on McMillin’s cause of action for breach of the implied covenant of good faith and fair dealing. An insurer owes a duty to defend any lawsuit “which potentially seeks damages within the coverage of the policy.” (Gray v.

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[ ON M Y RADAR ] Zurich Insurance Co. (1966) 65 Cal.2d 263, 275, 54 Cal.Rptr. 104, 419 P.2d 168.) Since the duty arises whenever the claim against the insured seeks damages on any theory that, if proved, would be covered by the policy, the insurer is relieved of its duty only when “‘the third party complaint can by no conceivable theory raise a single issue which could bring it within the policy coverage.”‘ (Montrose, supra, 6 Cal.4th at p. 300, 24 Cal.Rptr.2d 467, 861 P.2d 1153.) Horace Mann instructs: Where “factual issues exist precluding summary judgment in the insurer’s favor …, the duty to defend is then established, absent additional evidence bearing on the issue.” (Horace Mann, supra, 4 Cal.4th at p. 1085, 17 Cal.Rptr.2d 210, 846 P.2d 792.) Denying a summary judgment motion because the moving party failed to meet its initial burden of production is not the same as denying the motion based on an unresolved factual dispute. Accordingly, the trial court erred in ruling prior to trial that ASIC was precluded from presenting evidence or argument that disputed whether ASIC had a duty to defend the SAC plaintiffs in the Baker litigation. In making such a ruling in limine, the trial court essentially granted summary adjudication as to the breach of ASIC’s alleged duty to defend without requiring the statutory procedural protections associated with summary judgment proceedings, thereby not requiring McMillin to prove its case and not allowing ASIC to defend McMillin’s proof. Judge Alksne erred in rejecting McMillin’s presentation (that unallocated Settlement proceeds be allocated to resolving the tort claim) and accepting ASIC’s presentation (that unallocated Settlement proceeds be allocated first to resolving the contract claim), leaving McMillin without evidence of damages. In making such a ruling in limine, the trial court essentially granted a nonsuit as to the issue of McMillin’s alleged damages without requiring the statutory procedural protections associated with nonsuit proceedings, thereby precluding McMillin from trying its case. The Orders Granting the Motions in Limine Are Reversed Using an in limine motion as a substitute for a potentially dispositive statutory motion produces substantial risk of prejudicial error. The disadvantages of such

Denying a summary judgment motion because the moving party failed to meet its initial burden of production is not the same as denying the motion based on an unresolved factual dispute. shortcuts are obvious. They circumvent procedural protections provided by the statutory motions or by trial on the merits; they risk blindsiding the nonmoving party; and, in some cases, they could infringe a litigant’s right to a jury trial.

ZALMA OPINION This case clarified earlier duty to defend rulings that dealt with dispositive motions for summary judgment. When a court rules that there is a potential for coverage in a partial motion for summary judgment the issue of duty to defend is established. However, in a case like this one where the motion for summary judgment does not rule on any issue and just denies the motion for failure to produce evidence sufficient to rule, the duty to defend is not established. By wrongfully using a motion in limine to prevent the presentation of evidence concerning the duty to defend deprived the party of the right to present evidence to prove its case without any of the safeguards and evidentiary requirements of a motion for summary judgment. The judgment was reversed, the orders in limine were reversed and the case was sent back to be tried. Barry Zalma, Esq., CFE, has practiced law in California for more than 42 years as an insurance coverage and claims handling lawyer. He now limits his practice to service as an insurance consultant and expert witness specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes. He founded Zalma Insurance Consultants in 2001 and serves as its only consultant.

Look to National Underwriter Company for the new Zalma Insurance Claims Library, at www.nationalunderwriter. com/ZalmaLibrary. The new books are Mold Claims Coverage Guide, Construction Defects Coverage Guide and Insurance Claims: A Comprehensive Guide. The American Bar Association, Tort & Insurance Practice Section has published Mr. Zalma’s book “The Insurance Fraud Deskbook” available at http://shop.americanbar.org/eBus/Store /ProductDetails.aspx?productId=21462 4, or 800-285-2221 which is presently available. Mr. Zalma’s e-book, “Zalma on California Claims Regulations – 2013 explains in detail the reasons for the Regulations and how they are to be enforced; “Rescission of Insurance in California – 2013;” “Random Thoughts on Insurance” a collection of posts on this blog; “Zalma on Diminution in Value Damages – 2013,”“Zalma on Insurance,” “Heads I Win, Tails You Lose,” “Arson for Profit” and others that are available at www.zalma.com/zalmabooks.htm. Mr. Zalma reports on World Risk and Insurance News’ web-based television programing, http://wrin.tv or at the bottom of the home page of his website at http://www.zalma.com.

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[ LOOKING BACK… Insurance Advocate, 25 years ago]

30 March 31, 2015 / INSURANCE ADVOCATE

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

Barrett pointed out that public policy in New York has traditionally allowed the consumer a free choice as to which company or agent should provide the required insurance coverages.

INSURANCE ADVOCATE / March 31, 2015 31

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[ COURTSI DE ]

By Lawrence N. Rogak

Where MVAIC Claimant Indicates he was on a Motorcycle, Burden is on Claimant to Prove he is a Qualified Person New Millennium Med. Imaging, P.C. v M.V.A.I.C.

laintiff, a radiology center, commenced this action to recover the sum of $2,659.81 and $912.00 for imaging services it provided to its assignor Yao He Wang. Defendant MVAIC requests that the Court dismiss the claim based upon the assignor’s ineligibility for MVAIC benefits under Article 52 of the New York Insurance Law. The parties stipulated at trial that plaintiff had made its prima facie case by timely mailing its bills and assignment of benefit form to MVAIC and that defendant had timely mailed its request to qualify letters to both the provider and the assignor’s attorney. They also stipulated that Wang

MVAIC was created to “provide no-fault benefits for qualified persons for basic economic loss arising out of the use and operation in this state of an uninsured motor vehicle” NY Insurance Law (“Ins. Law”) § 5201. had filed the “Notice of Intention to Make Claim” form with MVAIC wherein he indi-

cated that the make and year of both Vehicles Nos. 1 and 2 were unknown, and that the registration was unknown even though Wang put down that he was the driver of Vehicle #1. Wang also indicated on this form that he had reported this incident to the 103rd police precinct. Finally, Wang stated that Vehicle #2 struck Vehicle #1 and that he did not own a motor vehicle. Over plaintiff ’s objection, the Court admitted into evidence the NF-2 (an application for no-fault benefits) where Wang checked off that he was operating either “a bus or school bus or a motorcycle.” The four requests to qualify sent by MVAIC informed Wang that to be deemed

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[ COURTS I D E ] a “covered person” under Insurance Law Article 52, Wang had to be a “qualified person” and that he had not yet met the requirements of a qualified person since there were a number of items that MVAIC had not yet received. Among the outstanding items that MVAIC requested from the applicant’s attorney were a notarized household affidavit, proof of residency, written confirmation of insurance, written proof showing lack of insurance, an affidavit of no insurance from the vehicle owner, and proof that the accident was timely reported to the police. MVAIC mailed almost identical letters to the provider NMMI. All the letters ended by stating that “this request for information is necessary to qualify for MVAIC coverage.” While the assignor’s attorney never responded, NMMI wrote MVAIC that it was not in possession of the information requested and that MVAIC should contact the patient directly or through his attorney. Defendant admittedly did not issue a timely denial. The following issues were raised at trial: (1) whether the defendant proved its defense that at the time of the accident, the applicant was occupying the type of motorcycle which was statutorily excluded from no fault benefits; (2) whether the applicant’s failure to submit proof that the accident was reported within 24 hours to the police department disqualifies him from coverage; and 3) whether defendant had to issue a timely denial in order to prove its defense that the applicant was not a qualified person because at the time of the accident he was driving the motorcycle. MVAIC was created to “provide no-fault benefits for qualified persons for basic economic loss arising out of the use and operation in this state of an uninsured motor vehicle” NY Insurance Law (“Ins. Law”) § 5201. The intent was to afford injured parties the same protections that exist when a tortfeasor involved in a motor vehicle accident is covered by insurance. Englington Med., P.C. v. MVAIC, 81 AD3d 223, 227-28 (2d Dept. 2011). See, Morisi v MVAIC, Corp., 19 AD2d 727 (2d Dept. 1963). The statutory provisions creating and regulating MVAIC should be liberally construed to serve those ends. Englington, supra, 81 AD3d at 228. See, Mtr of Dixon v MVAIC, 56 AD2d 650, 651 (2nd Dept. 1977). In order for someone who has allegedly

The plaintiff need only show, by proper evidentiary proof, that the prescribed statutory billing forms were properly generated, mailed and received, and that no fault benefits were overdue. been injured (the assignor or applicant) to be a “covered person” person under Ins. Law § 5221(b)(2), and hence be eligible for no fault benefits, the person must be a “qualified person” as that term is defined under § 5202(b), and must have complied with all of the requirements contained in § 5208. First Help Acupuncture, P.C. v. MVAIC, 2012 NY Slip Op 51643(U), 36 Misc 3d 148(a) (App. Term, 2d Dept. 2012). See, Olmecs Medical Supplies, Inc. v. MVAIC, 2013 NY Slip Op 50218(U), 38 Misc 3d 140(A) (App. Term, 2d Dept. 2013). The plaintiff need only show, by proper evidentiary proof, that the prescribed statutory billing forms were properly generated, mailed and received, and that no fault benefits were overdue. NY Hosp. Med. Ctr. v. MVAIC, 12 AD3d 429 (2nd Dept. 2004) citing Mary Immaculate Hosp. v Allstate Ins. Co., 5 AD3d 742, 742-43 (2d Dept.2004). Plaintiff does not have to prove that the assignor was a “qualified person” as part of its prima facie case. Rather, MVAIC must establish its prima facie defense that plaintiff ’s assignor was not a “qualified person” or lacked MVAIC no-fault coverage. Englington Med., supra, 81 AD3d at 229; Pomona Medical Diagnostic, P.C. v. MVAIC, 2011 NY Slip Op 51573[U] 32 Misc 3d 140[A] (1st Dept. 2011); ] Bath Medical Supply Inc., v. MVAIC, 2010 NY Slip Op 31281[U], 2010 NY Misc. LEXIS 2327 [Sup. Ct., Nassau Co. 2010]. See, Lexington Acupuncture v. MVAIC, 2012 NY Slip Op 51960U, 37 Misc 3d 1210(A) (Civil Ct., Kings Co. 2012). However, regardless of whether plaintiff makes out its prima facie case pursuant to Ins. Law Article 51, the plaintiff (and its assignor) must first comply with article 52. Akita Medical Acupuncture, P.C, v. MVAIC, 14 Misc 3d 405406 (Dist. Ct., Nass continued on page 34

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[ COURTSIDE ] continued from page 33

Co. 2006). Therefore, MVAIC need only pay first-party no-fault benefits to a qualified person for basic economic loss arising out of the use or operation in this state of an uninsured motor vehicle. See, Ins. Law § 5221(b)(2); Mtr of MVAIC v. Aetna Cas. & Sur. Co., 89 NY2d 214, 221 (1996). The term “qualified person” means “a resident of this state other than an insured or the owner of an uninsured motor vehicle and his spouse when a passenger in such vehicle, or his legal representative.” Ins. Law § 5202(b)(1). Therefore, a person is not qualified if (1) he is an insured person, since that person would have available insurance upon which he could make a claim for first party no fault benefits, or (2) is an owner of an uninsured motor vehicle, since Article 52 of the Insurance Law “is not intended to provide relief to those who fail to obtain insurance.” Englington Med., P.C. supra, 81 AD3d at 228. An uninsured vehicle, pursuant to Ins. Law § 5202(b), is a vehicle which is not an “insured motor vehicle,” i.e., one which there is maintained proof of financial security. Ins. Law § 5202(c). See Englington, supra, at 228. “Generally, motorcycle riders, whether operators or passengers, are not entitled to first-party no-fault insurance benefits from MVAIC.” Englington, supra, 81 AD3d at 228. See Ins. Law § 5103(a)(2). A motorcycle typically is “required to carry financial security pursuant to article six, eight or 48A of the VTL.” Id. See, Ins. Law §5102(m). However, not all motorcycles are required to have insurance. Pursuant to VTL §§1210b and 2265(3), class C motorcycles, which have a maximum speed of 20 mph are not required to carry insurance. Quinones v. MVAIC, 2004 NY Slip Op 51729U, 6 Misc 3d 1007(A) (Sup Ct. Kings. Co. 2004). “Construing these provisions together, the operator of, or passenger on a class C motorcycle is entitled to no-fault benefits in the absence of any other statutory preclusion of benefits.” Englington, 81 AD2d at 125. In order to be qualified, the applicant must also comply with the notification requirements of Ins. Law §5208, such as submitting a timely sworn notice of intention to make a claim to MVAIC (Olmecs, supra), and filing an accident report within 34 March 31, 2015 / INSURANCE ADVOCATE

24 hours of the occurrence unless it was “not reasonably possible to make such a report or that it was made as soon as was reasonably possible.” Howard M. Rombon v. MVAIC, 2008 NY Slip Op 52128(U), 21 Misc 3d 131 (A) (App. Ter, 2d & 11th Jud. Dists. 2008). See, Canty v. MVAIC 95 A.D. 2d 509, 511 (2d Dept. 1983). See also, Akita Med. Acupuncture, P.C. v. MVAIC, 14 Misc 3d 405, 408 (Nassau Cty. Dist. Ct. 2006) (Failure of claimant to verify that the alleged accident ever occurred or that it was reported to the police within 24 hours disqualifies claimant from receiving MVAIC benefits”). Where any of these requirements have not been met, the plaintiff ’s assignor is not a qualified person and thus, not a covered person. See, AP Orthopedic & Rehabilitation P.C. v. MVAIC, 2011 NY Slip Op 51448(U), 32 Misc 3d 133(A) (App. Term, 2d Dept 2011) (assignor’s failure to provide MVAIC with proof that she was a resident of the State of New York when the accident occurred); See, RAZ Acupuncture, P.C. v. MVAIC, 2009 NY Slip Op 52362(U), 25 Misc 3d 138(A) (App Term, 2d, Dists 2009); Five Boro Psychological Servs., P.C. v. MVAIC, 2010 NY Slip Op 50647(U), 27 Misc 3d 131(A) (App Term, 2d, 11th & 13th Jud Dists. 2010); (Insurance Law § 5221 (b)(2); Howard M. Rombon, Ph.D., P.C. v. MVAIC, supra. Consequently, a condition precedent to the right to apply for payment of no-fault benefits from MVAIC has not been satisfied and a defendant insurer is entitled to summary judgment. See, Five Boro, supra, Akita Medical, supra. See, generally, Canon Chiropractic, P.C. v. MVAIC, 2013 NY Slip Op 52044(U), 41 Misc 3d 1237A (Civil Ct., Kings Co. 2013). MVAIC has proven that plaintiff ’s assignor is not a qualified person and hence, not a covered person, because the assignor never responded to its four requests to qualify and, in particular, to its request that the applicant submit proof that the accident was timely reported to the police, which would typically be a police report. The assignor’s failure to provide such proof is of greater magnitude in the instant matter since the assignor made inconsistent statements on the various forms he did file as to whether he was driving a vehicle (notice of intention form) or a motorcycle (NF-2), much less what type of motorcycle he was driving, although he did admit that

vehicle 2 hit his vehicle 1 which he was driving and that he did not own a motor vehicle. This case is therefore distinguishable from Englingon, supra, where the issue of the applicant’s non-compliance with MVAIC’s requests to qualify was never raised, and the record indicated that MVAIC had in its possession a copy of the police accident report. In light of the assignor’s failure to clarify these inconsistencies by providing the material requested by MVAIC it is absurd for plaintiff to allege that the burden was on defendant to prove that the assignor was an occupant of a motorcycle at the time of loss or that he was driving the type of motorcycle which precludes an injured party from obtaining benefits from MVAIC. Ins. Law §5103 (a)(1) (i.e., a non-class C motorcycle). Here, MVAIC has met its burden of establishing that the assignor has not submitted the requisite forms to qualify him as a qualified person and thus entitle him to coverage by MVAIC. The burden then switches to the plaintiff medical provider to present evidence “that it had availed itself of the opportunity” to present the evidence. Cf Jamaica Medical Supply v. NY City Transit Authority, 2012 NY Slip Op 51660(U), 36 Misc 3d 150(A) (App. Term, 2d Dept. 2012). Here, plaintiff offered no such evidence and merely wrote a letter advising MVAIC to seek the information from the applicant or his attorney, which MVAIC had already done when it alerted plaintiff of the missing documents. MVAIC’s instant lack of coverage defense is not subject to the 30 day preclusion rule and may be raised at any time. MVAIC v. Interboro Medical Care & Diagnostic P.C., 73 AD3d 667 (2d Dept. 2010); Family Care Acupuncture P.C. 2010 NY Slip Op 51414(U), 28 Misc 3d 1220(A) (Civil Ct., NY Co. 2010). See, Kipor Medicine P.C. v. MVAIC, 23 Misc 3d 948 (Civil Ct., Kings Co. 2009). For the foregoing reasons, the case is dismissed. This constitutes the Decision and Order of the Court.[IA] 2015 NY Slip Op 50233(U) [46 Misc 3d 1222(A)] Decided on January 28, 2015 Civil Court Of The City Of New York, Kings County Levine, J.

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